French Short Term Leases
A French short term commercial lease is for a maximum of 3 years and is unlike a normal commercial lease, which is usually for 9 years with a right for the tenant to renew at the end of the 9 year period. This can be in the interests of both the landlord and the tenant, especially for a UK business uncertain about the consequences of Brexit.
At the end of the lease the tenant has to vacate unless the landlord and tenant agree to convert the lease into a normal 9 year one at that stage. Otherwise the tenant has no right to renew the lease. Generally the rents are lower because the tenant does not have the right to renew his lease and has no right to compensation. The contract has to be in writing.
Clause in lease clearly saying it is short term
It is important that the lease clearly states that the parties do not wish the lease to be a normal commercial lease. A clause in the lease should refer to Article L 145-5 of the Commercial Code which allows these leases to be created. However the parties do not need to give any reason for entering into a short term lease.
Negotiate terms freely
The lease can be negotiated freely. This includes the rent. If there are matters which are not expressly covered the Commercial Code will apply. The termination of the lease should not include any rights for the tenant to remain for more than 3 years otherwise it will probably be viewed as a normal commercial lease.
There has to be a schedule of conditions of the premises at the outset. It is in tenants interests that this is comprehensive and that the repairing conditions at the end of the lease are not onerous.
End of lease
The tenant has to leave. The landlord does not have to serve any notice. The tenant has no right to any compensation. If the tenant does not vacate the landlord has one month after the end of the lease to inform the tenant he must vacate. The tenant has this month to vacate. If the tenant does not vacate the landlord may have to obtain a court order. Tenants who do not vacate should also bear in mind the risk of the lease becoming a normal commercial lease with the implications that follow from this.
A short term leases is a good option if you want low rents and lots of flexibility. It could be for just one year whilst you initially assess whether it is worth having a presence in France. It should mean lower rents and fewer liabilities on the tenant.
Solicitor-Advocate and Chartered Tax Adviser