Security Deposits in Commercial Leases in Portugal

In the robust commercial real estate sector and leases dedicated to industries and retail commerce in mainland Portugal and the Islands, the paradigm regarding the collection and limit of monetary safeguards—primarily governed by the Portuguese Civil Code (effective since 1 June 1967) and the New Urban Leasing Regime (NRAU)—transitions away from constraints towards almost full and total negotiating freedom at the contract drafting table. The NRAU provides landlords in these contractual frameworks with vast shelter from the rigid protectionist civil rigor of traditional housing, primarily through the principle of contractual freedom enshrined in Article 1110 of the Civil Code.

Absence of Formal Maximum Caps from the Civil Code

Instead of being obligatorily supported and halted by the formal or rigorous limitation in the code to the insurmountable and strict ceiling of the common and literally applicable 2 (two) months of rent—as established for residential leases in Article 1076, n.º 2 of the Civil Code—the framework for non-residential transactions does not impose any mandatory cap that is immutable to the terms agreed upon by the parties.

Under the specific regime for non-residential leases (Article 1110, CC), landlords are free, in the validated consensual drafting subscribed by the corporate team of their industrial and merchant tenants, to vigorously require a ratio often equated to the budgeted cycles in balance sheets of six, eight, or up to twelve monthly balances of the final invoice.

Typical B2B Fiduciary Security Instruments

Given the enormous volume in bank flows, the usual Individual C.C or NIF Personal Guarantors give way to other corporately mitigated premises from the disadvantage of their organic bankruptcy or default, using:

1. The "On First Demand" Bank Guarantee (Garantia Bancária À Primeira Solicitação): An instrument issued by a credit institution that allows the landlord to unconditionally demand payment up to an agreed limit. This is the gold standard for high-value commercial leases. Its term and frozen amount are entirely subject to the commercial agreement.
2. Mother-Company Corporate Guarantee (Aval Corporativo da Casa-Mãe): Where recourse is had to fiduciary corporate responsibilities from a parent company over the local Portuguese subsidiary (usually an "Lda") headquartered in the leased building.

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