When entering into lease agreements – particularly for commercial real estate – the question often arises whether it makes sense to execute the contract as a notarial deed. Although the law does not require this in most cases, this form of agreement carries significant legal and practical advantages, especially in terms of security, enforceability, and protection of the landlord's interests.
What does a lease agreement as a notarial deed mean?
A notarial deed is a specific form of contract drawn up by a notary that constitutes a directly enforceable instrument. This means that the parties agree in advance that the contract is directly enforceable – without the need for additional court proceedings.
The key element is the enforcement clause, whereby the tenant agrees that in the event of non-performance (e.g. failure to pay rent or failure to vacate the premises upon expiry of the lease) enforcement proceedings can be initiated directly on the basis of the notarial deed.
1. Direct enforceability – the greatest advantage
If a tenant fails to pay rent, does not vacate the premises after the lease ends, or breaches other material obligations, the landlord can file for enforcement directly on the basis of the notarial deed.
Without a notarial deed, the landlord must first initiate court proceedings, obtain a final judgement, and only then begin enforcement – a process that can take months or even years. In commercial real estate, where rent amounts are substantial, time is of the essence.
2. Greater legal certainty
When preparing a notarial deed, the notary verifies the identity of the contracting parties, their legal capacity, the lawfulness of the contract's content, and the clarity and unambiguity of its provisions.
This reduces the risk of subsequent disputes regarding the validity of the contract, the interpretation of individual clauses, or the existence and scope of obligations. For both the landlord and the tenant, this means greater predictability and less uncertainty.
3. A stronger negotiating position for the landlord
The very requirement of a notarial deed often influences the tenant's conduct. In practice, this translates into greater payment discipline, a more serious approach to fulfilling contractual obligations, and a lower risk of deliberate delays in the event of disputes.
In larger commercial leases, this approach is often considered best practice, as it clearly signals that the landlord actively manages risk and expects a professional relationship.
4. Faster vacation of the premises
One of the most common practical problems is the situation where a tenant does not vacate the premises after the lease has ended.
If the agreement is executed as a notarial deed with an enforcement clause regarding vacation, the landlord can initiate eviction proceedings considerably more quickly. This reduces loss of income, uncertainty about re-letting, and overall business risk.
5. When is a notarial deed particularly advisable?
A notarial deed is especially recommended for long-term commercial leases, high rents, and investment properties where income stability is critical.
It also makes sense where the landlord is financing the property with a bank loan, or where swift and effective enforcement of obligations is a priority. For smaller, short-term leases it may not be essential, but for commercial leases it represents an important safeguard for capital.
6. What about the costs?
Executing a lease agreement as a notarial deed involves additional costs related to notarial fees. However, these are generally negligible compared to the risk of non-payment, lengthy court proceedings, or the loss of several months' rent.
In practice, the cost of the notarial deed is often shared between the contracting parties. It is important to treat this cost as part of risk management, not as an unnecessary administrative formality.
Key takeaways
A lease agreement executed as a notarial deed is not merely a formality, but an effective risk management instrument. It gives the landlord direct enforceability, greater legal certainty, and better control over income stability, while also providing the tenant with clear and transparent rules.
Well-structured relationships, clear obligations, and the ability to act swiftly in the event of a breach create the foundation for long-term, stable business relationships – which is essential in commercial real estate management.
If you are considering executing a lease agreement as a notarial deed, or would like a review of an existing contract, please contact us for a consultation and tailored advice.