The termination of a commercial lease is heavily regulated in Belgium. The Commercial Lease Act primarily seeks to protect the tenant, because the commercial location of the premises is often decisive for the survival of the business. However, that does not mean the landlord cannot end the lease.
The law provides various ways in which the landlord can terminate the commercial lease, each with its own conditions, time limits and consequences.
In this article you will discover, among other things:
- when termination of the commercial lease by the landlord is possible for breach of contract;
- how and when the landlord can give notice;
- how an amicable termination can be validly recorded;
- when and how the landlord may refuse the lease renewal;
- what risks are associated with ending a lease;
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Termination of the commercial lease by the landlord for breach of contract
What constitutes breach of contract in a commercial lease?
Breach of contract means that the tenant fails to comply with their contractual obligations. Typical examples are:
- persistent non-payment of the rent;
- unauthorised change of use;
- serious damage to the commercial premises;
- prohibited subletting.
The landlord cannot unilaterally terminate the commercial lease, but must turn to the court.
Judicial dissolution
The justice of the peace can dissolve the commercial lease if the breach is sufficiently serious. The court assesses this case by case.
Example:
A tenant fails to pay rent for three months and does not respond to reminders. The court can dissolve the commercial lease and order the tenant to pay the rent arrears and damages.
In practice, a prior formal notice of default is strongly advisable. Handelshuurloket can assist in drafting it.
Termination of the commercial lease by the landlord through contractual notice
Notice as provided for in the commercial lease agreement
The Commercial Lease Act allows the landlord, in certain cases, to end the lease at the end of each three-year period, provided this is provided for in the contract.
The possible statutory grounds are:
- notice without cause subject to payment of compensation;
- personal use by the landlord or a family member;
- major renovation works.
Strict conditions
The landlord must:
- observe a notice period of one year;
- give notice by registered letter or bailiff’s writ;
- clearly state the ground.
An error in form or time limit makes the landlord’s termination of the commercial lease invalid.
Amicable termination of the commercial lease
Free agreement between tenant and landlord
Tenant and landlord can decide at any time to end the commercial lease by mutual agreement. This is often the most pragmatic solution.
Formal requirements
The law requires that the agreement:
- is recorded in a notarial deed; or
- is confirmed through a declaration before the court.
A mere e-mail or private agreement does not suffice.
Example:
The parties agree to end the commercial lease early in exchange for a departure payment. This agreement is recorded in a notarial deed.
Refusal of lease renewal by the landlord
Lease renewal as the starting point
After nine years the tenant is in principle entitled to lease renewal. Here, the landlord ends the commercial lease not by notice but by refusing renewal.
Statutory grounds for refusal
The landlord can refuse renewal in cases including:
- personal use;
- reconstruction or major works;
- serious failings by the tenant;
- a higher offer from a third party;
- own operation without compensation (a limited number of times).
Eviction compensation
In many cases the landlord is required to pay eviction compensation. This can amount to several years’ rent.
The calculation is complex and depends on the specific ground for refusal.
Frequently asked questions (FAQ)
A registered notice is in principle deemed served, even if the tenant does not collect the letter. For absolute certainty, a bailiff’s writ can be used.
Bankruptcy does not automatically lead to termination. The trustee in bankruptcy decides whether the commercial lease is continued. The landlord can, however, seek dissolution if the rent is not paid.
If it turns out that the stated ground was not actually implemented, the tenant can claim substantial damages. This risk is particularly high with notice for personal use or works.
Then the notice is invalid. The lease continues until its scheduled end date or the next three-year period.
No. E-mail does not satisfy the legally required form.
No. The sale of the commercial premises is not in itself a valid ground for notice. The new owner must respect the ongoing commercial lease. The contract may, however, provide a limited notice regime for the new owner.
Any questions left?
Do you want to end a commercial lease correctly as a landlord? Or do you have another related question as tenant or landlord? Schedule your consultation!
