Professional Lease Agreement

Details

Professional leases were until recently subject to the protection status of the P.D. 34/1995. This presidential decree mainly protected the tenant, i.e. the merchant, who rented a space for his professional activity.With the recent provisions of law 4242/2014, this protective regime is significantly lifted, both for the old and for the new professional-commercial leases. In particular, the new law introduces two levels of amendments: The new regulations are contained in Article 13 of the law, of which paragraph 1 refers to new leases, i.e. those that are drawn up (concluded for the first time) after the entry into force of the law, i.e. after the date of its publication in the Gazette of Government on 28-2-2014, and paragraph 2 on old leases, i.e. those that have been concluded, extended or renewed, explicitly or implicitly, before the entry into force of the aforementioned law. In any case, the provisions of the Civil Code apply, both for new leases and for the old ones.

The category of new leases includes all leases that are re-concluded, i.e. are signed after the entry into force of Law 4242/2014 or after 28-2-2014 and do not include the written renewals of expired leases and those for which the 12-year period has expired and 9 months have passed since its expiration (even after the total time of the 4-year extension of article 61 of PD 34/1995, if they have been implicitly extended in accordance with article 611 of the Civil Code), even if we have drawing up a new contract between the same parties (employees-landlords) or their licensors.

A number of provisions are repealed for the new lease agreements, namely:

• Articles 5-6 of the P.D. 34/1995 which concerned the minimum validity of commercial lease agreements, which were determined at 12 years, regardless of the contractual duration (i.e. the duration determined by the contract) are repealed. According to the new law and to article 13 par. , the new leases are valid for three years only, even if they have been agreed for a shorter period. There are no longer special provisions for the possibility of time extension of contracts with unilateral or non-unilateral actions between lessor and lessee. However, contracts can be agreed for a longer period. They can also be extended in writing or tacitly after their expiration according to the rules of the Civil Code. Specifically, the provision of article 611 of the Civil Code is in force, according to which in case the lease is set for a certain time, after which the lessee continues to pay the rent and the lessor does not object, it is considered that the lease agreement is implicitly extended and becomes indefinite. According to the provision of article 608-609 of the Civil Code, the lease contract of indefinite duration is terminated with the termination (see under B ‘below), while the fixed term contract, only after the expiration of this time.

• Is abolished by par. 3 of article 13 of law 4242/2014 and with regard to new leases, the regulation of the mandatory 4-year extension of the lease after the expiration of 9 months from the end of the 12-year period (or the longer agreed contractual time), without the exercise a claim for restitution of the premises by the lessor.

• The termination of the lease must be in writing and served on the lessor or lessee. The legal effects of the termination occur after three (3) months from its notification to the lessor or lessee. This practically means that after the expiration of the contractual term of the lease, which may not be less than three years, each party has the right to terminate at any time, without any compensation under the lessor and the lessee’s obligation for an extension of three months and payment of the corresponding rents after notification. However, according to the general provisions of the Civil Code, the possibility of terminating the lease is not abolished for an important reason when, according to the principles of good faith and business ethics, the continuation of this permanent relationship becomes excessively unbearable for either party, or only for one part. This complaint is made at any time and its legal effects come immediately from the notification.

• The lessor’s complaint for private use or reconstruction was abolished, as well as the relevant provisions for compensation due to this termination (article 16-18, 20-26, 27 par.2, 28-36),

• The landlord’s complaint for own property and the relevant compensation provisions were abolished (Article 37), for the creation of a main residence (Article 38), for the demolition of a dilapidated building (Article 39), due to the bankruptcy of the tenant (Article 40),

• The possibility of the lessee to terminate the contract before its contractual expiration date was abolished, paying the corresponding compensation of one month after three months (the well-known 3 + 1, article 43), the special compensation of intangible value of 24 months in case of expiration of 12 years duration of the lease (Articles 60-61),

The old commercial leases, before the validity of law 4242/2014, (concerns the commercial leases concluded before 28-2-2014), to which they are subject according to the explicit provision of par. 2 para a ‘of article 13 of Law 4242/2014, those that were concluded before its entry into force, or that have been extended or renewed explicitly or implicitly (Article 611 of the Civil Code), before the entry into force, as well as leases, which have expired for 12 years and have not expired nine months from the end of that period. The provision on the inclusion of tacitly renewed contracts in the protective regime of the P.D. 34/1995, as it was valid before the abolitions of law 4242/2014, but with the amendments that will be pointed out below, means that it also includes the commercial contracts, in which the 12 years from the conclusion have expired, the 9-month extension has passed and and / or the four-year extension of article 61 of P.D.34/1995, however, the lessee continues to pay the rent, and the lessor does not object, making the contract for an indefinite period. For these old contracts, however, the law reserved some small but significant changes to the current regime. Indicatively, we mention the following:

• For fixed-term leases that have not expired, the obligation to terminate applies three months before the lessee leaves, after the expiration of one year from the lease, with the payment of an additional compensation lease (given, Article 43). ). For indefinite leases, the termination is valid according to the Civil Code, i.e. for the usual case of the provision of payment of monthly rent and the obligation to terminate is 15 days before the departure from the lease (article 609 of the Civil Code).

