A seasonal lease between a business tenant (or commercial company) and the owner of commercial premises must be concluded for one season and can be for several tourist seasons. It has a maximum duration of six months per year, during which the tenant can operate their business. Many businesses are suitable for seasonal leases, such as clothing sales, ice cream parlors, crêpe stands, jewelry stores, snack bars, and restaurants.
When a business or company enters into a standard commercial lease, it is generally for a term of nine years. It allows the tenant to operate their business year-round. A commercial lease, on the other hand, is more suited to a permanent business in locations with year-round customer traffic. In principle, the tenant (business or commercial company) has the right to renew the lease at the end of its term.
Seasonal leases are often concluded in locations with high tourist activity for a few months each year (seaside, spa, or mountain resorts), but not exclusively (seasonal leases can also be used in large cities). The important thing is that there is seasonal activity.
A commercial tenant can have a separate lease agreement for each season, or a single agreement for one or more seasons per year. Similarly, there can be a single agreement for several years, provided the seasons are clearly individualized. The tenant (commercial or company) must have access to the premises for a maximum of six months per year. At the end of each season, the landlord must take back the keys.
Thus, a tenant with a seasonal lease does not have to pay rent and service charges during the off-season periods because they do not have access to the premises. This is one of the major advantages of a seasonal lease, unlike a commercial lease where the tenant is obligated to pay rent for the duration of the lease, and for a minimum of three years, even if they do not operate the business for several months.
The rent for a seasonal lease is often higher than that for a commercial lease in order to take into account the seasonality of the premises.
The landlord often requires a security deposit from the tenant and sometimes even full payment of the rent upfront to protect against potential non-payment. However, rent is usually payable at the beginning of the month. For commercial leases, the landlord may also require a security deposit, often equivalent to six months (Excluding charges) rent excluding charges, but this can be negotiated. They also frequently request a guarantee from the tenant company’s directors. Rent for a commercial lease is often paid quarterly in advance or in arrears.
In a standard commercial lease, the rent is generally capped. If there are no specific clauses (indexation based on a predetermined index, rent variation based on turnover), the Commercial Rent Index will apply. The rent for a seasonal lease, often higher, can be renegotiated at the end of each contract.
Unlike a commercial lease, a seasonal lease does not have an automatic right to renewal for the tenant. A seasonal lease can be renewed at the end of each term. In theory, it can be renewed indefinitely. The condition is that the premises are not made available to the tenant for more than six months per year. In practice, the tenant must return the keys at the end of each season; otherwise, the lease could be reclassified as a commercial lease, even if the tenant is not operating the business. In this case, the landlord could be entitled to claim rent from the tenant for the off-season. To avoid this, it is advisable to include a clause in the seasonal lease stipulating that the landlord will provide the tenant with the keys to the premises free of charge during the off-season, a period during which, for example, the tenant could store equipment.
At the end of the commercial lease, the tenant can request a renewal. If they do not, the lease is automatically renewed (tacite reconduction). However, at the end of the lease, the seasonal tenant no longer has the right to use the premises and must vacate them. The seasonal lease ends automatically upon its expiry, with no formalities required from the property owner. The seasonal lease may, however, stipulate otherwise, for example, the circumstances and notice periods under which termination may be given by either the landlord or the tenant.
Finally, a commercial tenant is entitled to compensation representing the value of their business (plus moving expenses and the cost of layoffs) if the landlord refuses to renew the lease or issues a notice to quit (known as “eviction compensation”).
A seasonal tenant, however, is not entitled to any compensation at the end of the lease. This would be different if the lease, although labeled “seasonal,” were not actually seasonal. This could be the case if the seasonal tenant operates the premises for more than six months a year or if the tenant continues to operate the premises between two seasons. The fact that seasonal leases are renewed for years, with the same tenant, in the same premises, for the same activity, and that the tenant operates the premises permanently, thus lacking objective justification for the seasonal nature of the activity, allows the seasonal lease to be reclassified as a commercial lease.
The operating contracts concluded by the business and their duration (for example, employment contracts, premises insurance, landline telephone, electricity and gas consumption) can prove that the tenant is engaged in a non-seasonal activity.
The tenant has two years from the date of the contract’s signing to petition the court for reclassification in order to obtain compensation for eviction in the event of termination or non-renewal of the lease by the landlord. However, if this action is successful, the landlord will also be able to demand rent payments from the tenant every month of the year for the duration of the lease, which is generally nine years.
Some contracts, known as temporary occupancy agreements, are entered into by businesses or commercial companies with municipalities on their private property (e.g., ski resorts) for one or more seasons. These are also subject to reclassification as commercial leases, and therefore the municipality will have to pay the operator compensation for eviction in the event of non-renewal of the contract.
This affects many businesses that have entered into temporary occupancy agreements with municipalities, often lasting several years. These agreements stipulate that the tenant must carry out significant works at their own expense (for example: sealing the chimney flue of a barbecue to allow its use for cooking, installing a three-phase electrical outlet in the kitchen, repairing the water treatment system, upgrading a septic tank, completing the necessary paperwork for telephone connection, and restoring the premises, such as painting and cleaning). Often, under these agreements, the tenant is responsible for repairs and maintenance. If the municipality terminates the contract, the tenant can request that it be reclassified as a commercial lease, since they have worked for more than six months a year for several years, and there is no justification for using a seasonal contract.
Finally, just like a commercial tenant, a seasonal tenant can certainly apply for permission to occupy public space, such as an outdoor terrace, to increase their revenue by creating additional commercial space (extra seating, additional sales area) in a ski resort or seaside resort.
In conclusion, it is highly recommended to seek advice from a specialized lawyer before entering into seasonal leases to ensure the security of financial, tax, and legal transactions, and to optimize revenue and profits.