Often referred to as a precarious lease, the derogatory lease is a contract that deals with the rental of premises for artisanal or commercial use. The duration of this lease contract does not exceed 3 years. This article presents some advantages and disadvantages of this lease contract.
The advantages of the precarious lease
This contract offers advantages for both the tenant and the landlord.
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For the tenant
One of the main advantages of the derogatory lease is its ability to allow the tenant to benefit from a trial period in advance. Thus, the tenant views the derogatory lease as an opportunity to test the premises before embarking on their project. If they plan to create a test store, meaning one that will not last, then this lease contract is the most suitable.
Compared to a traditional commercial lease, the precarious lease offers a significantly lower rent. Additionally, they would not be required to pay entry fees. This lease contract has no formalities or notice periods for vacating the premises. By taking a precarious lease, the tenant has time to gain the landlord’s trust in view of a future long-term contract signing.
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For the landlord
The precarious lease allows the landlord to assess the reliability of the tenant. This test is very important because it helps the landlord in their decision to grant or not grant a long-term contract to the tenant after the lease expires. It enables them to identify and avoid tenants who do not meet rent payment deadlines.
The landlord also has the option to freely set a price. On the other hand, they are not obliged to pay eviction compensation at the end of the precarious lease. They can easily reclaim their premises due to the absence of formalities or notice periods.
The disadvantages of the precarious lease
Just as this lease presents advantages for both parties, it also has disadvantages.
For the tenant
Upon signing the precarious lease contract, the tenant faces certain restrictions. Firstly, they do not have the right to renew the lease.
Legally, they cannot claim a renewal of the lease. The tenant is then obliged to vacate the premises at the expiration of the lease contract. Furthermore, they are not entitled to eviction compensation when the landlord decides to convert the precarious lease into a traditional commercial lease. Lastly, they cannot terminate the precarious lease early unless this has been stipulated in the contract.
For the landlord
Given the lack of protection for the tenant in this lease contract, it is difficult for the landlord to find a tenant for a precarious lease. They only have one month from the expiration of the precarious lease to compel the tenant to leave; otherwise, the lease would be reclassified as a traditional commercial lease. The landlord does not have the option to unilaterally terminate the derogatory contract early.