Lease agreements for shops, catering, take-away or delivery services and craft businesses are referred to as lease agreements for medium-sized business premises. Specific legal provisions apply to this type of lease. The starting point is a high level of protection for the tenant. After all, the lessee must be able to build up his business and generate income and goodwill. The protection of the tenant also means that lease contracts for medium-sized business premises cannot simply be terminated. This is subject to legal requirements.
In practice, we often receive questions about how a landlord (or tenant) can terminate this type of lease. On the other hand, the question is often asked whether a landlord has validly terminated the lease. This article therefore explains how the termination of a lease agreement for medium sized business accommodations works and which requirements apply.
When can a tenancy agreement be terminated?
A lease agreement for a mid-market office space can only be terminated towards the end of a certain rental period. The term arrangement applies to such lease agreements. The starting point is an initial rental period of five years. If not terminated, the contract will be extended by five years. Termination of the lease agreement for medium-sized business premises is only possible towards the end of the rental period, for example after the first five years.
From ten years onwards, continuation is for an indefinite period of time, unless a different duration has been agreed in the lease agreement. If the lease is for an indefinite period, it can be terminated by any date.
In many lease agreements for medium sized business premises, a provision is included preventing the landlord from terminating the lease agreement. In that case, the tenancy agreement stipulates that the landlord may not terminate the tenancy agreement, for example, after the first period of five. In such a case, the tenant is assured tenancy for that period.
How to terminate a lease agreement for mid-market office space?
If a landlord or tenant wishes to terminate the tenancy agreement, he must send a registered letter or have a court bailiff’s writ served. The reason for this is that it can be proved that the other party has received the letter of termination. The notice period is always at least one year. If a shorter notice period has been agreed in the lease agreement, it is not valid. However, a longer notice period may have been agreed for a lessor.
The lessor must also state the grounds for termination in the letter of termination. If there are no grounds for termination in the letter of termination from the lessor to the lessee, the termination of the lease is not valid.
What are the grounds for termination?
A landlord can only terminate the lease agreement if there are one or more of the grounds for termination referred to in the Dutch Civil Code, which grounds are limitative. In the case of a tenancy agreement with a term of ten years or more, a lessor has more grounds for termination at his disposal than in the case of a five-year lease.
Grounds for termination of a tenancy agreement for the first five years:
- the tenant’s business operations are not as befits a good tenant; and/or
- the landlord wants to put the rented property into sustainable use personally and urgently needs the rented property for that purpose (‘urgent personal use’).
Additional grounds for termination after ten years:
- the tenant does not agree to a reasonable offer to enter into a new tenancy agreement;
- the lessor wishes to realise a destination on the leased property pursuant to a valid zoning plan; and
- the landlord’s interests on termination of the lease outweigh the tenant’s interests on continuation of the lease (‘evaluation of interests’).
What are the consequences of terminating the lease agreement for mid-market business premises?
If the tenant terminates the lease agreement correctly, the lease agreement ends. If the lessor has terminated the tenancy agreement, the tenancy agreement will only end when the lessee has let us know within six weeks that he agrees with the termination. If no (positive) notice is received from the tenant within six weeks, the lessor may ask the court to fix the end date of the tenancy. The property law attorneys of Leeman Verheijden Huntjens can assist you in such proceedings.
Is the tenant entitled to compensation for the termination of the lease?
In four instances, the tenant is entitled to compensation upon termination of the lease of a mid-market office space. This is the case:
- an allowance for removal and furnishing costs;
- a compensation for goodwill;
- demolition of the rented property in the public interest; and
- dissolution due to realisation of the zoning plan.
If the parties are unable to reach an agreement among themselves, they can go to court.
In what other ways can the tenancy agreement end?
In addition to termination, the lease agreement for medium-sized business premises can also end in two other ways, namely by dissolution or by mutual consent. A tenancy agreement can be terminated because the tenant or lessor fails to comply with the obligations that apply to him on the basis of the tenancy agreement. The tenant or lessor can then ask the court to dissolve the tenancy agreement. Thereafter, the parties will no longer be bound by the agreement and the lease will end.
The tenant and the lessor may also agree on termination of the tenancy with mutual consent. It is often wise to lay down the agreement made in a settlement agreement.
Do you have a question about ending or terminating a lease agreement for medium sized business accommodations?
For all your questions about renting remote control space you can contact the commercial property tenancy law attorneys of Leeman Verheijden Huntjens. They can advise you, draw up a notice of termination letter for you, discuss with the other party whether or not there is a valid termination and litigate when necessary.