• The lessor after the expiration of the contractual period of the lease, and in any case before eighteen (18) months (or in the case of leases related to article 2 of the PD 9 months), can terminate the lease for private use, namely for the exercise in the lease of the activities of article 1 par. a ‘to c’ or of the activities of article 2 mentioned above, by the owner, his children or his wife. With the previous repealed provision, the aforementioned deadline was three (3) years for the termination of the cases of article 1 and 18 months for the termination of the leases of article 2.

• Also, in the case c of par. 2 of article 13 of law 4242/2014, par. 1 of article 23 is amended. This article concerns the lessor’s right to terminate due to reconstruction, a) after the end of the contractual period, except if this period exceeds 6 years, in which case the termination can be made after 6 years in each case, b) after 18 months from the start of the lease in case the contractual period is less than 18 months or the lease has drawn up or of indefinite duration, c) after the lapse of 9 months from the start of the lease in the cases of article 2 of P.D. (law firms, accounting firms, doctor’s offices, etc.), if the contractual lease period is less than nine (9) months or the lease has an indefinite duration. These deadlines according to the repealed provision of article 23 were 12 years (for case a ‘), three years (for case b’) and 18 months (for case c ‘) respectively.

• According to the circumstance d of par.2 of article 13 of law 4242/2014, par. 1 and 2 of article 29 of P.D. are also replaced. These paragraphs concern the compensation of the lessee due to the termination by the lessor for private use (articles 16 and 17) or for reconstruction (article 23). In this case, according to the new provision, the lessor owes the tenant as compensation at the time of termination a rent paid for eight (8) months in the termination for private use and six (6) months in the termination for reconstruction. According to par. 2 of the new article 29, at the request of the tenant in the Court, the compensation can be increased to a rent paid of 15 months for the private use and 9 months for the reconstruction. The corresponding previous compensations were doubled, i.e. 16 and 12 months of regular compensation without a court decision and a maximum of 30 and 18 months with a court decision for complaints due to private use or reconstruction respectively (former Article 29).

• Article 30 of the PD 34/1995 is also amended according to the circumstance of par. 2 of article 14 of law 4242/2014, which concerns the compensation due to exercising in the lease of a similar company after a complaint for private use or reconstruction (the so-called intangible commercial value). This compensation according to the new par. 1 of article 30 is equal to 15 monthly rents, if exercised 1 year after the payment of the rent for the above reasons, business similar to the one exercised by the lessee. Under paragraph 2 the Court may increase the amount up to 20 monthly rents. The corresponding compensations were again double according to the old provision of Article 30 and corresponded to 30 monthly rents without a court decision and a maximum of 40 monthly rents with the issuance of a court decision.

• With the new provisions of law 4242/2014, articles 60 and 61 of the PD were abolished. They concerned the payment of compensation as intangible commercial value (specifically the obligation to pay compensation of 24 months for the return of the lease by the lessee) but also provided for the 4-year mandatory extension of the lease in case of non-filing of a claim for rent by the lessor after the lapse of 9 months from the end of the 12-year lease.

• Thus, within the new law there is a special provision of a transitional provision for leases that expire (12 years or 9 months) until 31-8-2014 or were on 28/2/2014 in a 4-year extension. According to par. 3 of article 13 of law 4242/2014, the lessor must pay as compensation to the lessee 6 monthly rents (compared to 24 old with article 60 PD 34/1995) in case of termination by the lessor lease until 31-8-2014, which is to expire by the above date due to the completion of 12 years, or in case of lease that expired for the same reason until 31-8-2014, but did not expire the 9 months from the expiration , or in case of a lease that has expired and is under the 4-year extension of article 61 of P.D. 34/1995.

• The provisions of article 5 of the PD 34/1995 are maintained for the old leases which mean that for them the minimum duration of twelve years is maintained. However, with the abolition of the provision of article 61 of the P.D. 34/1995, the automatic 4-year extension is now permanently abolished after the expiration of the inactive (without expulsion lawsuit) 9 months after the end of the four-year period. Obviously the abolition does not apply to leases, whose 9 months have already expired before 28/2/2014 and therefore were automatically extended to four years.

• According to the explicit provision of subparagraph b of para 1 article 13 of this Law it is not possible to be agreed on new commercial leases (concluded after 28/2/2014) for a lease term shorter than the 3 years provided, otherwise conflicts with the explicit prohibition provision of the law (AP 1745/2007, LAW). The subsequent disagreement (with a document of a certain date) for less time does not seem to be valid after the explicit abolition of articles 5-6 of the P.D. 34/1995. However, the opinion about the possibility of a later provision in a contract (of a certain date) for a shorter period of 3 years can be grounded if the interpretation given for Law 4242/2014 is also followed for the PD 34/1995, (interpretation regarding the latest settlement agreement: see Supreme Court 450/2000, Legal Justice 2000, p.1354. The safest way until the publication of a court decision is the observance of 3 years.