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Commercial leases referring to a "share of common parts": pathes worth exploring to avoid (unpleasant) surprises...

  • France
  • Real estate

24-05-2017

There have been various legislative and regulatory measures for quite a long time now, which aim is to protect the party who is considered to be the weakest in contractual relationships.

This was notably the case of e.g. “consumers” and also (more recently) “tenants” (“Alur” law of 24th March 2014, “Pinel” law of 18th June 2014, etc.) or even the “contracting party” in general (see for example the ordinance of 10th February 2016 reforming French contract law).

Notwithstanding this trend, practitioners, in particular in relation to commercial leases, never stop trying to “counterbalance” those protective effects, and more generally to preserve the financial return the landlord expects from its property.

That's fair enough, some part of the market will say.

In relation to office premises for example, a number of leases about the premises, which are located in buildings rented by several tenants, now contain contractual provisions specifying the surface area of the relevant premises, but with the following provision written next to it: “share of common parts included”.

This provision enables landlords to display an aggregate surface area, which is in fact the sum of two types of surface areas, namely: first, the private parts intended for an exclusive use by the tenant (the offices fall into that category) and, second, a share (defined by the landlord) of the surface area of the common parts that are related to said private premises (e.g. a share of the surface area of landings, staff communal areas, corridors, of a main staircase, etc.).

A future tenant won’t necessarily pay much attention to the reference made to a “share of common parts included”. But he should, as in reality, this share may well represent from 10% to 30% of the total surface area initially announced by the landlord and/or its agents (in the letter of interest and/or in the lease).

 

It means for the tenant, that he will not only pay in respect of each square meter of the “share of common parts” the same rent as the one he pays in respect of the surface areas that are “really” private surface areas, but also that the real accommodation capacity in the premises for his personnel shall be lower than the one that was calculated initially.

It is very difficult for a tenant, whether he is French or foreign, to accept to realize that the initial surface area he thought he would rent is in fact not the private surface area, and that he is notably paying a higher rent per square meter than the one he thought initially.

At that stage, it means that the contractual documentation is generally already concluded, meaning it is likely to be difficult using such documentation to the benefit of the tenant (although this needs to be confirmed on a case by case basis). For example, contemplating to ask a chartered surveyor a measuring, so as to obtain a reduction of the rent, has little chance of succeeding. This is because the lease (notably) generally provides that the tenant expressly accepts that there may be no reduction of the rent following a new measuring of the premises, even if the discrepancy in surface areas revealed by the new measuring is of more than 5%.

In fact, the solution for the tenant is rather to be found during the “pre-contractual” stage. The idea is for the tenant to obtain, as soon as possible (even before signing the letter of interest), a plan of the premises drawn up by a chartered surveyor, mentioning a measuring and a precise description of the surface areas (private parts, common parts, and share), as well as to request the supporting documents concerning the accommodation capacity of the relevant premises.

Then, on the basis of those documents, the tenant will be in a position to discuss with the landlord about the “private” surface areas and the related “share of common parts”, in order to, as the case may be, avoid future unpleasant surprises, even if it means agreeing on a specific rent per m² in respect of those surface areas corresponding to the “share of common parts”. This specific rent will obviously be lower than the one payable in respect of the private parts of the premises.

Otherwise, watch out for unpleasant surprises…