Pop-up stores have become very popular over the past few years. Retailers set up shop in strategic locations for a few weeks or months to test new products or liquidate their stock. Until now, retailers have had to resort to a short-term occupancy agreement to rent these points of sale. Now they can sign a short-term lease agreement of up to one year.
THE NEED FOR THE SHORT-TERM LEASE AGREEMENT
Brussels didn’t have a specific legal framework for short-term commercial leases in place. The spirit of the law of 30 April 1951 on commercial lease agreements doesn’t reflect the current economic climate in that it only covers nine-year leases. “Pop-ups” called for a new legal framework.
Of course, there were already pop-ups in Brussels, but they used a complex legal construct to avoid general commercial lease rules. The parties used a “short-term occupancy agreement” to meet the occasional requirements of temporary rentals. However, this temporary solution did not provide the parties with full protection. The legal shortcoming required them to establish short-term leases which were fragile due to the shaky legal framework.
The Brussels-Capital Region intends to achieve the following with the short-term lease agreement:
- Boost retail;
- Fight retail vacancy;
- Provide a legal framework for an existing situation;
- Encourage young retailers to open businesses;
- Align with the other two regions; and,
- Promote innovative concepts.
This new legal framework can provide leverage to support the development of urban retailing. It will indirectly promote the spirit of entrepreneurship and the regeneration of retail.
WHAT IS THE SCOPE OF APPLICATION?
It is a written agreement between the parties covering the rental of real estate or portions of real estate which are used primarily by the tenant for the purposes of retailing or artisanal work involving direct contact between the tenant and the public and which are the subject of a lease expressly agreed for a period of one year or less.
HOW LONG IS THE SHORT COMMERCIAL LEASE?
The maximum rental period is one year. The rental can be shorter.
The tenant is not entitled to request tacit renewal of the lease. Renewal requires a written agreement between the parties without, however, the total length of the agreements exceeding one year.
This is important. As soon as the short-term lease is extended via written agreement by the two parties, it comes under the scope of application of Book III, Title VIII, Chapter II, Section II bis of the Civil Code and is deemed to be agreed for nine years, as of the date on which the initial short-term lease came into effect.
HOW IS A SHORT-TERM LEASE AGREEMENT ENDED?
The tenant can terminate the lease at any time with a notice period of one month, which takes effect on the first day of the month following notification. The parties can also end the lease at any time on condition that the two parties agree in writing. Note that Article 7 explicitly excludes any compensation for the tenant, unless otherwise agreed.
HOW CAN I FIND OUT IF I CAN RECOVER MY DEPOSIT?
The parties are required to conduct an inventory of the property at the start and end of the lease. In the event that an expert is consulted, the fees are split equally between the parties. If the lessor requests a deposit to ensure compliance with the lease obligations, it cannot exceed one month’s rent. A deposit is not mandatory.
WHAT ABOUT RENOVATIONS?
The tenant's right to carry out work is conditional on providing the lessor with prior notification. Once the lessor has been informed, they can oppose the work within 10 business days for valid reasons, i.e. reasons which, if sufficiently documented, can include compromised safety, health or the aesthetic value of the property, among other reasons, given that “valid reasons” can be interpreted in this case as an overall refusal on the part of the lessor.
In addition, the lessor is entitled to forbid any changes in the agreement, given its duration.
When changes are made at the tenant’s expense, the lessor can demand the return of their property to its original state, unless there is an agreement to the contrary. They are not required to pay any compensation in the event that they retain the changes made.
TERMINATION OF THE LEASE AND ALIENATION OF THE LEASED PROPERTY
The lease can only be transferred if there is a written agreement between the lessor and the tenant. The party acquiring the property, whether free or for a consideration, is required to comply with the agreed-to obligations of the duly dated lease.
The new short-term lease order came into effect on 19 May 2019 and is applicable to leases entered into after that date.