ANDORRA Law and Practice Contributed by: Albert Hinojosa and Marc Ambrós, Cases Lacambra
6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time The Andorran regulatory provisions recognise a lease agreement as commercial as long as it allows any nat - ural or legal person to occupy and use a real estate for a limited period without the tenant having an obliga - tion to purchase it. 6.2 Types of Commercial Leases The Andorran regulatory provisions do not establish any differentiation between commercial leases. In this vein, commercial leases have the purpose of conduct - ing a commercial, industrial, professional, logistics or teaching activity, as well as other purposes. 6.3 Regulation of Rents or Lease Terms Unless a law stipulates otherwise, the principle of free - dom of contract between/among the parties governs in commercial leases. Without prejudice to the princi - ple of freedom of contract and pursuant to the Andor - ran provisions, the minimum length for a commercial lease agreement is four years. Rent is freely agreed upon between the landlord and the tenant. A rent adjustment, if agreed between the parties, cannot be carried out more than once per contractual year. Furthermore, it is the use of vari - ation experienced by the general Consumer Price Index during the previous calendar year based on the income paid when the right to adjust came into being. However, a fixed minimum income can be estab - lished and increased according to turnover or oper - ating income. In this scenario, the period during which the tenant must provide the landlord with business accounts must be agreed. If the tenant does not pro - vide the landlord with the business accounts, the land - lord is entitled to terminate the contract and claim the corresponding compensation for damages suffered. Any other adjustment system agreed upon between the parties is void. 6.4 Typical Terms of a Lease The length of a lease term is agreed upon by the par - ties, but it cannot be less than four years for commer - cial leaseholds and five years for household leases. If
a term is not agreed by the parties, or if a term lower than the legal minimum is agreed, the lease shall be deemed to be for a four-year term for commercial leaseholds and five-year term for household leases. Once the minimum term has expired, the agreement can be tacitly extended for periods of one year unless a party notifies the other of its willingness to resolve the agreement, with a minimum notice of three months before the end of the principal term or any of its exten - sions. The landlord can repossess the leased premises only for personal household use of his/her family, as long as either (i) five years have passed since the entering of the lease agreement; or (ii) two years have passed since the entering of the lease agreement and a repos - session clause was explicitly foreseen in such agree - ment. The landlord is obliged to carry out the necessary repairs so that the tenant can continue carrying out the activity for which the real estate was leased. The tenant is obliged to carry out the repairs that are the result of wear and tear due to normal or abnormal use of the real estate or its facilities or services. The rent is paid in the manner agreed by the parties in the agreement. In the absence of such agreement, the rent shall be paid monthly, within the first five days of each month. 6.5 Rent Variation The rent is freely agreed upon between the landlord and the tenant. During the contractual term, and if the parties have agreed on no price adjustment system, the landlord and the tenant may adjust the rent at the end of each contractual year in accordance with the percentage variation experienced by the general Con - sumer Price Index or the other price adjustment men - tioned in 6.3 Regulation of Rents or Lease Terms . 6.6 Determination of New Rent Any increase in the rent is determined in accordance with the general Consumer Price Index or according to variables such as turnover or operating income. See 6.3 Regulation of Rents or Lease Terms and 6.5 Rent Variation .
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