Law No. 1.433 of 18 November 2016: a new status for office use leases

Law No. 1.433 of November 8, 2016, published in the Journal de Monaco of November 18, 2016, organizes a new status dedicated to office use leases by inserting in the Civil Code the new articles 1616-1 to 1616-7.

From now on, when premises are rented for the purpose of performing intellectual work and related services (including customer reception), the parties may, even if the work or services are otherwise related to commercial, industrial or craft activity as long as this activity is not carried out directly in the premises and no goods are delivered or stored there, conclude a lease escaping the provisions of Law No. 490 of 24 November 1948.

The new status therefore interests not only the liberal professions (which were however not subject to the status of the law n ° 490 of November 24, 1948 except to opt voluntarily for its application), but especially - and there is all the interest of the status - premises for the use of simple administrative office of all commercial or industrial activities.

Essentially, the lease for office use must be concluded in writing for a period of at least equal to 5 years, renewable by tacit agreement for a period equivalent to the absence of notified leave (by registered letter or bailiff) subject to a 6 months’ notice.

The tenant however benefits from a right of early termination: at the end of the period of 1 year from the effective date of the lease, he may terminate it at any time subject to six months' notice.

The rent is freely set between the parties and is, unless otherwise agreed, reviewed annually based on the INSEE’s index’s variation of the construction’s cost.

Finally, any payment of key money upon start of the lease, like any payment of a possible compensation in case of non-renewal of the lease, are expressly prohibited.

The originality of these new provisions lies in the fact that it is at the same time a purely voluntary status, since the law provides that it is only applicable if the parties have contractually chosen to submit to it, but nevertheless imperative, because the law specifies that it excludes the public order status of commercial leases. Also any clauses, stipulations and arrangements which would have the effect of obstructing these commercial provisions are void and of with no effect whatever the form.

If it has to be welcomed considering it meets a need of the economic actors by offering an alternative to commercial leases which may in some instances be burdensome in terms of time and financial constraints, this new status must however be apprehended and used with caution as long as he has not undergone the test by the Judge.

CMS Pasquier Ciulla & Marquet Real Estate team is at your disposal for any advice or writing request specially adapted to your needs