Newsletter 11/2014 – Major Commercial Leases

Newsletter 11/2014 – Major Commercial Leases

The liberalization of major commercial leases introduced by Law No. 164 of November 11th, 2014 converting Law-Decree No. 133 of September 12th, 2014

 Law No. 164 of November 11th, 2014, converting with amendments Decree-Law No. 133 of September 12th, 2014 (the so-called “Unblock Italy Decree”) introduces, amongst various others, a regulation aimed at granting certain increased powers to the private autonomy in the field of non-residential leases pursuant to article 27 of Law No. 392 of July 27th, 1978 (the “Law on Leases”) and applicable to commercial, industrial and hospitality destination leases.

Such regulation introduces a derogation to article 79, first paragraph, of the Law on Leases setting forth the invalidity of contractual provisions aimed at limiting “the term of lease agreements or granting to the lessor an increased rent or conferring any advantage to the lessor which is in conflict with the provisions of this law”.

In particular, article 18 of the Unblock Italy Decree (converted with amendments into Law No. 164 of November 11th, 2014) provides for the insertion of the following new paragraph to article 79 of the Law on Leases:

“By way of derogation to the provision of the first paragraph, when entering into a lease agreement with use destination other than the residential use, including the leases for hospitality use, in respect of which an annual rent higher of euro 250,000 is agreed, and that do not relate to units of historical interest by regional or municipal statutes, the parties are entitled to agree upon terms and conditions that derogate to the provisions of this law. The lease agreements referred to in the preceding paragraph shall be proven in writing. Such provisions shall not apply to the agreements in force as of the effective date of conversion of this decree. In respect of lawsuits pending up to the effective date of conversion of this decree shall be governed for all purposes by the provisions previously in force”.

It is important to underline that this amendment does not modify specific aspects of the Law on Leases, but enables the parties to fully derogate from the provisions of such law whenever an annual rent higher than Euro 250,000 is agreed upon. Pursuant to the new measure, it will be possible to stipulate terms and conditions which, if stipulated before the entry into force of the Unblock Italy Decree, would have been null and void under article 79, first paragraph, of the Law on Leases.

Therefore, insofar as the applicable requirements are met (i.e. minimum amount of the annual rent, non-residential use destination, units of without historical interest, written contract) and the general provisions of the Italian Civil Code on leases (articles 1571–1614) are respected, it will be possible to stipulate in example:

(i) a contractual term even shorter than the minimum term provided by the law (i.e.: six-year term, renewable);

(ii) criteria of revision and updating of the rent not linked only to monetary depreciation, notwithstanding the provisions of the article 32 of the Law on Leases;

(iii) further exclusions for denying lease renewals in addition to the cases contemplated by the Law of Leases;

(iv) amendments to the rights of the tenant with respect to pre-emption and indemnity for loss of goodwill;

(v) a completely autonomous regulation of sub-leases and /or lease assignments.

This new discipline is not retroactive and shall apply only with reference to new contracts stipulated after the entry into force of the law is effective, namely as of November 12th, 2014.

 

The aim pursued by the legislator is to improve the profitability of the commercial leases’ market, with particular reference to the large retail sector and the tourist accommodation industry, in order to favor investments in our country, also by foreign entities.

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