Commercial leases in Brazil: key clauses, security and renewal protection

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The value of a business location may include its established clientele, brand recognition and years of investment. Many businesses use rented premises. A commercial lease therefore does more than record monthly rent: it organizes occupation, costs and options for remaining. The Brazilian term ponto comercial refers to the business location and its associated commercial value, not all goodwill of the enterprise.

A lease tailored to the business can help protect investment, allocate responsibilities and identify risks. A generic template may omit particular use, works or renewal issues. This guide covers the key provisions, permitted security, term and sale of the property through a fictional example. No drafting can guarantee a dispute-free tenancy.

What must a commercial lease contain?

For a non-residential lease covered by Brazilian Law 8,245/1991, key provisions include:

• Parties and property: identification of the landlord and the tenant and a precise description of the property.

• Rent and adjustment: amount, due date and lawful index (IGP-M, IPCA or another), respecting the minimum annual interval under Law 10,192/2001.

• Term: preferably for a fixed period and in writing (relevant to protecting the business location, as explained below).

• Security: if required, one form without combining types.

• Permitted use: business activity, licences, zoning and condominium rules.

• Charges and improvements: who pays property tax (IPTU) and condominium fees, and the treatment of improvements and of the return of the property.

Termination, penalties, assignment, subletting and continued effect on sale also need attention. In an ordinary lease, the tenant bears routine condominium expenses and the landlord extraordinary expenses; an express clause may allocate property tax (IPTU) to the tenant (articles 22–23). Necessary and useful improvements follow article 35, which permits an express contrary agreement: not all works must be reimbursed. Shopping centres and build-to-suit leases under article 54-A require review of their special rules.

What is the difference between a commercial and a residential lease?

For urban leases covered by the Act, non-residential use has special rules. A statutory commercial lease renewal action allows a qualifying tenant to ask a court to preserve occupation and the location’s commercial value. The landlord retains the defences in articles 52 and 72; renewal is not automatic and this is not the residential mechanism.

In ordinary non-residential cases under article 56, the fixed term ends on expiry. Occupation for more than thirty days without objection creates a presumption of indefinite extension. Terminating that extension requires written notice allowing thirty days to vacate (article 57). Without voluntary surrender, the landlord must use the appropriate court process, not forcibly remove the occupier.

How many forms of security can the landlord require?

The landlord may let without security or require one form, without combining types in the same lease. Article 37 lists four:

• Collateral (caução): cash, movable assets or real estate, subject to the respective formalities.

• Personal guarantee (fiança): obligations assumed by a guarantor.

• Rent-guarantee insurance;

• Fiduciary assignment of investment-fund quotas.

Article 37’s sole paragraph prohibits combining security types, on pain of nullity. Requiring a personal guarantor and collateral together also falls within the minor criminal offence (contravenção penal) in article 43(II). Cash collateral specifically is capped at three months’ rent and must be held in a savings account with its benefits accruing to the tenant (article 38). That cap does not apply to every security type.

How should the term be chosen to protect the business location?

The term is not just a matter of convenience — it has a strategic legal effect. To be entitled to the commercial lease renewal action (to protect the business location), the lease must meet the requirements of art. 51 of Tenancy Act 8.245/1991:

• A lease in writing and for a fixed term;

• Five years under the lease or uninterrupted successive written leases.

• At least three uninterrupted years in the same line of business.

A written five-year lease meets one term requirement, but shorter written leases can count if uninterrupted. The suitable term depends on the business. Proceedings must be filed between one year and six months before the current expiry date (article 51(5)). Article 71 also requires proof of exact performance, taxes allocated to the tenant, proposed terms and applicable security documents. Missing the window loses the statutory renewal claim for that lease; it does not prohibit a later consensual renewal.

Practical example: Sérgio's Bakery

Fictional example: Sérgio opens a bakery in a busy São Paulo location. He signs twelve-month leases, but some extensions remain informal. The customer base grows. On expiry, the landlord wants to recover the property to let to a competitor at a higher rent, and only then does Sérgio organize the records.

If uninterrupted written leases total under five years, one renewal condition is missing. An initial five-year agreement would improve that position, but three years in the same business line, compliance and timely filing would still be needed. If statutory renewal is available, a competitor’s offer is not a complete defence: article 72(2) prevents relying on a better third-party offer for the same line of business. The example illustrates planning and evidence, not guaranteed occupation.

The most common (and costly) mistakes

• Ignoring written terms and continuity. Shorter leases can add up to five years; oral terms or undocumented periods may prevent statutory renewal.

