Leasing: All you need to know !

A lease, also known as a tenancy agreement, is an agreement between a tenant and a landlord to rent a property. It sets out the conditions under which the tenant may use the property in return for a payment to the landlord. This article discusses the various aspects of a lease, including penalties for default by the tenant, the right of first refusal, statutory extensions and aspects specific to commercial leases.

Penalties for defaulting tenants

There are several possible sanctions in the event of tenant default. One of them is the dissolution or termination of the lease, which must be sought in court. Even if the contract contains an explicit clause, the dissolution or termination must always be approved by a judge.

Another sanction is the exception of non-performance, which allows the lessor to suspend his own obligations. This exception can be applied without recourse to the courts, but it is advisable to proceed with caution.

The lessor also has the privilege of exercising a lien on any movable property in the rented premises as security for unpaid rent. Finally, in the event of non-payment, the landlord has the right to repossess the furniture in the rented premises.

Right of pre-emption

The right of pre-emption is an advantage granted to the tenant who has occupied the premises for 18 years or more. In the event of a sale, this tenant has priority. They have one month to respond to the sale offer.

There are exceptions to this rule. For example, in the case of a judicial auction, the tenant can go directly to the public sale. Similarly, if the owner sells to a family member (up to the third degree), the right of pre-emption does not apply.

If the owner eventually decides to sell to a third party, he can only do so at a higher price than the tenant is offering.

Legal renewal

The legal renewal extends the lease under the same conditions as before, except that the term becomes indefinite. This extension is not automatic. The landlord can refuse to extend the lease if the tenant has not fulfilled his obligations, if the landlord needs the property for his personal use, or if there is a serious and legitimate reason why the continuation of the lease would cause greater damage to the landlord than to the tenant.

Commercial lease: notice period and tacit renewal

The commercial lease is specific. The notice period cannot be less than six months and the notice must be given by registered letter with acknowledgement of receipt.

If the lease is terminated for any reason, it is automatically renewed for an indefinite period. The lessee is then obliged to renew or adjust the rental guarantee accordingly so that the lessor has a guarantee until the end of the lease.

It is important to note that all of these points are subject to variation depending on the local jurisdiction, the nature of the property and the specific terms of the lease. Always consult a professional for advice specific to your situation.

Here are some multiple choice questions on this topic:

1. What is a lease?

• a) A contract of sale
  

• b) A tenancy agreement
  

• c) A service contract
  

• d) A contract to buy
  

  Answer: b) A rental agreement

2. What is the penalty for default by the lessee?

• a) Termination of the contract
  

• b) An increase in the rent
  

• c) Extension of the lease
  

• d) Reduction in rent
  

  Answer: a) termination of the lease

3. What is the right of first refusal?

• a) The right to terminate a lease
  

• b) The right to buy a property before others
  

• c) The right to sell a property before others
  

• d) The right to rent a property before others
  

  Answer: b) The right to buy a property before others

4. What is the legal term of a lease?

• a) A fixed term of two years
  

• b) An indefinite term
  

• c) A fixed term of one year
  

• d) A fixed term of six months
  

  Answer: b) An indefinite term

5. What is the minimum notice period for terminating a commercial lease?

• a) One month
  

• b) Two months
  

• c) Three months
  

• d) Six months
  

  Answer: d) Six months

6. What is meant by 'exception to the rule'?

• a) The lessor can suspend his obligations
  

• b) The tenant can suspend his obligations
  

• c) The landlord can increase the rent
  

• d) The tenant can reduce the rent
  

  Answer: a) The landlord can suspend his obligations.

7. What is a garnishment?

• a) A legal action to obtain payment
  

• b) A penalty for non-payment of rent
  

• c) A penalty for damaging the property
  

• d) A legal action to obtain payment
  

  Answer: b) A penalty for non-payment of rent

8. What is a commercial lease?

• a) A rental agreement for an apartment
  

• b) A lease for a business
  

• c) A contract for the sale of a business
  

• d) A service contract for a business
  

  Answer: b) A lease for a business

9. What is a rent deposit?

• a) A sum of money paid by the tenant as security
  

• b) An insurance policy taken out by the tenant
  

• c) Insurance taken out by the landlord
  

• d) Money paid by the landlord as security
  

  Answer: a) Money paid by the tenant as security

10. What is the purpose of an express break clause?

• a) To automatically terminate the lease in the event of non-payment of rent
  

• b) To increase the rent automatically in the event of non-payment
  

• c) Automatically extend the lease in the event of non-payment
  

• d) automatically reduce the rent in the event of non-payment
  

  Answer: a) Automatically terminate the lease for non-payment of rent