Commercial leases & The Civil Code
NATURE OF LEASE
1851. Lease is a contract by which a person, the lessor, undertakes to provide another person, the lessee, in return for a rent, with the enjoyment of movable or immovable property for a certain time.
The term of a lease is fixed or indeterminate.
1852. The rights resulting from the lease may be published.
Publication is required, however, in the case of rights resulting from a lease, with a term of more than one year, of a road vehicle or other movable property determined by regulation, or of any movable property required for the service or operation of an enterprise, subject, in the latter case, to the exclusions provided by regulation; the rights may be set up against third persons from the date of the lease provided they are published within 15 days. A lease with a term of one year or less is deemed to have a term of more than one year if, by the operation of a renewal clause or other covenant to the same effect, the term of the lease may be increased to more than one year.
The transfer of rights under a lease requires or is open to publication, according to whether the rights themselves require or are open to publication.
1853. The lease of movable property is not presumed; a person using the property by sufferance of the owner is presumed to have borrowed it by virtue of a loan for use.
The lease of immovable property is presumed where a person occupies the premises by sufferance of the owner. The term of the lease is indeterminate; the lease takes effect upon occupancy and entails the obligation to pay a rent corresponding to the rental value.
RIGHTS AND OBLIGATIONS RESULTING FROM LEASE
§ 1. — General provisions
1854. The lessor is bound to deliver the leased property to the lessee in a good state of repair in all respects and to provide him with peaceable enjoyment of the property throughout the term of the lease.
He is also bound to warrant the lessee that the property may be used for the purpose for which it was leased and to maintain the property for that purpose throughout the term of the lease.
1855. The lessee is bound to pay the agreed rent and to use the property with prudence and diligence during the term of the lease.
1856. Neither the lessor nor the lessee may change the form or destination of the leased property during the term of the lease.
1857. The lessor has the right to ascertain the condition of the leased property, to carry out work thereon and, in the case of an immovable, to have it visited by a prospective lessee or acquirer; he is, however, bound to exercise his right in a reasonable manner.
1858. The lessor is bound to warrant the lessee against legal disturbances to enjoyment of the leased property.
Before pursuing his remedies, the lessee shall notify the lessor of the disturbance.
1859. The lessor is not bound to make reparation for injury resulting from disturbance to enjoyment of the property caused by the act or omission of a third person; he may be so bound where the third person is also a lessee of that property or is a person the lessee allows to use or to have access to the property.
However, if the enjoyment of the property is diminished by the disturbance, the lessee retains his other remedies against the lessor.
1860. A lessee is bound to act in such a way as not to disturb the normal enjoyment of the other lessees.
He is bound, towards the lessor and the other lessees, to make reparation for injury that results from a violation of that obligation, whether the violation is due to his own act or omission or to the act or omission of persons he allows to use or to have access to the property.
In case of violation of this obligation, the lessor may apply for resiliation of the lease.
1861. A lessee who is disturbed by another lessee or by persons whom another lessee allows to use or to have access to the property may obtain, according to the circumstances, a reduction of rent or the resiliation of the lease, if he notified the common lessor of the disturbance and if the disturbance persists.
He may also recover damages from the common lessor unless the lessor proves that he acted with prudence and diligence; the lessor has a recourse against the lessee at fault to be indemnified for the injury suffered by him.
1862. The lessee is bound to make reparation for injury suffered by the lessor by reason of any loss sustained by the leased property, unless he proves that the loss is not due to his fault or that of persons he allows to use or to have access to the property.
Where the leased property is an immovable, the lessee is not bound for injury resulting from a fire unless it is proved that the fire was due to his fault or that of persons he allowed to have access to the immovable.
1863. The nonperformance of an obligation by one of the parties entitles the other party to apply for, in addition to damages, specific performance of the obligation in cases which admit of it. He may apply for the resiliation of the lease where the nonperformance causes serious injury to him or, in the case of the lease of an immovable, to the other occupants.
The nonperformance also entitles the lessee to apply for a reduction of rent; where the court grants it, the lessor, upon remedying his default, is nonetheless entitled to the re-establishment of the rent for the future.
§ 2. — Repairs
1864. The lessor is bound, during the term of the lease, to make all necessary repairs to the leased property other than minor maintenance repairs, which are assumed by the lessee unless they result from the age of the property or superior force.
1865. The lessee shall allow urgent and necessary repairs to be made to ensure the preservation or enjoyment of the leased property.
A lessor who makes such repairs may require the lessee to vacate or be dispossessed of the property temporarily but, if the repairs are not urgent, he shall first obtain the authorization of the court, which also fixes the conditions required to protect the rights of the lessee.
The lessee retains, according to the circumstances, the right to obtain a reduction of rent, to apply for the resiliation of the lease or, if he vacates or is dispossessed of the property temporarily, to demand an indemnity.
1866. A lessee who becomes aware of a serious defect or deterioration of the leased property is bound to inform the lessor within a reasonable time.
1867. Where a lessor fails to make the repairs or improvements he is bound to make under the lease or by law, the lessee may apply to the court for authorization to carry them out himself.
If the court grants authorization to make the repairs or improvements, it determines their amount and fixes the conditions to be complied with in carrying them out. The lessee may then withhold from his rent the amount of the expenses incurred to carry out the authorized work, up to the amount fixed by the court.
1868. After the lessee has attempted to inform the lessor, or has informed him and the lessor fails to act in due time, the lessee may undertake repairs or incur expenses, even without the authorization of the court, provided they are urgent and necessary to ensure the preservation or enjoyment of the leased property. The lessor may intervene at any time, however, to pursue the work.