• Accepting more than one form of security. Requiring a guarantor and a cash deposit together is void (art. 37, sole paragraph).

• Omitting a fixed term, continued-effect clause or registration. Missing article 8 requirements may allow termination by a purchaser under the statutory conditions and deadlines.

• Not setting out the adjustment and charges. Silence on the index, property tax (IPTU) and condominium fees can cause disputes.

• Using a generic template. Check that the template covers the actual business, property and negotiated terms.

Checklist: for a good commercial lease

• Set a suitable written term and track the conditions and filing window for statutory renewal.

• If security is required, use one form. The three-month cap and savings-account rule apply to cash collateral.

• Set the amount, the adjustment index and the charges (property tax (IPTU), condominium fees).

• Define the designated use (activity) and the treatment of improvements and return.

• For protection on sale, use a fixed term and continued-effect clause, and register the lease in the property record. Purchase preference has separate requirements.

• Review the lease with a business law lawyer before signing.

Frequently asked questions about commercial leases

What must a commercial lease contain?

Identify the parties and property and address rent, adjustment, term, permitted use, licences, any security, charges, improvements and return. Different forms of security cannot be combined. In an ordinary lease, routine condominium expenses fall to the tenant and extraordinary expenses to the landlord; an express clause may allocate property tax (IPTU) to the tenant. Termination, penalties, assignment, subletting and continued effect on sale also require review under Brazilian Law 8,245/1991.

What is the difference between a commercial and a residential lease?

Urban leases covered by Brazilian Law 8,245/1991 have different rules according to use and term. A commercial tenant may seek court-ordered renewal under articles 51 and 71, subject to the filing window and the landlord’s statutory defences. In ordinary article 56 cases, a fixed term ends on expiry; occupation for over thirty days without objection creates a presumption of indefinite extension. Terminating that extension requires written notice allowing thirty days to vacate (article 57), not forcible removal by the landlord.

How many forms of security can the landlord require in the lease?

A landlord may require one form, or let without security, but cannot combine different forms in the same lease. Article 37 permits collateral (caução), a personal guarantee (fiança), rent-guarantee insurance and fiduciary assignment of investment-fund units. Collateral may be cash, movable assets or real estate; only cash collateral is capped at three months’ rent and must be placed in a savings account with its benefits accruing to the tenant (article 38).

What is the ideal term for a commercial lease?

No term suits every business. Statutory renewal requires a written fixed-term lease, five years under that lease or uninterrupted successive written leases, and three uninterrupted years in the same line of business. Shorter leases can count if these conditions are met. Proceedings must be filed between one year and six months before the current expiry date; proof of performance and the other article 71 documents are also required. Five years alone does not guarantee renewal.

Do I need to register the commercial lease at a registry office in São Paulo?

Registration is generally not required for validity between the parties. To bind a purchaser for the remaining term of an ordinary lease, relevant requirements are a fixed term, an express continued-effect-on-sale clause and registration in the property record (article 8). Although the Tenancy Act says averbação, the Public Registries Act provides for registro for that clause in article 167(I)(3), distinct from the entry protecting purchase preference. Apply to the competent Real Estate Registry. Without that protection, the purchaser may terminate within ninety days of acquisition registration, allowing ninety days to vacate; eviction is not automatic.

When should I seek a lawyer for a commercial lease?

Preferably before signing or investing in works. Review may cover ownership, authority to sign, permitted use, licences, term, security, charges, improvements, sale and termination. A possible renewal claim also needs evidence of compliance and timely filing. Legal advice cannot guarantee payment, continued occupation or success in court.

Plan the lease around the business and its risks

The lease organizes use of the location where the business develops. Defining term, security, charges and continuity mechanisms helps both parties assess investment and risk, but the effects depend on the law, drafting and performance throughout the relationship.

Plan from the outset: a written lease, suitable term, any lawful security and protection on sale. Combine clauses with records and date management. A statutory renewal right does not arise from an isolated clause, and continued effect against a purchaser requires the relevant property registration.

At Falchet e Marques Sociedade de Advogados, a firm in São Paulo (Av. Paulista), we work on commercial leases and business law — drafting and reviewing contracts for landlords and tenants, with a focus on the business location and the allocation of obligations. If you are going to rent (or rent out) a commercial property, it is worth drawing up the lease with proper support.

Talk to our team on WhatsApp: +55 11 95901-1854 — request an assessment of your commercial lease.