The rental contract is the key element in the purchase or sale of a commercial property, a property development project, and in the valuation of a commercial property. It is crucial to maintain a keen awareness regarding rental contracts and their content in order to match the legal provisions of the contract to the property in question and its conditions, and also to reduce the risk of disputes and prepare for a realisation of the property’s value.
We assist in the drafting of contracts in both Norwegian and English, and also in adjusting them according to the specific conditions of the rental relationship concerned.
Over time, a relatively extensive use of standard contracts has gradually become a feature of the industry, and these contracts are administered by the Norwegian Property Federation (Norsk Eiendom). It is often wise to use standard contracts as any legal grey areas will increasingly be clarified through judicial precedence, thereby reducing the scope for disputes.
To the extent that standard contracts are used without adjustments, there will still often be the need to customise options and make further adjustments to the rental contract. This is particularly relevant when entering into contracts involving properties that are being developed. In such situations it may be necessary to adjust the contract terms that are subject to official approval, as well as those relating to delayed transfer in a design-build project.
A central mechanism in commercial rental contracts is derogation from the mandatory provisions of the Tenancy Act. Section 1-2 of this Act allows for the provisions to be waived by agreement when renting premises, though with the exception of certain provisions. The stipulations of the Tenancy Act may be departed from by both explicitly waiving individual provisions, as well as by adjusting the relations between the parties in a different manner to the main rule of the Act.
A key example of the latter is the division of responsibilities for maintenance and replacements in a commercial property rental relationship. For a long time, it has been the case that the landlord is responsible for the external maintenance of the building, with the tenant responsible for its internal maintenance. Despite this arrangement appearing to differentiate clearly between the respective obligations, disagreements nevertheless crop up in practice. One example is where the replacement of a technical device is the responsibility of the landlord, but where the tenant is responsible for its maintenance. This situation gives rise to the question of whether the tenant has fulfilled his maintenance duty or whether the need to replace the device has arisen prematurely as a result of defective maintenance.
In each commercial rental relationship tenants will pay, in addition to rent, their share of the joint costs. The share normally depends on the other tenants in the property, and is calculated according to a tenant’s relative share of the total building space rented. Examples of joint costs are electricity and heating, public utility charges, tax, cleaning costs etc.
A non-exhaustive list of the costs included in the joint costs is usually provided in an appendix to the rental contract. It is an important condition that this list is non-exhaustive, and that the joint costs are defined by the terms of the contract.
