Rights of a commercial tenant in Peru

Renting a commercial premises in Lima, Arequipa or Trujillo means risking more than money: there is clientele, brand and operations at stake. Peruvian legislation partially protects the commercial tenant, but most rules depend on what is agreed in the contract. Knowing the legal framework and the key clauses before signing saves costly disputes. This article walks through commercial tenants' rights and how to defend them.

Applicable legal framework

A commercial premises lease in Peru is governed by:

• Civil Code, articles 1666 to 1712 (on leasing).
• Legislative Decree 1177, which regulates leases with an express eviction resolution clause before a notary, optional for the parties.
• Consumer Protection and Defense Code (Law 29571) when the tenant is an end consumer dealing with a goods or services provider (e.g., shopping malls).
• The contract terms, within the limits of public order.

Commercial leasing has no legal rent cap and renewal is not automatic unless agreed. That is why contract negotiation is decisive.

Basic tenant rights

Peaceful use of the property

The landlord is obliged to deliver the premises in usable condition and to keep the tenant in peaceful possession throughout the term (Article 1678 of the Civil Code). If third parties disturb possession, the landlord must take up the defense.

Repairs

Unless otherwise agreed, necessary repairs are the landlord's responsibility: structure, roofs, general installations, damage not attributable to the tenant. Repairs from ordinary use (paint, maintenance of the tenant's own equipment, minor leaks from misuse) are the tenant's.

Improvements

The Civil Code distinguishes three types:

• Necessary: always reimbursable.
• Useful: reimbursable if authorized or, at least, not objected to.
• Recreational: the tenant can remove them if it does not damage the property.

Negotiate in writing which improvements each party covers and which you take at the end.

Receipts and vouchers

The landlord must issue an electronic payment voucher (lease receipt or invoice, depending on tax status). Natural persons leasing to companies usually issue Form 1683 (PDT 1683) or the current SUNAT electronic receipt, and the company withholds 5 % first-category IR.

Renewal and continuity

Article 1700 of the Civil Code provides that, once the term expires, if the tenant remains in the property and the landlord does not object, the contract continues under the same conditions for an indefinite term. It is an important right, but the landlord can end it with prior notice (notarial letter).

Clauses that change everything

1. Rent adjustment: the most common is to index to INEI's CPI. Negotiate bands (e.g., CPI with floor 0 and ceiling 6 %) to prevent spikes.
2. Term and renewal options: define a tenant option to renew for one or two additional terms with an agreed adjustment.
3. Assignment and subletting: by default requires consent. Negotiate the right to assign to a legal entity in the same group or to a buyer of the business.
4. Guarantees: co-signer, joint and several guarantee, surety bond or deposit (1–3 months). Ask that it be refundable and free of arbitrary deductions.
5. Penalty for early termination: reasonable is 1–3 months' rent, not the remaining installments.
6. Eviction resolution clause (Legislative Decree 1177): if you sign it, the landlord can request your eviction within weeks before a notary for default. Useful for the landlord, risky for the tenant; negotiate a grace period and prior notice.
7. Authorized line of business: define the activity broadly to avoid conflicts when expanding business lines.

Transfer of the premises

The "transfer" is a common practice: the tenant assigns the contract to a third party for consideration reflecting clientele and investment. For it to be valid:

• The original contract must allow assignment (or written authorization is obtained).
• A contractual position assignment agreement is signed (Articles 1435 to 1439 of the Civil Code) with the landlord's consent.
• The contract is updated with the new tenant.
• The landlord usually takes the opportunity to revise rent to market price.

Termination and eviction

Grounds favoring the tenant for ending the contract:

• Hidden defects preventing commercial use.
• Failure to deliver or clear title by the landlord.
• Disturbances by third parties unresolved.
• Fortuitous event or force majeure that destroys or disables the premises.

On the landlord's side, typical termination grounds are default (two unpaid installments), use other than agreed and lack of guarantees. If the contract was signed under Legislative Decree 1177, the procedure is notarial and quick; otherwise, it goes to the summary civil court.

If the landlord wants a big rent hike at renewal

Renegotiation at the end of the term is a friction point. Before accepting:

1. Research comparables in the district (Adondevivir, Urbania, Properati, commercial brokers).
2. Offer a longer term in exchange for moderation.
3. Set a clear formula (CPI with bands).
4. Calculate the real cost of moving: loss of clientele, transfer, refit, reopening. Often staying and absorbing a moderate hike is better.

Practical recommendations

1. Always sign in writing and, when relevant, raise the contract to a public deed so it can be recorded with SUNARP (Property Registry) and made enforceable against third parties.
2. Document the condition of the premises with photos and video at start and end.
3. Negotiate renewal options from the start.
4. Define the adjustment formula and its limits.
5. If you sign under Legislative Decree 1177, seek professional advice: the ease of eviction in the landlord's favor doubles the importance of every clause.
6. Consider including mediation or arbitration as a dispute resolution mechanism; it is faster than the Judiciary.

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