Drafting and review of commercial leases
Commercial leases are often concluded for many years and are of considerable economic importance. We advise landlords and tenants on the drafting, review and negotiation of leases for office, retail, practice and storage premises.
The key points at a glance
Extensive freedom of contract
Unlike residential tenancy law, commercial leases are subject to only a few mandatory protective provisions. The parties are largely free to agree the rent, term, termination and service charges. This makes careful drafting of the lease all the more important.
Form of long-term leases
Leases with a term of more than one year are subject to particular formal requirements (§ 550 BGB). If these are not met, the lease may be terminated early by ordinary notice. The formal requirements for long-term commercial leases have recently been relaxed. Complying with them nevertheless remains important, including for addenda.
Rent and value protection
The rent may be freely agreed and adjusted by means of stepped or index-linked rent. Value protection clauses must, however, satisfy the requirements of price law.
Typical points to be agreed
Matters to be addressed include, in particular, the permitted use, protection against competition, allocation of service charges, maintenance and repair, decorative repairs, subletting, reinstatement and option rights. Standard-form clauses are also subject to review under the law on general terms and conditions.
How we proceed
We discuss with you the property, its intended use, the desired term and the economic parameters.
We prepare a draft lease or review the other party’s draft, and identify risks and room for negotiation.
We support you in the negotiations and ensure that the formal requirements are met on conclusion and in any later addenda.
Frequently asked questions
Can a fixed-term commercial lease be terminated early?
In principle only for good cause, unless the lease provides for special termination rights. Where there are formal defects, however, early termination by ordinary notice may be possible in certain circumstances.
Does the rent cap also apply to commercial premises?
No, the rules limiting the level of rent apply only to residential premises. In commercial leases, the rent can in principle be freely agreed.
Your contacts
Talk to us.
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