Yes, a commercial lease for retail space can be transferred to another tenant, but in virtually all cases this requires the landlord’s consent. The most commonly used legal route is assignment, whereby the new tenant fully takes over the rights and obligations of the departing tenant. This article answers the most frequently asked questions about the transfer of a commercial lease for retail space in the Netherlands.
Under what conditions can a lease be transferred?
A commercial lease for retail space may be transferred if the landlord gives consent, or if the court permits assignment on the basis of Article 7:307 of the Dutch Civil Code. The transferring party must demonstrate that a business transfer is taking place and that the new tenant offers sufficient financial guarantees to fulfil the lease obligations.
The law provides tenants of commercial space with a relatively strong position when it comes to assignment, but this does not mean that a transfer is automatically possible. There must always be a legitimate reason, such as the sale of a business, a merger, or a business transfer within a group of companies. Purely commercial advantage for the tenant, without an actual business transfer taking place, is not sufficient grounds.
In addition to the legal basis, practical conditions apply. The new tenant must genuinely continue the operation of the shop, and the financial soundness of that party plays a central role in the assessment by the landlord or the court.
What is the difference between assignment and subletting?
With assignment, a new tenant fully steps into the rights and obligations of the departing tenant. The original tenant is removed from the contract. With subletting, the original tenant remains responsible to the landlord and sublets the space to a third party. These are two fundamentally different legal structures.
Assignment is final: once the transfer is completed, the original tenant has no further rights or obligations towards the landlord. Subletting is more temporary in nature and creates an additional layer in the tenancy relationship. The original tenant remains liable if the subtenant fails to meet their obligations.
For retailers wishing to transfer their shop as part of a business sale, assignment is generally the appropriate route. Subletting is more commonly used in situations where the tenant temporarily does not make full use of the space but wishes to retain the contract. Both structures in principle require the landlord’s consent, unless the lease explicitly provides otherwise.
Can a landlord refuse a transfer?
Yes, a landlord can refuse the transfer of a commercial lease for retail space, but not always on valid grounds. In the event of a formal request for assignment, the tenant can go to court if the landlord refuses. The court then weighs the interests of both parties and assesses whether the refusal is reasonable.
A landlord has valid grounds for refusal if the new tenant is not sufficiently financially sound, if the intended operation does not fit the retail mix of the shopping area, or if there are well-founded doubts about the continuity of the business operations. However, a landlord may not refuse purely to get rid of a tenant or to negotiate a higher rent with a new tenant.
In practice, a refusal frequently leads to negotiations. Landlords sometimes impose additional conditions, such as a higher rent, additional securities, or amendments to the lease. It is advisable to seek sound legal and commercial advice in such negotiations, so that you do not agree to conditions that are not in line with market standards.
What does a lease typically say about transfer?
Most commercial leases for retail space contain a provision that explicitly governs transfer and assignment. The standard requirement is that the tenant needs prior written consent from the landlord for any form of transfer, subletting, or assignment. Failure to comply with this obligation is regarded as a serious breach.
In the Netherlands, the ROZ model lease agreement is frequently used for retail space. It contains provisions on assignment and subletting that sometimes limit the statutory rights of the tenant. It is important to know that contractual restrictions cannot entirely exclude the statutory rights to assignment, but they can make the process more difficult.
Some leases also contain provisions regarding change of control: a situation in which control over a company changes without the lease itself being formally transferred. Landlords often also wish to grant consent in such structures, because the actual tenant then changes without this being visible on paper. When receiving guidance on leasing retail space, this type of contractual detail is assessed as standard.
How does the transfer of a lease work in practice?
The transfer of a commercial lease for retail space proceeds in practice through a number of steps. First, the tenant submits a written request to the landlord, including information about the new tenant and the nature of the business transfer. This is followed by an assessment period, after which the landlord grants consent, imposes additional conditions, or refuses.
- Submitting a request: The tenant informs the landlord in writing of the intended transfer and provides relevant information about the acquiring party, such as annual accounts and a business plan.
- Assessment by the landlord: The landlord assesses the financial position of the new tenant and whether the intended operation is suited to the property and its surroundings.
- Negotiation of conditions: The landlord and tenant negotiate, where applicable, on additional conditions such as a bank guarantee or an adjustment to the rent.
- Recording in a deed: The transfer is recorded in a notarial or private deed of assignment, signed by all parties involved.
- Completion: After signing, the new tenant is bound by the existing lease, including the remaining term and all associated obligations.
The timeline of this process varies considerably. With a cooperative landlord and a solid acquiring party, it can be completed within a few weeks. In more complex situations or with a reluctant landlord, it can take months. A specialist retail agent such as KroesePaternotte can mediate in this process and significantly accelerate the procedure.
What are the risks of transferring a lease without consent?
Transferring a commercial lease for retail space without the landlord’s consent constitutes a serious breach of the lease agreement. This can lead to termination of the lease, a claim for eviction, and damages. In such a case, the landlord does not need to wait for a court ruling before taking action.
In addition to the risk of contract termination, as a tenant you also risk reputational damage. Landlords in the retail property market know each other well, and a tenant who circumvents contractual obligations makes things difficult for themselves in future lease negotiations. Particularly in prime locations in cities such as Amsterdam, Rotterdam, Utrecht, or Groningen, the network of owners and landlords is small and closely connected.
There is also a risk for the new tenant. If the assignment is not legally valid, the new party has no protection under tenancy law. The landlord can then reclaim the space without the new tenant being able to invoke tenancy law. This makes it essential for both parties to ensure that the transfer proceeds formally and correctly.
Are you unsure about the right approach to a transfer, or would you like to know what is in line with market standards in your situation? Contact KroesePaternotte for tailored advice. With lease data going back to 1984 and daily contact with owners and landlords throughout the Netherlands, we quickly assess whether a situation is feasible and what the best route is to follow. Also view our current range of available retail spaces if, in addition to the transfer, you are also looking for a new location.
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