Pop-up stores : new legal framework in Wallonia
The Walloon Decree on short-term retail leases enters into force on 1 May 2018.
Almost two years after the adoption of the Flemish Decree on pop-up stores Flemish Decree of 17 June 2016 on short-term retail lease, published in the Belgian Official Gazette on 26 July 2016 , the Walloon Decree of 15 March 2018 on short-term retail lease has been published in the Belgian Official Gazette on 28 March 2018. Most of the provisions of the Walloon Decree will enter into force on 1 May 2018 but will not apply to on-going contracts.
As the Flemish Decree, the Walloon Decree aims to establish a legal framework for pop-up stores and restaurants for which the (mandatory) provisions of the Commercial Lease Act of 30 April 1951 are not suitable. It is very positive to note that provisions of both Decrees are quite similar.
The Walloon Decree on short-term retail lease applies on (i) written leases of (parts of) immovable premises, (ii) which are leased for the operation of a retail or craftsmen activity, (iii) with direct contact between the tenant and the public and (iv) which are concluded for a term which is equal to or less than one (1) year.
You find hereafter an overview of relevant key items:
- Written leases: contrary to the Commercial Lease Act which is applicable to verbal leases as well, the new Walloon Decree only applies to written leases.
- Sub-lease and assignment of the short-term lease are prohibited, unless otherwise agreed in writing between the parties. The Commercial Lease Act provides the opposite.
- Duration: the short-term retail lease automatically ends on its expiry date. However, the lease can be renewed (i) under the same conditions, (ii) if the parties agree so in writing and (iii) provided that the total duration do not exceed one (1) year. Failing this, the lease agreement will be deemed to be concluded for 9 years starting from the date on which the lease initially entered into force and the provisions of the Commercial Lease Act will apply.
- Early termination: the tenant can terminate the short-term retail lease at any time with one-month prior notice sent by registered mail According to the Flemish Decree on short-term retail lease, the termination notice can also be given by bailiff’s writ. , starting on the first day of the month following receipt of the mail. This possibility does not exist under the Commercial Lease Act and early termination by the tenant is subject to very strict mandatory conditions. In addition, the parties can terminate the lease agreement at any time in writing by mutual consent, where the Commercial Lease Act requires a notarial deed or a joint declaration made before the Justice of the Peace.
- Alterations: the tenant is entitled to carry out works that are useful for its business provided that (i) the costs of the works do not exceed the annual rent (instead of 3-year rent under the Commercial Lease Act), (ii) the works do not affect the safety of the leased property, its health aspects and its esthetical value, and (iii) the tenant informs the landlord before the start of the works by registered mail (notification by bailiff’s writ The Flemish Decree on short-term retail lease only provides that the notification shall be done in writing. is also allowed under the Commercial Lease Act). Contrary to the Commercial Lease Act, at the end of the lease, the landlord can request the removal of the works but he cannot refuse it. In addition, no indemnity is due to the tenant if the works are kept, unless agreed otherwise.
This new Walloon Decree is to be warmly welcomed. Indeed, the provisions of the Commercial Lease Act were no longer adapted and did not fit to the economic reality faced by operators of pop-up stores and restaurants. The new Walloon Decree, like the Flemish Decree on short-term retail lease, offers them a much more suitable legal framework. One can only hope that a similar regulation will soon be approved in the Brussels-Capital Region.
SophieVan BerkelProfessional Support Lawyer
Sophie is a member of the Loyens & Loeff Real Estate Practice Group in Belgium and a professional support lawyer in our office in Brussels.T: +32 2 773 23 41 E: email@example.com