Article 13 of Law 4242/2014, published on February 28th, introduces important amendments to Presidential Decree 34/1995 aiming to the liberalization of commercial leases. The Law draws a distinction between new and existing commercial leases and the main changes are as follows:

(i)    New Leases (those concluded after 28.02.14)

–    Minimum term of 3 years which shall bind both parties.
–    The unilateral termination of a lease (by either the landlord or the lessee) shall be made in writing and shall come into effect 3 months after service to the counterparty. It should be noted however that the new Law does not specify whether this right of unilateral termination is afforded to parties during the legal minimum term of 3 years.
–    Many provisions of Presidential Decree 34/1995, such as those pertaining to the obligation of the landlord to restore the intangible commercial value of the leased property after the completion of 12 years, the termination by the landlord for own-using and reconstructing the leasehold and the related payable compensation, are no longer applicable to new leases.

(ii)    Existing leases
(those concluded, extended or renewed before 28.02.14, including also the leases whose 12-year duration has expired but less than 9 months have passed since such expiry)

–    The previous regime of the minimum 12-year duration is still effective. However, the automatic 4-year extension of the lease after expiry of the 12-year period is no longer applicable.
–    The obligation of the landlord to restore the intangible commercial value of the property is abolished towards existing leases as well. However, a transitional provision has been introduced providing for obligation of the landlord to pay to the lessee a compensation equal to 6 monthly rents in the event of termination by the landlord until 31.08.2014 of a commercial lease that is due to expire until such date by reason of completion of the twelve-year term.
–    Regarding lease termination by the landlord for private use or reconstructing of the premises, the related time limits are shortened as well as the payable compensation is reduced by half.
–    As regards the unilateral termination of an existing lease by the lessee, the respective provision of the said Presidential Decree is still applicable (i.e. termination is possible 1 year after the effective date of the lease, by service of a 3-months prior notice and compensation amounting to one monthly rent).

In conclusion, it should be pointed out that –with regards to new commercial leases- the new regime appears to provide substantial contractual freedom to the parties which may freely negotiate and agree the terms of a commercial lease agreement, subject however to the provisions of the Greek Civil Code as well as the provisions of Presidential Decree 34/1995 that are still in effect.

Edited by Christina Georga