You are considering handing over your business to a third party. The reasons can be various: financial difficulties, change of activities, retirement, etc. Conversely, you want to become a merchant by developing a project that is close to your heart. The question of transferring and taking over a lease concerns you! How to proceed and what are the pitfalls to avoid? You will know everything about commercial leases.
Commercial leases are usually entered into for a fairly long term (5 or 10 years), in order to take into account the amortization of investments. Whether it is a restaurant, shop, kiosk or beauty salon, sometimes tenants wish to dispose of the lease agreement before it expires. This is possible by termination or by transfer of the lease. The tenant usually chooses the second option. For the outgoing tenant, it offers a financial advantage, namely the sale of the business. The transfer of a commercial lease is governed by article 263 of the Code of Obligations. It states that “the tenant of a commercial premises may transfer his lease to a third party with the written consent of the lessor”. The interest for the transferee is to have a few more years of lease in front of him at conditions that remain unchanged. This will allow him to amortize his installation work.
The former tenant remains jointly and severally liable for the obligations under the lease. This applies until the end of the contract and for a maximum period of two years. It is up to the transferor to make the request to the landlord (or the agency representing him). The latter is obliged to accept the transfer if it concerns the continuation of the same type of activity (restaurant, sale of clothing, office arcade, etc.). A refusal must be supported by “just” reasons.
Very often, the goodwill is resold in conjunction with the lease transfer. This corresponds to the layout, installation, equipment, furniture. The reputation and clientele of the business are also taken into account, provided that the same activity continues. As for the “key money”, it is strictly forbidden since the location of the arcade is the property of the lessor and not the lessee. The latter therefore has no legitimacy to earn money on something that does not belong to him.
Beware of unscrupulous sellers eager to raise the stakes, especially in strategic locations such as the hypercentre! The landlord (or the management company) is not directly involved in the transaction. However, it is entitled to request the takeover agreement between the two parties and can object if it believes that there is a hidden key money in the takeover amount. There are companies that specialise in trade discounts and that ” match ” sale offers with potential buyers. These agencies also provide advice on determining the value of the business.
Article 263 CO can be invoked if the transferee does not present sufficient guarantees of solvency. This is also the case if the amount of rent or goodwill is clearly too high in relation to the financial capabilities of the new tenant. The transfer may also be refused if the new activity is likely to be prejudicial to the lessor: noise, non-conformity with good morals, sector in crisis, etc. Finally, not having the operating permits or requesting too much transformation of the premises are other circumstances that can justify the lessor’s non-consent.
If the new tenant falls behind on rent, the former tenant is held liable for the debt for up to two years. The same applies to any damages committed by the transferee. Don’t overlook these assumptions that would put you in an embarrassing situation!
#EnBref: the régies (representing the landlords) are not there to interfere with the transactions. Their role is to ensure that they reflect the reality on the ground. This also ensures protection of the future tenant – “client” of the landlord – who will be advised and warned against possible abuses.