We recently posted a blog on residential rental contracts in Malta. This article instead will focus on rental contracts (also known as commercial lease agreements) of commercial property, such as retail outlets, catering establishments, offices, factories, warehouses, clinics, garages for commercial use, and so on.
The Maltese law distinguishes commercial property as property which is used for business purposes in order to generate profit. Generally, a commercial lease agreement requires a contract to include standards details such as property to leased, agreed usage, duration of agreement, rent amount to be paid and how, otherwise it could be deemed as null.
When signing a commercial lease agreement, it is important to understand certain legal terms and understand certain legal conditions. Let’s have a look here at the most common and important terms on such contracts:
Notice period: A time between the official notification of vacating the premises until the day when one needs to vacate the premises.
Di fermo period: A time where the tenant cannot withdraw from the contract and must pay rent during this definite period.
Di rispetto period: A period that gives the tenant the opportunity to terminate the agreement during that period by giving an official notice as per agreement.
Renewal clause: A condition that allows the lease to be extended upon expiration of a term.
Default: A failure to complete a legal obligation such as the payment of rent.
Eviction: The legal process to pull a tenant out of the property.
Assignment: The transfer of rights of property from one person (or business) to another.
Security deposit: A sum of money deposited by a tenant with the property owner as security which is normally kept until the end of the lease.
Sublease: A lease by the tenant to a third party, where the original tenant remains completely liable for the rent.
When renting a commercial property, it’s very important to know which commercial permits it can operate in, to make sure that they are right for your business model. These permits include Planning Authority permits, environmental permits, and other specific licenses depending on your business line (such as catering establishments from Malta Tourism Authority). Additionally, you will also require applying for utilities such as water and electricity with commercial rates.
Before signing a commercial lease agreement, it is important to understand the difference between commercial and residential agreements. If you would like advice or require an expert to review such agreements, whether you are the owner of a commercial property, or the one renting it out, do not hesitate to contact us.
This article is for information purposes only and should not be construed as legal advice.
Article written by Ms Charlene Sciberras, B.A. (Hons), guest writer, is a marketing and business administration specialist with a special focus on corporate, accounting, and legal matters.
Sciberras Advocates founded by Dr Adrian Sciberras, is a law firm based in Malta. The firm prides itself to be multi-disciplinary, innovative and flexible in order to meet the changing times and any challenges in the local and international legal scenario. No matter what private or corporate complex demands are called for, Sciberras Advocates offers practical and cost-effective legal solutions to achieve your desired results. You may reach Sciberras Advocates by phone on +35627795222 or via email on [email protected].