REALWorld Law

Commercial leases

Use by the lessee

Can restrictions be imposed by the lessor on how a lessee uses the real estate and are there any regulations and/or laws which impose further restrictions?

Angola

Angola

The purpose of the leased property has to be defined in the lease, in accordance with the type of legally permitted use for the property (which is certified by the relevant administrative authority who issues the use license (certificado de habitabilidade).

The permitted use cannot be changed by lessee without the lessor’s or the relevant administrative authority’s consent.

The use of the property for any purpose other than the one which it is licensed for is considered to be a contractual default by the lessee, constituting justification for termination of the contract by the lessor, who may apply to court to obtain the termination of the contract.

Otherwise, the lease of property for any purpose other than the one mentioned in the relevant use license may trigger the payment of fines.

Australia

Australia

Leases normally specify the permitted uses of premises. Certain activities which may cause a nuisance are prohibited and tenants are also subject to any usage restrictions laid down by planning (zoning) regulations. However, such usage restrictions may vary between local planning authorities within each Australian state jurisdiction. 

Belgium

Belgium

Normally the parties will agree on the use of the leased premises and this will be set out in the contract. The tenant will not be allowed to use the leased premises for other purposes. The principal use of the leased premises will determine which legal provisions apply.

It is also advisable to state which party is responsible for obtaining any specific authorizations or permits required for the tenant's activities in the leased premises (this will usually be the tenant).

Bosnia-Herzegovina

Bosnia-Herzegovina

Leases normally stipulate the permitted use of the premises.

Activities that have not been provided for in the lease or that may cause damage to the property are prohibited. 

Canada

Canada

A lease will commonly limit the purposes for which a tenant can use the leased premises. Typically, the lease will specify certain permitted uses (eg office use) and will expressly prohibit other uses. In addition, municipalities commonly impose zoning laws which limit the lawful uses of property within a given area.

China

China

The lessee is entitled to use the premises as agreed in the lease. If the lease is silent or unclear on this point, the premises must be used in a manner consistent with their nature.

The lessee must always comply with the use designated by the government as an unauthorized change away from the designated purpose may result in re-entry by the government without compensation.

Croatia

Croatia

Leases normally restrict the use of the premises. Specific activities which may cause a nuisance are also prohibited.

Czech Republic

Czech Republic

The lessee is entitled to use the premises for the purposes agreed on in the lease or, if there was no agreement in that respect, for the usual purposes. The lessee must always comply with a purpose of the use as approved or granted by the occupancy permit or consent issued by relevant building authority (if a building or its part is subject to the lease) and with all other relevant regulations applying to usage. The lessee has exercise due care.

Denmark

Denmark

The contract will normally restrict the use of the premises to a particular use.

The lessee will also be restricted by planning law to a use which has been approved by the planning authority or which corresponds to past uses of the property.

The Commercial Rent Act also regulates the lessee's use. As a principal rule, the lessee must treat the leased premises properly and a lessee is responsible for damage caused by its own improper behaviour or that of its personnel or other persons, to whom the lessee has granted access to the leased area or property.

France

France

Leases usually specify the permitted use, which is narrowly defined, and any changes require the landlord's consent and/or administrative permissions.

Germany

Germany

Leases generally specify that the leased property can only be put to a particular use. The use can only be changed with the consent of both parties. The tenant will also be restricted by planning/zoning law to a use approved by the planning/zoning authority or that is in line with past uses of the property. The building authority can provide information concerning permitted usage.

Hong Kong, SAR

Hong Kong, SAR

The lessee must comply with the permitted use that is set out in the lease and certain activities which may cause a nuisance are generally prohibited. Lessees in Hong Kong are also subject to any user restrictions set out in the lease from the Government under which all land in Hong Kong must be held and any subsequent lease modifications, the Occupation Permit for the building and the Deed of Mutual Covenant (a document governing the rights and obligations of owners and their tenants in a multistorey building). Laws and regulations relating to the permitted use of the premises (such as those in the Town Planning Ordinance (Cap. 131 of the Laws of Hong Kong) and Outline Zoning Plans) must also be complied with.

For commercial premises in large-scale development, there may be house rules set by the developer of the whole building to which the lessees will adhere.

Hungary

Hungary

Leases normally restrict the scope of activities the tenant may carry on in the leased premises. Changing the scope of activities requires the prior consent of the landlord. Activities which may cause a nuisance are also prohibited under commercial lease agreements.

The hours of operation of consumer goods retailers is regulated in great detail, and there is a general Sunday trading ban in force in Hungary for these retailers with a few exceptions (eg shops may open on the four Sundays before Christmas). Additionally, local municipalities may impose additional restrictions on hours of operation and certain activities pursued in certain districts of an urban area.

