How long does a commercial lease last?

Question

José Manuel Alburquerque · Accepted Answer

Whatever is agreed in the lease. For commercial premises, the law sets no minimum term or mandatory extensions, which are features of residential tenancies. If the lease says nothing about how long it lasts, it is deemed to have been made by the month when the rent is monthly, so either party can end it at the end of a month by notifying the other. That is why it is advisable to set out in writing the term, the minimum time the tenant undertakes to stay and what happens when the end comes. What should be agreed With commercial premises, the lease is what counts, in Catalonia too, where the same national law applies. The usual practice is to set: The total term, for example ten years. A minimum commitment period, the years during which the tenant undertakes not to leave, for example the first three. After that period, the tenant can leave by giving the notice agreed. If the tenant leaves earlier, he or she is in breach of the lease and may have to pay the rent for the rest of the term or the agreed penalty. Extensions, if any. They can be automatic unless one of the parties gives notice that it does not wish to continue, or at the tenant's option. They should state how much notice must be given. Whether the tenant waives goodwill compensation, which the law grants in some cases when the lease ends on its expiry date. If the lease says nothing The Spanish Civil Code (“Código civil”) applies. If no term was set, the tenancy is deemed to have been made by the year when the rent is annual, by the month when it is monthly and by the day when it is daily. With a monthly rent, the lease runs from month to month and either party can end it at the end of a month. The law does not say how much notice must be given, but the prudent course is to give it in writing and at least a month in advance. Nor does a lease that leaves its duration to the tenant's will last for ever. The “Tribunal Supremo”, Spain's Supreme Court, accepts such leases but applies to them the limit that the law sets for usufruct, the right to use and enjoy property belonging to someone else. That limit is thirty years if the tenant is a company and the tenant's lifetime if the tenant is an individual. When the term ends If the lease has an end date, it ends on that day without any need for notice. Even so, it is advisable to give notice in writing. If the tenant stays on in the premises for fifteen days without the landlord objecting, the tenancy is renewed on the same terms, but only for the period by which the rent is set, normally from month to month. If the landlord sells the premises, the buyer must honour the lease, unless the buyer purchases without knowing about the tenancy, registers the purchase at the “Registro de la Propiedad” —the Land Registry— and the lease is not registered. If the lease is a long one, it is in the tenant's interest to have it executed as a public deed and registered. Leases of commercial premises signed before 9 May 1985, the old-style protected tenancies (“renta antigua”), have their own rules on duration.