The lessee is entitled to reimbursement of the reasonable expenses he incurred for that purpose; he may, if necessary, withhold the amount of such expenses from his rent.
1869. The lessee is bound to render an account to the lessor of the repairs or improvements made to the property and the expenses incurred and to hand over to him the vouchers for such expenses and, in the case of movable property, the replaced parts.
The lessor is bound to reimburse the lessee for any amount in excess of the rent withheld, but not in excess of the amount the lessee was authorized to disburse, where that is the case.
§ 3. — Sublease of property and assignment of lease
1870. A lessee may sublease all or part of the leased property or assign the lease. In either case, he is bound to give the lessor notice of his intention and the name and address of the intended sublessee or assignee and to obtain the lessor’s consent to the sublease or assignment.
1871. The lessor may not refuse to consent to the sublease of the property or the assignment of the lease without a serious reason.
If he refuses, he is bound to inform the lessee of his reasons for refusing within 15 days after receiving the notice; otherwise, he is deemed to have consented.
1872. A lessor who consents to the sublease of the property or the assignment of the lease may not exact any payment other than the reimbursement of any reasonable expenses resulting from the sublease or assignment.
1873. The assignment of a lease discharges the former lessee of his obligations, unless, where the lease is not a lease of a dwelling, the parties agree otherwise.
1874. Where the lessor brings an action against the lessee, the sublessee is not bound towards the lessor for any amount except the rent for the sublease which he owes to the lessee; the sublessee may not set up advance payments.
Payments made by the sublessee either under a stipulation that is included in his lease and has been made known to the lessor, or in accordance with the usage of the place, are not considered to be advance payments.
1875. Where the nonperformance of an obligation by a sublessee causes serious injury to the lessor or the other lessees or occupants, the lessor may apply for the resiliation of the sublease.
1876. Where a lessor fails to perform his obligations, the sublessee may exercise the rights and remedies of the lessee to have them performed.
TERMINATION OF THE LEASE
1877. A lease with a fixed term terminates by operation of law upon expiry of the term. A lease with an indeterminate term terminates upon resiliation by one of the parties.
1878. A lease with a fixed term may be renewed. The renewal must be express, unless the lease is of an immovable, in which case the renewal may be tacit.
1879. A lease is renewed tacitly where the lessee continues to occupy the premises for more than 10 days after the expiry of the lease without opposition from the lessor.
In that case, the lease is renewed for one year or for the term of the initial lease, if that was less than one year, on the same conditions. The renewed lease is also subject to renewal.
1880. The term of a lease may not exceed 100 years. If it exceeds 100 years, it is reduced to that term.
1881. Security given by a third person to secure the performance of the obligations of the lessee does not extend to a renewed lease.
1882. A party who intends to resiliate a lease with an indeterminate term shall give the other party notice to that effect.
The time for giving the notice is the same as the rent payment period, or three months if the rent payment period exceeds three months. However, if the leased property is a movable, the time for giving the notice is 10 days, regardless of the rent payment period.
1883. A lessee against whom proceedings for resiliation of a lease are brought for non-payment of the rent may avoid the resiliation by paying, before judgment, in addition to the rent due and costs, interest at the rate fixed in accordance with section 28 of the Tax Administration Act (chapter A-6.002) or at any other lower rate agreed with the lessor.
1884. A lease is not resiliated by the death of either party.
1885. Where the lease of an immovable is for a fixed term, the lessee shall allow the premises to be visited and signs to be posted, for leasing purposes, during the three months preceding the expiry of the lease, or during the month preceding it if the lease is for less than one year.
Where the lease is for an indeterminate term, the lessee is bound to allow such activities from the date of the notice of resiliation.
1886. Voluntary or forced alienation of leased property or extinction of the lessor’s title for any other reason does not terminate the lease by operation of law.
1887. The acquirer or the person who benefits from the extinction of title may resiliate the lease, if it is a lease with an indeterminate term, in accordance with the ordinary rules pertaining to resiliation contained in this section.
In the case of the lease of an immovable with a fixed term and if more than 12 months remain from the date of alienation or extinction of title, he may resiliate it upon expiry of the 12 months by giving the lessee written notice of six months. He may not resiliate the lease if it was registered at the registry office before the act of alienation or the act by which the title is extinguished was so registered.
In the case of the lease of a movable with a fixed term, notice is of one month.
1888. The total expropriation of leased property terminates the lease from the date on which the expropriating party is allowed to take possession of the property in accordance with the Expropriation Act (chapter E-24).
In the case of partial expropriation, the lessee may, according to the circumstances, obtain a reduction of rent or the resiliation of the lease.
1889. The lessor of an immovable may obtain the eviction of a lessee who continues to occupy the leased premises after the expiry of the lease or after the date for the handing over of the premises agreed upon during the term of the lease; the lessor of a movable may, in the same circumstances, obtain the handing over of the property.
1890. Upon termination of the lease, the lessee is bound to hand over the property in the condition in which he received it but he is not liable for changes resulting from aging or fair wear and tear of the property or superior force.
The condition of the property may be established by the description made or the photographs taken by the parties; if it is not so established, the lessee is presumed to have received the property in good condition at the beginning of the lease.
1891. Upon termination of the lease, the lessee is bound to remove all the constructions, works or plantations he has made.
If they cannot be removed without deteriorating the property, the lessor may retain them by paying their value to the lessee or compel the lessee to remove them and to restore the property to the condition in which it was when he received it.
If the property cannot be restored to its original condition, the lessor may retain the constructions, works or plantations without indemnity.
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