LUXEMBOURG Law and Practice Contributed by: Claire-Marie Darnand, Victorien Hémery, Johan Léonard, Benjamin Marthoz and Tom Storck, Stibbe
Unless otherwise agreed between the landlord and the tenant, the tenant bears the cost of any alterations and improvements. At the end of the lease term, the landlord usually has the option to either keep the modifications or require the tenant to restore the premises to their original condition. 6.14 Specific Regulations See 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time . 6.15 Effect of the Tenant’s Insolvency The insolvency/bankruptcy of a tenant does not automatically result in the immediate termina - tion of a lease agreement. However, lease agree - ments often contain a possibility for the landlord to terminate the lease agreement without notice if the tenant is declared bankrupt. The landlord and the bankruptcy receiver agree on the termi - nation of the lease and its terms. 6.16 Forms of Security to Protect Against a Failure of the Tenant to Meet Its Obligations For commercial lease agreements, the com - mon security is a security cash deposit, a first demand bank guarantee or other equivalent guarantee covering an amount limited by statute to six months of rent. 6.17 Right to Occupy After Termination or Expiry of a Lease Whether or not a tenant has a right to contin - ue occupying the relevant real estate after the expiry or termination of a commercial lease depends on whether the commercial lease has a fixed term (it ends automatically at the end of the term without requiring formal notice) or an indefinite duration (the notice period to be granted is contractually agreed and cannot be less than six months). If no termination notice
has been given, a commercial lease agreement that ends for any reason is tacitly renewed for an indefinite period. For fixed-term commercial leases, it is advisable to send a formal notice of termination at least six months before the lease’s agreed term, request - ing the tenant to vacate the premises at the end of the agreed term to avoid an automatic tacit renewal. However, the landlord only has the right to termi - nate an indefinite duration lease or to refuse the renewal of a fixed-term lease (if timely requested by the tenant) in the following circumstances: • if the landlord or their first-degree descend - ants intend to personally use the premises; • if the premises will no longer be rented for the same activities; or • in case of the reconstruction or transforma - tion of the rented building. If the tenant has occupied the rented premises for at least nine years, the landlord can refuse a renewal of the term lease or terminate an indefi - nite duration lease without giving reasons, but only if the landlord or a third party agrees to pay an eviction indemnity to the tenant before the end of the lease. 6.18 Right to Assign a Leasehold Interest A contractual clause in a commercial lease prohibiting the assignment of the lease or sub - lease of the leased premises is null and void if the assignment of the lease or the subleasing is made together with the assignment of the com - mercial activity ( fonds de commerce ) and an identical commercial activity will remain estab - lished on the premises.
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