Commercial Leases in Monaco: Law No. 490 Explained

Monegasque law, not French law

This is the single most common misconception about Monaco commercial property, and it has immediate practical consequences: French commercial lease law does not apply in Monaco. The governing text is Law No. 490 of 24 November 1948 on leases for commercial, industrial or artisanal use, amended several times, notably by Law No. 969 of 21 March 1975 and Law No. 1.287 of 15 July 2004.

The differences are not cosmetic. The familiar French "3-6-9" lease does not exist here: Monegasque law creates no general three-yearly break right for the tenant. Renewal is acquired without any application. And where the parties disagree on rent, the figure is set not by a single judge but by a joint arbitral commission peculiar to the Principality.

This page covers the legal regime. For the search for premises, entry costs and the practical sequence of taking a lease, see the practical guide to taking commercial premises.

Who the law protects

Article 1 reserves protection to premises and buildings where a business has been operated for at least three consecutive years, whether that business belongs to a trader, an industrialist or a craftsman. The lease may be written or verbal.

Protection extends to ancillary premises — storage, workshop, depot — on conditions that depend on who owns them:

Two exclusions matter. The law does not apply to emphyteutic (long building) leases (article 26), nor to providers of furnished lodging — unless the furnished operation, by its purpose, has all the characteristics of a going concern (article 27). That last point cleanly separates the commercial lease from furnished lettings and short-term rentals.

Article 28 finally voids any clause whose direct effect would be to defeat the law. There is no contracting out.

Renewal is automatic, with no formality

This is the provision that most surprises anyone arriving from France. Article 2 states that tenants, subtenants and validly appointed assignees "who have not renounced the benefit of the provisions of the present law at least three months before the expiry of the tenancy agreement shall be entitled to renewal of the letting from its expiry without having to complete any formality".

In other words, the fixed deadline falls on the party who wants to leave, not on the tenant who wants to stay.

The length of the new lease follows mechanically:

A twelve-year lease therefore renews for nine years; a two-year lease renews for three.

Subletting is possible only where the lease does not prohibit it. The tenant must then notify the landlord by extrajudicial deed; the landlord has fifteen days to say whether they wish to join the deed, and neither refusal nor silence blocks it (article 3). When the head lease expires, the subtenant's renewal right can only be asserted against the landlord if the landlord authorised or approved the subletting.

Procedure: conciliation first, then the arbitral commission

If no agreement is reached by expiry, or if the landlord has signalled an intention to oppose renewal, whichever party moves first applies to the president of the court of first instance by a declaration entered in a special register at the Greffe Général (article 4). The parties are summoned by recorded-delivery letter at least eight days in advance.

Two consequences punish non-attendance severely:

• a tenant who fails to appear forfeits the benefit of the law;
• a landlord who fails to appear is presumed not to oppose renewal.

The absent party has fifteen days to object, running from service of the order made against them — a deadline that the service must expressly state, on pain of nullity.

Where the landlord accepts renewal in principle but the dispute is about rent, duration or ancillary conditions, the matter goes before the commission arbitrale des loyers commerciaux (article 5). It sits with five members:

• the president of the court of first instance, or a magistrate delegated by them;
• two landlords and two commercial, industrial or artisanal tenants, sitting as lay assessors, chosen from a list of fifteen landlords and fifteen tenants settled every three years by the Minister of State.

The commission sets a rent that can in no case be lower than the letting value of the premises, assessed on their extent, location, comfort, fittings and the operating facilities they offer (article 6). It may appoint an expert, who must report within a maximum of two months.

Its decisions are reasoned, delivered in open court, and recorded in full — with the parties' names, the trade name and the sign removed — in a register held at the Greffe Général, where any interested person may consult them and obtain a copy at their own expense. This is the best public comparison base available on Monegasque commercial letting values, and it is under-used before negotiations. Appeal lies within one month of service.

Throughout the proceedings the tenant keeps paying rent at the previous rate; once fixed, the new rent takes effect retroactively from the expiry date and the accounts are settled between the parties (article 19).

Refusal to renew and the eviction indemnity

A landlord may oppose renewal. Unless they establish serious and legitimate grounds against the outgoing tenant, they must then pay an indemnity equal to the loss caused by the failure to renew (article 9). The tenant has one month to bring the landlord before the arbitral commission, a deadline that must appear expressly in the service, on pain of nullity (article 10).

Two safeguards protect the tenant:

• No eviction before payment. Article 18 forbids requiring the tenant to leave before receiving the eviction indemnity, or the provisional indemnity fixed by the president where the amount is still to be determined.
• The landlord can change their mind. Within fifteen days of the enforcement notice they may escape payment by finally consenting to renewal — but only while the tenant is still in occupation and has neither rented nor bought other premises (article 11).

