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Introduction

The new Non-Residential Rent Law, enacted on April 3, 2025, governs the lease of non-residential and commercial properties, specifically those leases that were signed and had their original term expire before July 23, 1992, and outlines new regulations for extending leases, determining fair rent, and the rights and obligations of both property owners and tenants.

Understanding this law is crucial for anyone involved in the leasing of commercial, industrial, or professional spaces. This guide aims to provide a clear and detailed breakdown of this new Non-Residential Rent Law through a question-and-answer format, ensuring that you have access to the information you need to navigate these changes effectively.

Scope and Definitions

Governed Leases: The law applies to all leases of built properties for non-residential purposes that were signed and had their original term expire before July 23, 1992.

Non-Residential Properties: These are defined as properties leased for trade, industry, legally regulated professions, artisanal trades, or any other non-residential activity.

Lease Extension

Extension Option: Leases can be extended for a maximum of four years from the law’s effective date if the owner demands gradual rent increases as per Article 6 of the law, after which the lease is subject to mutual agreement.

Alternative Two-Year Extension: If the owner waives the right to these rent increases, the lease is extended for two years. This waiver is implied if the owner does not seek to determine the new rent within two years of the law’s enactment.

Determining Fair Rent

Determination Methods: Fair rent is determined either by mutual agreement between the owner and tenant or, failing that, by a court decision.

Mutual Agreement Procedure:

1. The owner sends a formal written invitation to the tenant to negotiate.
2. The tenant must respond within 20 days.
3. If an agreement is reached, a written contract is signed.

Legal Procedure:

If both parties fail to reach an amicable agreement, then;

1. Either party can file a case with the competent court.
2. The court appoints an expert to assess the property.
3. Both parties can comment on the expert’s report.
4. The court issues a ruling, appealable within eight days, and the appeal decision is final and binding.

Calculation: Fair rent is 8% of the property’s current market value.

Rent Increases

During the four-year extension:

Year 1: 25% of the difference between the existing rent and fair rent.

Year 2: 50% of the difference.

Years 3 & 4: Rent equals the fair rent.

Eviction Conditions

A tenant can be evicted for:

1. Failure to pay rent within two months of formal notice.
2. Subleasing or assigning without the owner’s written consent. If allowed, the original tenant remains responsible.
3. Improper use of the property.
4. Abandoning the property for a specified period.
5. Changing the property’s designated use.

Subleasing and Assignment

Subleasing or assignment requires the owner’s explicit written consent.

Inheritance and Succession

In case of the tenant’s death, specific family members or partners may continue the lease under certain conditions.

These successors cannot sublease or assign the property.

Owner’s Right to Reclaim Property

Owners can reclaim property for specific reasons, with compensation to the tenant.

Compensation is typically 15% of the property’s sale value, decreasing over the extension period, with potential additional compensation.

Miscellaneous

Legal proceedings under this law are subject to a fixed fee.

In specific cases, rent may be multiplied.

Specific provisions of the 2014 Rent Law apply.

Owners may be eligible for tax exemptions.

Conclusion

The Non-Residential Rent Law represents a significant shift in the regulation of non-residential leases in Lebanon. It is designed to balance the rights and responsibilities of property owners and tenants while modernizing the legal framework governing these transactions.

This guide has provided a detailed overview of the law’s key provisions, but it is essential to remember that legal situations can be complex. Therefore, consulting with a legal professional is always recommended to ensure full compliance and protect your interests.