When renting business premises, not only the amount of the rent and the duration of the contract play an important role, but also whether the lessee is obliged to actually operate the leased business premises. This so-called obligation to operate can have far-reaching consequences for both the landlord and the tenant of the business space. What exactly does this obligation entail, and under what circumstances can it be enforced or called into question?
What is the duty to operate?
The obligation to operate means that the lessee of business premises is obliged to actively and actually use the leased business premises and continue to conduct a business therein during the term of the lease. This prevents a landlord from being faced with a vacant property, which can be detrimental to a shopping center in which the leased property is located, for example.
Legal basis
The obligation to operate has no legal basis and thus must be explicitly included in the lease. Many standard lease agreements, such as the ROZ model, include an obligation to operate. As a tenant, you can make different arrangements with the landlord of the premises or negotiate the terms of such an obligation to operate.
Importance of landlord’s obligation to operate
For landlords, especially of retail and hospitality properties, an operating obligation is essential. An active business attracts customers and contributes to the success of other nearby businesses. If a tenant closes its doors without going out of business, it can reduce the overall attractiveness of a location.
Tenant and flexibility
For tenants, the obligation to operate can sometimes be a hindrance. Entrepreneurs want the freedom to terminate or temporarily pause operations when economically necessary. Therefore, possible exceptions, such as a right to temporarily pause operations for compelling business reasons, are often negotiated during contract formation.
What if a tenant does not comply with the duty to operate?
When a tenant fails to comply with the duty to operate, it can lead to legal disputes. Landlords may in some cases claim damages or even dissolution of the lease. The outcome of such disputes depends on the specific terms of the lease and the circumstances of the case.
Conclusion
The operating obligation is an important point of negotiation in leases of commercial space. It offers landlords security, but can be restrictive for tenants. A well-formulated agreement and clear understandings can prevent later conflicts. Both tenants and landlords would do well to seek legal advice when drafting or reviewing the lease. Do you have questions about the exploitation obligation in business premises? Please contact mr. Yvonne Hilderink at hilderink@lvh-advocaten.nl.
