Commercial Leases in Poland: B2B Rules Overview

Unlike the extremely rigid and protective residential leasing law (protecting the tenant-consumer), commercial leasing in Poland (commercial premises, office buildings, warehouses) is based on the foundation of Freedom of Contract (Art. 353(1) of the Civil Code). Here, both parties (the Landlord fund and the Business Tenant - B2B) are treated as equal, professional market players.

Law in the commercial model in Poland allows for negotiating almost any condition: from transferring 100% of structural repair costs to the tenant (Triple Net Lease), up to rigorous multi-million fines for early exit from a shopping mall before the expiration of 5 years.

Key Legal Foundations (B2B) in Poland

| The most popular structure in logistics (warehouses). The tenant de facto bears the public real estate tax from the city, insurance of the investor's building, and full costs of capital roof repairs. |

1. Fixed Term vs. Indefinite Term (The Golden Cage of 5-Year Contracts)

A fundamental difference of the Polish system is the CC's approach to the length of contracts between companies with a designated end date on the calendar relative to non-existent terminations:

• B2B for a "Fixed Term" (e.g., for 5 years): A Polish Mall Landlord signing a rigor for X years with a foreign Company, knows 100 percent from the CC that this Company just like that cannot pack its clothes from the floor at night nor notify him with a year's notice that their business is doing poorly to cut off rent loss. This contract with a designated end Cannot Be Terminated from universal rule before the 5-year deadline; escaping business closure binds corporate Companies to pay for an empty premises for 4 years in penalties. And in order to be able to free themselves, large retail chains strongly negotiate from corporate lawyers so-called Break Options for an exit option from the penalty loss for a 10-month compensation deduction severance ("Break Fee").
• B2B for an "Indefinite Term": Very rare for powerful business. Renting garages near cities to construction companies (without frameworks of final dates) with allowance of free termination on the part of the landlord from the calendar code calculates from a month to the end from the next day with an option for mutual, quick termination disposal from hands in without problems "goodbye after paying fees for the given last month".

The final nuance of the CC in Poland mandated is sometimes the max 10-year rigor for the action - if the contract passes the tenth anniversary of keeping the company in the office (or 30 years in entrepreneurs in institutional leases specially written long) it is universally transformed from itself "in presumed extension in time of rigor for an indefinite time". This must be remembered striving with annexing in Warsaw offices (WFC investing and annexing).

2. Language and Settlement Currency in Poland

Poland is a member of the European Union, but has its own currency (Złoty PLN). International funds investing in office buildings (Class-A) in Warsaw traditionally denominate base rents (Base Rent) in Euro (EUR). Physical transfers in the country to the landlord, however, generally go in domestic bases of rigor to the equivalent after the NBP average exchange rates announced for valuation on the eve before issuing the VAT invoice for the day with a fee for circulation of bank transfers.

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