The landlord's right of recovery

The law organises four grounds of recovery, on distinct terms.

Two protections are worth knowing. A tenant can defeat recovery for residential use by proving that the owner or the beneficiary has — or could recover — non-commercial premises meeting their normal needs (article 12).

More striking, article 15 protects long-established businesses: recovery cannot be exercised against a trader, industrialist or craftsman established in Monaco for at least fifteen years except by an owner whose title comes from inheritance or from a deed with a certain date five years before 1 January of the year in which recovery is exercised. That fifteen-year period falls to five years where the tenant is a Monegasque national, and the owner must additionally show that neither they nor the beneficiary owns Monaco premises occupied by a foreign-national tenant against whom recovery could usefully be exercised.

A tenant evicted because the building threatens ruin has a priority right over new commercial premises created in the rebuilt building. They must claim it by extrajudicial deed on leaving or within the following three months, electing an address for service in Monaco; the owner must then notify the terms and the price, and the tenant has three months to accept or refer the matter to the arbitral commission (article 17).

Reviewing the rent mid-lease

Title II allows review upwards or downwards, at either party's request, notwithstanding any agreement to the contrary. The applicant must show that the rent paid no longer matches the letting value because of a change:

• either in the general economic conditions of the Principality;
• or in the particular conditions affecting the business.

The application is admissible only once at least three years have run since the current rent took effect (article 21). It is made by recorded-delivery letter or extrajudicial deed and must state the grounds relied on and the new rent proposed. Failing agreement within a month, the arbitral commission is seised (article 22).

Two further points: where the rent comes from an index-linked escalator clause, the commission adapts the operation of the index to the fair letting value (article 23); and a party applying for a reduction must keep paying, on the lease's due dates, a provisional instalment of 50% of the rent under review (article 24).

A tenant unable to meet an instalment has one relief valve: at least eight days before the due date they may ask the president of the court for time to pay, which cannot exceed the current term. The order is immediately enforceable and not subject to appeal (article 29).

Leasehold duty: 1%, borne by the tenant

Every Monegasque property lease attracts a registration charge known as the droit de bail, calculated at 1% of the rent and charges for the entire period of occupation, and borne by the tenant.

• Registration must take place within three months of signature, subject to penalties.
• For a lease longer than three years, payment may be requested in three-year instalments.
• The formality is handled by the Direction des Services Fiscaux.

On a nine-year lease the charge is therefore based on nine years of rent and charges: a line to budget for during negotiations, not a last-minute formality.

Reform in progress: the "commercial activity lease"

The 1948 regime is under active debate, not least because of the number of vacant commercial units in the Principality. On 12 May 2026 the National Council adopted in public session private member's bill No. 278 creating a commercial activity lease, transmitted to the Government on 13 May 2026.

The proposed text would create an opt-in regime: it would apply only to commercial premises where the parties have expressly chosen to submit to it, and would then displace Law No. 490. Its main features:

• estate agency, banking and insurance activities would be excluded;
• a minimum term of seven years, with no tacit renewal; a renewal request served six months before expiry, the landlord replying within one month, silence counting as acceptance;
• freely agreed rent, revisable annually by reference to the construction cost index alone;
• security deposit capped at three months' rent and charges;
• key money (pas-de-porte) prohibited, and no eviction indemnity;
• the tenant may exit at any time after one year on six months' notice, owing neither indemnity nor the remaining rent and charges;
• landlord termination confined to demolition-and-rebuild or restructuring schemes and to buildings threatening ruin, with compensation for the tenant's unamortised fit-out works.

This text is not in force. A private member's bill transmitted to the Government has no binding effect: the Minister of State has six months from receipt — that is, until 13 November 2026 — to convert it into a government bill or bring the process to an end. Until and unless that happens, Law No. 490 remains the only applicable regime.

Getting advice

A Monegasque commercial lease should be negotiated with local counsel. The vocabulary is that of French civil law, but the rules, the deadlines and the competent forum are not: a contract drafted on a French precedent imports mechanisms that do not exist here and omits those that are mandatory.

The arbitral commission's judgments, consultable at the Greffe Général, are the best public comparison base available on Monegasque commercial letting values.

Related reading

• Taking commercial premises in Monaco: the practical steps
• Offices and business premises
• Company domiciliation
• Setting up a company in Monaco
• Business authorisations and licences
• The Trade and Industry Register
• Lawyers and legal services