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4 Different Types of Commercial Lease

There are four basic types of commercial lease. When you open a business and you plan to occupy a place, you are usually required to sign a commercial lease and pay either a lease or a lease.

  • What is the difference between these two notions?
  • What is a standard commercial lease?
  •  A precarious lease?
  • What is their duration?
  • What are the elements that make up the goodwill?
  • Who owns it?

These different notions can lead to confusion and misunderstandings during negotiations between owners and traders. Here is a point not to confuse them.

Types of Commercial Lease:

  1. Goodwill:

The goodwill is a set of tangible and intangible items dedicated to your commercial activity. Concretely, the tangible elements that make up a goodwill are the following: furniture, equipment, fixtures and fittings and the stock of goods. As for intangible elements, it is the sign, the trade name, the right to the lease, the customers, the various licenses or patents. Note that ownership of a goodwill is most often distinct from the ownership of the walls or premises in which the business is carried on. Indeed if you invest in a goodwill, it means that you buy the sign and all the elements that make up it, you are then the new owner of the goodwill but not necessarily the owner of the walls. However, The combination of these two properties is quite possible. If you are buying the premises in addition to the goodwill then you are the owner and the goodwill and the walls. Finally, buying a goodwill usually helps to secure a larger source of potential customers.

Business and Commercial Leases forms

  1. The Commercial Lease:

It is the traditional lease agreement that unites you with the owner of premises so that you can practice your business there. To be able to benefit from a commercial lease you must be registered in the Register of Businesses and Companies, have an autonomous activity in its management, and which generates customers.

The minimum term of a commercial lease is 9 years. The contract may set a higher but not lesser duration. If its duration is particularly long it is in order to allow traders to develop their business lasting. However every 3 years, you and you alone can decide to leave the commercial premises. If you wish to leave the premises, you must notify the landlord at least 6 months before the date of the decision, using a bailiff. You can end the lease outside these triennial periods but it is a difficult and difficult procedure, the termination of the commercial lease being very framed by the law.

Also, be aware that the law allows the novice who wants to rent premises in the short term to sign a short lease: it is the precarious lease. Its maximum duration is limited to two years. It is, therefore, possible to predict less than this period. It may also be renewed for as long as the total duration of the lease or successive leases does not exceed 24 months. This lease may seem less binding than a commercial lease 3/6/9 because it can allow you to test your business without committing yourself in the long term. All the more so, that on its expiration, this one can be renewed in the classic commercial lease.

As for the rent, it is freely determined by the owner. The amount can be reviewed at the end of each 3-year period. Do not hesitate to negotiate. Even if it is not compulsory to write a written document to fix the terms of use of the premises and the duties of each one it is strongly advisable to do so in order to prove the existence of the lease. For this, it is preferable to have recourse to a notary or a lawyer for a lease in the form of an authentic deed (which is compulsory for leases over 12 years) or it will be an act under private seal, c That is to say a contract drafted and signed by the owner and yourself.

  1. The door-to-door:

Another commercial lease type is so-called entrance fee also refers to the amount of money you pay to the owner of the premises in one or more installments (1 / 9th per year) at the time of Entry into the premises, in addition to the agreed rent. Once the amount paid is the rental contract that is established and you can dispose of the premises to carry out your business. The amount of the door-step is freely fixed by the owner of the premises and yourself according to the attractiveness of the area in which the premises are located.

  1. The right to lease:

It is your right to occupy the premises and to have a right to renew the lease. When you buy the right to the lease you pay a sum of money to the previous tenant (not the lessor), who will have set the price of the lease right. Thus, you take over an ongoing lease that was entered into between the outgoing tenant and the landlord. You purchase the right to benefit from a commercial lease in progress for the remaining term of the contract and under identical conditions, in particular as regards the rent.


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About the author

Salman Qureshi

Salman Qureshi is an Accountant by profession & he loves to write on Commerce & Management Sciences Subject to assist Students. Hope you guys will like his effort.

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