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Modalities of the lease termination

Each lease provides for the terms of termination of the lease for both parties. It may also provide for a right of unilateral termination for one of the parties. There is usually a notice period (most often 6 or 12 months) prior to expiration of the period for which the lease was signed (e.g. 3, 5, 7 or 10 years), where the parties can express their intentions in relation to the renewal or termination of the lease.

Tenant can terminate the lease if :

  • The landlord does not transfer the rented premises within the agreed period;

  • The rented premises transferred by the landlord have defaults which exclude or significantly compromise their conformity with the predetermined use;

  • The landlord is aware of a defects and does not remedy them within an adequate time, and this defects prevent or significantly impede the agreed use of the premises by the tenant;

  • The tenant presents to the landlord new tenant, who is ready to take over existing lease on the prevailing conditions.

The landlord and the tenant can also terminate the lease for valid reasons which make the execution of the lease impossible.

Restitution of the premises at the end of the lease

Restitution of the premises is a very important clause as it may potentially expose the tenant to an unforeseen cost at the end of the lease.

Usually the lease stipulates that the tenant has to, at the end of the lease, restitute the premises to the same state he received them in, in accordance with the premises take over protocol, signed at the lease commencement. Bearing in mind that most premises always require tenant’s intervention and additional works, and some are even taken over in the shell and core state, it may mean bringing the premises to its original state at the end of the lease. Depending on the fit-out carried out in the premises, it can represent CHF 75-150 per sqm of the rented space.

In case tenant has made substantial investments into the space, the best would be to negotiate the restitution clause and try to take out of the lease altogether. In such case the lease shall expressly mentioned the waiver of the restitution clause. Tenant may agree to restitute the premises clean and orderly, fair wear and tear excepted.

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