Commercial lease agreements in Serbia

Starting a business or moving it into a new commercial space is an exciting step, but it also carries large financial risks. Whether you are opening a retail store, a hospitality venue, an aesthetic studio, or moving an IT company into a new office, the location and the premises are often the pillars of your business.

Entrepreneurs in Serbia, however, too often sign “template” lease agreements from the internet or the ones offered by the landlord. Only after investing thousands of euros in renovation, branding, and marketing do they realise that a single sentence in the contract can cost them the entire business.

As a lawyer, I keep seeing the same mistakes in practice. Here are the three key points you must pay attention to in order to legally protect your business.

1. The trap of sudden termination: how do you secure stability?

Imagine this scenario: you have built up the premises, clients are used to your address, and the business is thriving. Suddenly the landlord serves a 15-day notice because someone else is offering more. Overnight, your entire investment in that location collapses.

To prevent this, the contract must define two things precisely:

Duration of the lease: if you are investing in the premises, the contract must be concluded for a fixed term (for example 3, 5, or more years). An open-ended contract is too risky because either party can terminate it at any time.
Notice periods and conditions: even with a fixed-term contract, landlords try to insert clauses that allow early termination “without giving reasons”. Your lawyer must insist that termination is allowed only in precisely listed situations (for example if you fail to pay rent for two consecutive months) and that the landlord’s notice period is long enough (at least 60 to 90 days) so that your business has time to survive the transition.

2. Hidden costs: who pays for current maintenance, and who for capital repairs?

Investors often misuse the phrase “the tenant pays the maintenance costs”. When, after three months, the main plumbing stack bursts, the central air conditioning fails, or the roof starts leaking, the landlord will point to that sentence and say it is your obligation.

The Law on Contracts and Torts is clear on this, but a contract can change those rules to your detriment. That is why the contract must contain a clear division:

Current maintenance (your cost): painting, replacing light bulbs, minor repairs, cleaning, and utilities.
Capital / investment maintenance (the landlord’s cost): repair of the roof and facade, replacement of windows, repair of heating and ventilation systems, and replacement of installations.

Pro tip: if you are taking over a grey-phase space and investing in a full renovation yourself, the contract must clearly provide that those costs are set off against the monthly rent (for example that you do not pay rent for the first 6 months).

3. Rent indexation and the right to sublet

Two items that entrepreneurs often overlook, and that can become a serious burden:

A jump in rent (indexation): check whether the contract contains a clause on “adjusting the rent to inflation or the euro”. If it does, the increase mechanism must be transparent and predictable, so that you do not wake up with rent 15% higher and no prior notice.
The right to sublet: if your business grows or changes, you may want to give part of the space to a partner company or share it with someone to reduce costs. Without the landlord’s explicit consent in the contract, subletting is prohibited by law and can be grounds for immediate termination.

A rule of the business world: the landlord protects their property, and you must protect your business. Real estate agencies that broker leases most often use generic contracts that do not address the specifics of your activity.

A poorly drafted commercial lease is a time bomb for any company. The cost of a legal review and negotiation of the contract with an experienced lawyer is negligible compared with losing the location, equipment, and clients.

Do not allow the stability of your business to depend on the goodwill of the property owner.

If you have found the ideal space for your business and have received a draft lease, do not sign it blindly. Send us the draft for a legal analysis so that we can eliminate the hidden traps.