Ireland

Ireland

Yes. The landlord can restrict the tenant's use of the premises through the terms of the lease. In addition, the use of commercial premises will be restricted by the planning permission granted by the local authority.

Italy

Italy

Leases usually specify the permitted use of the leased premises and contains a specific prohibition for the lessee to modify this use. Further restrictions can be provided for under the applicable town planning laws or under the applicable local zoning tools or by orders of the relevant authority.

Japan

Japan

Restrictions can be imposed by the lessor on how the lessee makes use of the leased property.  The underlying purpose for use of the premises is usually agreed between the lessor and the lessee and evidenced in the lease agreement.  The lessee may not use the premises for any non-agreed purpose (eg if the agreed use purpose is as a ‘residence’, the lessee is prohibited from using the premises as an office or for other commercial purposes).  In a commercial lease, it is often agreed that the lessee may only use the premises during the specified hours and that the lessee shall not cause nuisance to other tenants or the neighborhood, etc.

Netherlands

Netherlands

Yes, leases normally stipulate the permitted use of the premises. Specific activities which may cause a nuisance are also prohibited.

Public regulations may impose restrictions to the permitted use of the premises as well. Commonly, compliance with public regulations is the responsibility of the lessee.

Nigeria

Nigeria

The lessor can restrict the use for which the property can be put by ensuring that there is a contractual provision with respect to use in the lease agreement. The lessee will be liable for breach of covenants and damages if the property is put to any use contrary to those specified in the agreement. Usually, lessee’s covenants specify the use of the property as either ‘residential’ or ‘commercial’, however, there can be a more specific restriction of the use to avoid the wide interpretation for which the words ‘commercial use’ can be inferred.

The Certificate of Occupancy or title deed usually also indicates the purpose for which the land is to be used and the lessor as holder of title is bound to comply and ensure compliance by the lessee with the conditions in the title document. A lessor cannot by contract impose an obligation on the lessee to use a property for a purpose at variance with the relevant states government’s specified approved land use and zoning regulations. Any such action or use of the property will be a contravention of the law and is a ground for revocation of the leasehold interest or imposition of fines for wrongful use.

The different states in Nigeria are responsible for development control and the regulation of physical and town planning through specific legislations in the different locations within the states. There are circumstances where the government will consider applications for change of use of a particular property and issue approval and in most instance, these occur in locations previously zoned for residential purposes being converted to commercial areas or mixed development uses.

The Advance Fee Fraud and other Fraud Related Offences Act 2006 restricts a lessor from knowingly permitting a lessee to use a lease premises for any illegal or immoral purpose which constitutes an offence under the Advance Fee Fraud and other Fraud Related Offences Act. A lessor who is found guilty of the offence is liable on conviction to imprisonment for a term of not more than 15 years and not less than five years without the option of a fine.

Norway

Norway

Leases normally stipulate the permitted uses of the premises and tenants must also abide by the restrictions imposed by planning regulations.

Poland

Poland

Leases normally restrict the use of the leased property to a particular use (restaurant, office, etc), and the tenant cannot change the use of the property without the landlord's consent.

The landlord and the tenant may also be restricted by planning laws. 

Portugal

Portugal

The purpose of the leased property has to be defined in the lease, in accordance with the type of legally permitted use for the property which is determined by the Town Hall.

The permitted use cannot be changed without the landlord’s or the Town Hall’s consent.

If the building has a residential use licence it cannot be used for any other purposes, such as commercial purposes.

The use of the property for any purpose other than that which it is licensed for is considered to be a contractual default of the tenant, constituting justification for termination of the contract by the landlord, who may apply to court to obtain the termination of the contract.

Otherwise, the letting of property for any purpose other than the one it is licensed for is void, and the landlord can be subject to pecuniary sanctions.

Romania

Romania

Under Romanian legislation, the tenant is obliged to use the leased property prudently and diligently and only in compliance with the intended use provided in the lease agreement. If the intended use is not expressly provided for, the tenant must use the property for the use intended as presumed from the applicable circumstances (eg a dwelling cannot be used for commercial activities).

In buildings consisting of multiple apartments, any change in the intended use of the dwellings must be approved by the neighbouring owners who are directly affected by the change.

The parties can, however, agree on specific contractual rules in the lease agreement regarding the use of the real estate by the tenant.

Slovak Republic

Slovak Republic

The tenant is entitled to use the property as agreed in the contract and appropriate to the nature and purpose of the property. In general, the use of the property is specified in the building permit and the specified use is confirmed by the occupancy permit.

