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If you are a US citizen interested in doing business in Colombia, it is important you know that in case you want to lease a store unit in Colombia, you be aware of the following.

The Colombian commercial lease contract is governed by specific regulations established within the Colombian Commercial Code. This is because special protection is granted to traders, taking into account the role of commerce in the economy.

Therefore, the commercial lease contract in Colombia is the local document that establishes the agreement between the owner of a commercial property and the person who will use the property. The document must determine the obligations of the parties and provide relevant information such as the duration of the lease, the rental amount, among others.

Colombian Regulation of the commercial lease contract

Regarding the rules that regulate this type of contract, it is established that it is subject to the general rules established in the Civil Code. Additionally, the Colombian Commercial Code adds specific rules that aim to protect the investor or trader’s investment.

The articles within the Commercial Code that regulate this matter are those between Art. 518 and 523.

What are the obligations of the commercial property lessor?

According to Article 1982 of the Civil Code, lessors are obliged to:

Deliver the leased property to the tenant.

Maintain the leased property in good condition.

Prevent any disturbance to the tenant’s enjoyment of the property.

Likewise, the lessor is obligated to the contractual stipulations assumed within the commercial property lease contract.

What are the obligations of the commercial property lessee?

Similarly, the Civil Code also establishes obligations that the lessee must fulfill. These include:

Paying the rental fee.

Using the property for the purpose for which it was leased.

Taking care of the commercial property.

Returning the property to the lessor in the condition it was delivered at the end of the lease contract.

What should the commercial lease contract include?

The parties to a commercial property lease contract have the autonomy to include provisions within the contract, such as the inclusion of penalty clauses.

However, the lease contract must include essential elements such as:

Full names, identification documents, and addresses of the lessor and lessee.

Location and detailed description of the property to be leased.

Inclusion of the object or purpose of the lease contract.

Determination and stipulation of the rental fee.

Payment method.

Duration of the contract.

Colombia Contract renewal

The renewal of the lease contract for commercial properties is established in Article 518 of the Commercial Code. This provision states that, in general, there is a right to contract renewal when the property has been occupied for more than two (2) years, with the exception of the following cases:

When the lessee has breached the contract.

When the owner needs the property for personal use or for a different business.

In cases where the property needs to be reconstructed or repaired due to necessary works that cannot be carried out without delivery or vacation. Also in cases where the property needs to be demolished due to ruin or construction of a new building.

 Colombia Termination of the commercial lease contract

The lessor may terminate the lease contract when the rental payments are not made, when the property is being used for unauthorized purposes, when it is not kept in good condition, and, in general, for non-compliance with the stipulations within the contract.

Similarly, the lessee may terminate the lease contract by invoking the breach of contract by the lessor. For example, when the required repairs are not carried out.

The procedure to be followed as a result of non-compliance with obligations will depend on what has been agreed upon in the contract.

At DOING BUSINESS IN COLOMBIA, our team of Real Estate Law specialists is dedicated to providing expert advice on lease contract drafting and clause inclusion. By seeking the legal guidance of our professionals, both parties involved will benefit from strong legal provisions safeguarding their rights and efficient dispute resolution mechanisms in case of future conflicts.

Please contact us for further information

www.doingbusinessincolombia.com

EMAIL info@doingbusinessincolombia.com

TEL +57-305-461-9162