Drafting a Retail Space Lease Agreement

A retail space lease agreement sets out the arrangements between landlord and tenant regarding a space accessible to the public for the supply of goods or services, such as a shop, hospitality establishment, or takeaway business. This type of space falls under Article 7:290 of the Dutch Civil Code, also known as "290 business premises." As soon as you lease or rent a property where products are sold directly to customers or where food and drink are consumed on the premises, you need an agreement tailored to this specific regime.

The difference compared to other business premises (office or storage under Article 7:230a of the Dutch Civil Code) is significant. For 290 business premises, a mandatory system of tenancy protection applies that offers the tenant extensive security. A contract incorrectly drafted as office space, or one that disregards statutory time limits, leads to ambiguity and costly disputes. Therefore, a good retail space lease agreement begins with the correct legal classification of the space.

The core of the agreement consists of the description of the leased property, the contractual purpose, the rent, and the service charges. The purpose clause is decisive: it establishes the type of business for which the premises may be used and thereby limits the tenant's operational possibilities. In addition, the agreement regulates the lease term, the indexation of the rent, the security deposit or bank guarantee, the division of maintenance responsibilities, and the rules regarding subletting and substitution.

In practice, the ROZ (Council for Real Estate) model for retail space, along with the accompanying general provisions, is almost always used. This model offers a solid foundation but is originally landlord-friendly and contains options that must be consciously selected for each specific situation. Blindly adopting a standard model without tailoring the provisions to your specific situation is a common mistake.

For business premises classified as Section 290, statutory term protection applies pursuant to Article 7:292 of the Dutch Civil Code. An agreement entered into for five years or less is automatically extended after the initial period to a total of ten years. If a longer or shorter term is agreed upon, specific rules apply, but the basic principle remains that the tenant is assured of the enjoyment of the leased property for the first ten years, provided he fulfills his obligations.

During the first five years, the landlord may terminate the agreement only on two grounds: poor business management by the tenant or urgent personal use. After ten years, broader grounds for termination apply, including a general balancing of interests by the sub-district court judge. Termination must always take place at the end of a term, with a notice period of at least one year and by bailiff's writ or registered letter. Correct adherence to these time limits is essential; a termination sent too late or incorrectly is invalid.

The tenancy protection for business premises classified as Section 290 is largely of mandatory law in favor of the tenant. If you wish to include clauses that deviate from the statutory regulations to the detriment of the tenant—for example, a shorter term or a broader termination option—approval from the sub-district court is required pursuant to Article 7:291 of the Dutch Civil Code. Without such approval, the deviating clause is voidable, and the tenant can successfully oppose it.

Although a lease agreement can be concluded without specific formalities, written documentation is indispensable. Only in this way can the intended use, terms, and financial agreements be proven later. Also document the condition upon delivery, any renovations, and the state of the leased property, preferably with a delivery report, to prevent disputes at the end of the lease.

The rent is generally indexed annually according to an agreed index figure. In addition, Article 7:303 of the Dutch Civil Code offers both parties the option, after the expiration of an agreed term or in principle every five years, to request a further determination of the rent from the court if it no longer corresponds to comparable business premises in the area. In doing so, the court bases its decision on an average of the rents of comparable properties over a reference period.

It is advisable to carefully describe in the agreement how and when indexation takes place and whether the rent is inclusive or exclusive of VAT. Unclear or contradictory rent provisions lead to conflicts regarding the amount of rent and whether a rent revision is appropriate.

The greatest risk is an incorrect classification of the premises. If retail space is wrongly treated as other business premises, term protection is lacking and the tenant may unexpectedly lose their rights, or the landlord may find themselves bound by protection rules they did not intend. A second risk lies in the termination: grounds, time limits, and the manner of service require careful attention, and an error renders the termination invalid.

Furthermore, substitution (Article 7:307 of the Dutch Civil Code), whereby the tenant can transfer his business to a successor under the lease agreement, and the division of maintenance and defects are common sources of dispute. An agreement that leaves these subjects unregulated or unclear will result in costly disputes later on. The same applies to operating obligations, penalty clauses, and the security deposit: provisions agreed upon in advance prevent surprises.

A retail space lease agreement involves mandatory tenancy law, extensive term protection, and significant financial interests. A tailor-made contract that uses the correct classification, accurately sets out terms, and clearly regulates the intended use, rent, and maintenance allocation prevents years of uncertainty. Whether you are a landlord or a tenant, it pays to have the agreement legally reviewed or drafted before you sign.

MKB Juristen drafts your retail space lease agreement to measure, tailored to your situation and interests, for a fixed price in advance. This way, you know exactly where you stand and have a document that is legally sound and resilient to the specifics of 290 business premises.