Negotiating a commercial lease in Switzerland

The legal framework in one sentence

Leases are governed by articles 253 et seq. of the Code of Obligations. The protective rules against abusive rents and on extension of the lease also apply to commercial premises, but the contractual latitude there is far wider than for housing: the contract largely prevails over the default statutory regime.

Term and exit

A commercial lease is most often concluded for a firm initial term of five years, together with renewal options. The firm term protects the tenant against early termination and binds them just as much: during that period they owe the rent even if they cease trading, unless they present a solvent successor.

Failing agreement to the contrary, the statutory notice period for commercial premises is six months, for the customary local term or, if there is no such custom, for the end of a three-month rental period. At the end of the lease, the tenant may request a judicial extension, up to six years at most for commercial premises, if termination entails hardship and the landlord's interest does not prevail.

A long firm term with no exit option is a risk, not a security, while the retail concept is unproven. A short initial term with two five-year options gives the tenant the choice and leaves them the value of the lease.

Net rent, costs and service charges

Service charges are owed by the tenant only if they have been specifically agreed. A vague clause such as "usual charges" opens years of dispute: the list must be exhaustive and itemised — heating, hot water, electricity for common parts, caretaking, maintenance of installations, taxes.

Three points deserve to be written down in black and white: the allocation key between the tenants of the building, how often the statement is issued, and the right to inspect the supporting documents. A monthly instalment without a documented annual statement is blind billing.

Indexation and rent adjustment

A lease concluded for at least five years may provide for the rent to be indexed to the Swiss consumer price index. That is the most common and the most readable mechanism. The alternative is a stepped rent, which sets increments in francs at fixed dates in advance, with the advantage of making the future rent perfectly predictable.

Outside these two mechanisms, a rent increase must be notified on an official form and may be contested. A lease providing both for indexation and for a free adjustment clause stacks two incompatible regimes: a warning sign on reading.

Works, fit-out and reinstatement

Two questions are settled before signing. Who finances the initial fit-out, and what becomes of it at the end of the lease? A landlord contributing to the works in exchange for a longer firm term is a frequent and healthy arrangement. A full reinstatement clause at the tenant's expense, on the other hand, can amount to several tens of thousands of francs at the moment they leave the premises — that is to say, at the worst possible moment.

The entry condition report, photographed and annexed to the lease, is the only document that protects against complaints on departure. Its absence is a constant failing.

Assignment of the lease: the clause that carries the goodwill

For commercial premises, the Code of Obligations provides that the landlord may refuse consent to the assignment of the lease to a third party only for good cause. The former tenant remains jointly and severally liable until the end of the lease, for a maximum of two years.

That clause decides whether the business can be sold. A profitable business whose lease cannot be assigned does not sell: the buyer would have to negotiate a lease with the landlord themselves, and the landlord will take advantage of it. So check that the contract does not restrict that right beyond what the law allows.

What to obtain in writing

• The exact floor area, and the measurement method used.
• The authorised use of the premises, worded broadly enough to cover a change in the activity.
• The exhaustive list of service charges and the allocation key.
• The fate of the fit-out at the end of the lease and the extent of reinstatement.
• The terms for assigning the lease and for subletting.
• Any restrictions on opening hours, signage, deliveries or nuisance.