Let MGM’s real estate experts explain the definition of a commercial lease and the main conditions of this contract between you and your MGM tourist residence: commercial lease statutes, operation and advantages, termination and renewal… Make the most of our expertise to update your knowledge and gain a better understanding of the 3 6 9 commercial lease.
What is a commercial lease?
The commercial lease is a tenancy agreement by which a lessor (the owner) rents their property to a third party (the lessee) for the purpose of conducting a commercial or craft activity there.
When you buy an apartment in an MGM tourist residence, a commercial lease is established between you and the operator (either MGM Hôtels et Résidences, or CGH); as the owner of the property, you have the status of lessor, while our operator is the third party “lessee”.
Through this contract, you entrust the rental of the property to our operating company, which will take care of all the rental management procedures, and will market the apartment to tenants.
The commercial lease creates a right to the application of commercial lease statutes.
To benefit from these statutes, the operator MGM provides the following serviced accommodation services:
- Reception of customers;
- Cleaning of apartments;
- Provision of towels.
What are the advantages of a commercial lease?
Commercial lease status has the advantage of establishing specific obligations between you and the lessee. These detailed regulations mean that you know the rights and duties of each party.
What the lessor (you) must do:
- Make the rented property available to the tenant;
- Guarantee the peaceful enjoyment and security of the rented property.
What the operator MGM must do:
- Pay the amount of rent set out in the lease;
- Use the rented property in accordance with the contract drawn up.
Commercial lease statutes are advantageous for you and the tenant:
- You receive net rent each year as set out in the contract;
- You are protected on several levels concerning renewal of the lease;
- The contract clauses are defined clearly.
How does a 3 6 9 commercial lease work?
How long is it for?
In our tourist residences, the commercial lease signed between you and the operator runs for a minimum period of 9 years. When the contract (also known as a 3 6 9 lease) expires, you can renew the lease or recover the full use of your apartment (to occupy, rent or sell it).
How do I terminate a commercial lease?
The commercial lease can be terminated by the tenant every 3 years, except in tourist residences*. This is provided for by the commercial lease statutes. To terminate the lease, the tenant must give you notice by deed of service, at least 6 months’ ahead of their departure.
As a lessor, you can also terminate the lease under certain conditions. The main reason for termination is non-payment of the monthly rent.
* In tourist residences, the tenant is the manager. The term of the lease is fixed by the State for a minimum of 9 years (our operator MGM has chosen a term of 11 years).
How do I renew a commercial lease?
The commercial lease statutes give the tenant a right of renewal. This protection is called “commercial ownership”. You can of course decide not to renew the lease and recover your property.
Commercial lease rent
The law does not impose any rules concerning rents or how they are set. The original rent is therefore set freely between you and our operator MGM – it can be revised every three years, but must be within a legal upper limit prohibiting excessive increases. In any case, the law does not require any party to draft a commercial lease in writing, but it is advisable to draft and sign a contract in order to simplify the agreement.
Having specialised in real estate development for over 50 years, MGM offers new-build properties in the Alps’ most beautiful resorts and on the shores of Lake Annecy (department 74). Enjoying exceptional surroundings, our residences offer upmarket apartments designed in an authentic mountain chalet style.
The quality of our apartments, our residences’ prestigious services and the reliability of our property managers enable us to attract thousands of investors every year, as well as a very large number of holidaymakers. Thanks to this reputation, we can help you make a particularly profitable seasonal rental investment.
Discover our expert advice on buying an MGM second home, and see all the advantages of our tourist properties in the mountains.