Commercial Lease Disputes: Your Rights as Tenant or Landlord

A commercial lease dispute can directly threaten the continuity of your business. Whether it concerns mounting rent arrears, a landlord who refuses to remedy defects, or a disagreement over the rent after five years — the stakes are high and the legal rules complex. Dutch tenancy law for commercial premises within the meaning of Article 7:290 of the Dutch Civil Code (DCC) differs in crucial respects from residential tenancy law.

In this article, mr. Vulto discusses the most common commercial lease disputes and the legal frameworks within which they are resolved. Whether you are a tenant or a landlord: understanding your legal position is the difference between winning and losing.

Commercial Premises Under Section 290 DCC: A Distinct Regime

Dutch tenancy law for commercial premises under Article 7:290 DCC — think of retail shops, hospitality venues, craft businesses and hotels — has a semi-mandatory character. This means that parties may not deviate from the statutory provisions to the detriment of the tenant, unless the court approves. The ROZ conditions (Council for Real Estate Matters) are used in virtually every commercial lease agreement and contain far-reaching exoneration clauses that strengthen the landlord's position.

It is essential to understand that the ROZ conditions do not always hold up. Provisions that conflict with mandatory law or that are unacceptable according to the standards of reasonableness and fairness may be set aside by the court.

Rent Arrears and Eviction

The most common ground for a lease dispute is rent arrears. As a landlord, you want to be able to act swiftly. The general rule is clear: where rent arrears amount to at least three months, the sub-district court will in principle dissolve the lease agreement and order the eviction of the commercial premises.

However, this is not automatic. The court weighs all the circumstances. Does the tenant have a counterclaim based on defects? Has a payment arrangement been proposed? Practice shows that a well-substantiated defence can delay or even prevent eviction. As a tenant, it is wise not to wait, but to proactively seek legal advice as soon as the arrears begin to accumulate.

Defects Regime: Rent Reduction for Defects

A defect within the meaning of Article 7:204 DCC is any condition or characteristic of the leased property that limits its enjoyment. Think of leaks, broken installations, vermin or a non-functioning air conditioning system. The landlord is obliged to remedy defects, unless this is impossible or requires expenditure that cannot reasonably be demanded.

Under Article 7:207 DCC, the tenant may claim a rent reduction proportionate to the diminished enjoyment. However, there is an important pitfall: in most ROZ contracts, the right to rent reduction is contractually excluded. Whether this exclusion is valid depends on the circumstances. In cases of serious defects that effectively render the use of the commercial premises impossible, reliance on the exoneration clause may be deemed unacceptable according to the standards of reasonableness and fairness.

Rent Review After Five Years

Upon expiry of the initial lease term — typically five years — both tenant and landlord may seek a rent review under Article 7:303 DCC. The revised rent is determined by reference to comparable commercial premises in the area over the preceding five years.

In practice, this leads to complex discussions about the benchmark. Which properties are truly comparable? How are incentives (rent-free periods, fit-out contributions) factored in? An expert report from a court-appointed expert is often decisive. It is advisable to seek legal advice on the available options well before the first term expires.

Assignment of Lease Upon Business Transfer

If you sell your business, you will want to transfer the lease to the buyer. The landlord is not always willing to agree. Article 7:307 DCC therefore gives the tenant the right to assignment of the lease: the court may, at the tenant's request, grant authorisation to substitute a third party as tenant.

The requirements are that the tenant has a compelling interest in the transfer and that the proposed new tenant offers sufficient guarantees for performance of the lease. In practice, assignment of lease is regularly granted, provided the new tenant is financially sound and will operate a comparable business.

Eviction Protection Versus Termination

The tenant of Section 290 commercial premises enjoys extensive tenancy protection. The landlord may only terminate the lease on grounds exhaustively listed in the statute, including urgent personal use and poor business conduct. After termination by the landlord, the lease does not automatically end: if the tenant does not consent, the landlord must initiate proceedings before the sub-district court.

Even in the case of a valid termination, the tenant is entitled to a contribution towards relocation and fit-out costs. This compensation can be substantial, particularly for established hospitality businesses or shops with costly fixtures. It is worth negotiating firmly on this point.