In case of leases under the Act on Leasing and Subleasing Commercial Premises, the contractual parties must always define the permitted use of the leased non-residential premises. Failure to do so invalidates the lease contract. Furthermore, the tenant must always comply with all the relevant regulations applying to usage (such as in the case of culturally protected real estate).

Spain

Spain

Leases generally specify that the premises can only be put to a particular use. Tenants are also restricted by planning/zoning law to uses which have been approved by the planning/zoning authority or are in line with past uses of the property.

Sweden

Sweden

The lease normally states the purpose for which a tenant may use the premises, and prohibits them from using it for any other purpose without the landlord's consent. However, if the landlord refuses consent without reasonable cause, the Rent Tribunal can give the tenant permission for the use.

Thailand

Thailand

Restrictions can be imposed by relevant provisions in the lease, as well as by relevant laws (ie the Condominium Act and the Civil and Commercial Code). For example, under the Civil and Commercial Code, any use of the leased property that is unlawful or contrary to public order or the good morals of the people of Thailand is prohibited.

United Arab Emirates - Abu Dhabi

United Arab Emirates - Abu Dhabi

Leases normally specify the permitted use.

If the lease is silent, the use should be consistent with the purpose for which the property was built or according to common practice.

United Arab Emirates - Dubai

United Arab Emirates - Dubai

Leases in Dubai tend to specify the permitted use. In any event, a property must be used in accordance with the zoning authorised for such property. This is determined by Dubai Municipality and stated on an 'affection plan' for the property. Where a tenant is a company, the tenant’s commercial activities must accord with its ‘permitted activities’ set out in its trade licence. Therefore, the use of its leased premises must be consistent with its trade licence.

UK - England and Wales UK - England and Wales

UK - England and Wales

Leases normally specify the permitted uses of premises. Certain activities which may cause a nuisance are prohibited and tenants are also subject to any usage restrictions laid down by the planning regulations.

Attempts by the landlord to restrict the use of the real estate by reference to the use carried out by other real estate occupiers or itself (for example in a shopping centre or multi-let estate) may fall foul of competition laws. The landlord cannot expressly prevent the tenant from competing with other businesses.

UK - Scotland

UK - Scotland

The lease will contain numerous conditions relating to the use of the premises, including the specific obligation to use the premises for a particular purpose.

In addition, the tenant is obliged to comply with all the statutory provisions relating to the use and occupation of the premises.

There will normally be a specific obligation to comply with all planning/zoning legislation relating to the use of the premises. 

Ukraine

Ukraine

Ukrainian law contains provisions requiring real estate to be used in accordance with its designated use, as well as laying down fire protection and health and safety regulations to be observed by the person (eg the lessee) using the real estate. Furthermore, the building (for instance a business centre) where the leased premises are situated will generally have its own rules as to the use of the premises. Additional restrictions regarding the use of real estate may be imposed by the lease agreement.

The land must be used in accordance with its zoning and designated use, and the lessee must abide by any rules protecting the interests of neighbours. Also Ukrainian law provides for environmental regulations and other restrictions on certain categories of land, as well as on areas subject to special regimes.

 

United States

United States

A lease will commonly limit the purposes for which a tenant can use the leased premises. Typically, the lease will specify certain permitted uses (e.g., office use) and will expressly prohibit other uses. In addition, localities commonly impose zoning laws which limit the lawful uses of property within a given area.  In addition, the underlying real estate of a leased premises may be subject to covenants, conditions and restrictions (so-called “CC&Rs”), which are recorded documentation that may limit how a leased premises can be used.  Zoning laws and CC&Rs vary in each local jurisdiction and advice from local counsel should be obtained regarding the applicable zoning laws and CC&Rs affecting the permitted uses for any particular lease.

Zimbabwe

Zimbabwe

The lease agreement entered into between the parties will regulate how the lessee is permitted to use the premises and under what conditions. The parties generally have freedom to contract in this regard and the common law requirements for conclusion of a contract would then be applicable. As such, according to contract law, parties are prohibited from entering into a contract for an illegal or unlawful purpose. As such, the use of the property cannot be for an illegal or unlawful purpose.

The Urban Councils Act [Chapter 29:15], which regulates the establishment and administration of municipalities and towns in the urban areas, imposes a duty on the council to do all things necessary to ensure that the conditions of the establishment of any township within the council area and the conditions of title to any land in the council area are properly observed. The council has the power, upon the service of a notice, to:

  • Without compensation, cause any building wilfully erected in contravention of any such condition to be demolished and recover from any person responsible for the contravention the expenses incurred by the council in connection with such demolition
  • Prohibit the use of any building or land which contravenes any such condition
  • Execute any work which under any such condition it is the duty of any person to execute and recover from that person the expenses incurred by the council in executing such work

In the notice that the council serves, restriction may be imposed on the use of the property.