6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time

Other than "normal" lease agreements under which a tenant is given a right to use (parts of) the landlord's real estate, there is a Norwegian concept called ground-lease (tomtefeste) under which a tenant is leasing the real estate below a building or other construction owned by the tenant themselves.

6.2 Types of Commercial Leases

Most of the commercial leases in Norway are based on standard templates provided by the commercial real estate agent association, thus being called the "broker standards" (Meglerstandarden). Several versions of these templates exist, and these can be grouped in the following:

lease of new or newly rehabilitated premises (which have specific regulations with respect to the building project prior to handover);

"as/is" lease (the most used lease where the premises are leased out as/is); and

"triple-net" lease (where all obligations regarding maintenance/restoration, taxes and building insurance are the tenants' responsibility).

6.3 Regulation of Rents or Lease Terms

The main rule in Norwegian law is that all lease terms must comply with the Norwegian Tenancy Act. However, professional landlords and tenants may deviate from several of these provisions (and the widely used standard template "Meglerstandarden" also deviates from the Tenancy Act on several items).

6.4 Typical Terms of a Lease

The typical length of a lease term (eg, extension options) varies between one to two years for short leases, around five years for medium length leases and from ten up to 20 to 25 years for long leases. The far end of the long-term leases are typically entered into by industrial corporate entities or governmental bodies.

The obligation of maintenance and restoration usually implies that the landlord is responsible for exterior maintenance and restoration of technical installations, while the tenant is responsible for internal maintenance and maintenance of technical installations. However, in some cases, the parties will agree on barehouse/"triple-net" terms, which will normally imply that the tenant is also responsible for exterior maintenance and restoration of technical installations.

The frequency of rent payment varies between monthly, quarterly and annual payments.

6.5 Rent Variation

Section 4-3 of the Tenancy Act states that both parties may require a regulation of rent to market level if no rent adjustments have taken place during the last two years and six months. Parties usually deviate from this section, and the rent under Norwegian leases will normally be adjusted on an annual basis, proportionate to the development (or sometimes only to the increase) in the Norwegian consumer price index. It is normal that leases include a provision that prevents the lease from becoming lower than the initial rent in the event of negative development of the CPI.

6.6 Determination of New Rent

If the parties fail to agree on a new rent level, the rent must be determined by the Norwegian courts (or by arbitration if agreed upon). If one of the parties uses its right, under Section 4-3 of the Tenancy Act, to adjust the rent to market level, and the parties cannot agree on the market level, an appraisal committee (takstnemd) shall determine the new rent level (see Section 12-2 of the Tenancy Act clause 12-2).

6.7 Payment of VAT

The main rule is that the rent is not subject to VAT. However, the landlord may be entitled to (and will often submit) voluntary registration as a VAT subject in the VAT Register, and VAT will in such case be added to the rent. The tenant will be entitled to full or partial deduction of VAT.

6.8 Costs Payable by Tenant at Start of Lease

Unless the parties have agreed to other specific costs, only rent will be payable by the tenant at handover.

6.9 Payment of Maintenance and Repair of Communal Areas

The landlord pays for the cost of maintenance and repair of areas used by several tenants, but may transfer these costs to the tenants through the common costs (which may be added to the rent).

6.10 Payment of Utilities and Telecommunications

Utilities and telecommunications serving several tenants are paid by the landlord, but the landlord will, in general, transfer these costs to the tenants through the common costs (which may be added to the rent).

6.11 Insuring the Real Estate that is Subject to the Lease

Property insurance will, in most cases, be paid by the landlord, which will also be the person/entity subject to the property insurance. The insurance will typically cover damage to the property, the landlord's liability and any loss of rent. If the parties have agreed on a barehouse/"triple-net" lease, the property insurance may be entered into and covered by the tenant directly.

6.12 Restrictions on Use of Real Estate

The leased premises must be used in accordance with the agreed purpose and with due care. Public law may also limit the allowed use of the property, and a lease agreement will typically include a provision that obliges the tenant to use the premises in accordance with such public law. In some situations, private law can also limit the use of the leased premises. A typical example is the neighbouring law.

6.13 Tenant's Ability to Alter and Improve Real Estate

The tenant may not make any changes, including internal/installation work, of or to the Leased Object without the prior written consent of the landlord. As a rule, the landlord can withhold written approval at their own discretion. However, it is often agreed that a prior written approval shall not be withheld without just cause.

Since alterations to the premises require a prior written approval, the landlord can impose any type of condition to his approval. However, if approval can only be denied on just cause, the conditions must also be deemed as "just".

6.14 Specific Regulations

The Norwegian Tenancy Act does not apply to lease between hotels, hostels, guesthouses, boarding houses, etc, and their guests. All types/categories of real estate (in terms of buildings) are otherwise subject to the Norwegian Tenancy Act.

6.15 Effect of Tenant's Insolvency

In case a tenant becomes insolvent, the bankruptcy estate shall within four weeks decide on whether it will enter into the lease or terminate the lease. During this period, the estate must cover the rent (which will have priority above unsecured claims).

If the estate enters into the lease agreement, the estate will be subject to the contractual terms of the lease. However, the estate will typically aim to sell the assets and business in the insolvent tenant together with the lease agreement, and will have such a transfer right regardless of any contractual provisions in the lease. The estate may also terminate the lease upon prior notice, regardless of the lease term provisions in the lease agreement.

If the estate chooses not to enter into the lease agreement, it will represent a breach of contract that gives the landlord the right to claim compensation for losses and defaults. Unless the landlord has any security in form of a pledge or a guarantee, such claims are regarded as non-prioritised claims in the estate and coverage is normally unlikely.

6.16 Forms of Security to Protect Against Failure of Tenant to Meet Obligations

The tenant will typically provide a third-party guarantee towards the landlord for their contractual obligations under the lease. Normally, such guarantee will be provided by a financial institution (a bank guarantee) or by a parent company (parent company guarantee). The tenant may also provide other types of security (eg, an asset pledge), but this is more unusual than the guarantees.

6.17 Right to Occupy After Termination or Expiry of a Lease

A tenant has no right to occupy the lease object after the expiry or termination of a commercial lease. However, if the tenant does not vacate the premises upon expiry, and the landlord fails to send a request to vacate within a given time limit after expiry (three months according to law, but normally agreed to six months), the lease will be regarded as continued and as a continuous lease without a fixed term. The landlord will, in general, have a right to terminate such continuous leases with a three months' notice period.

6.18 Right to Assign Leasehold Interest

The tenant may not assign the lease or sublease the premises without written approval from the landlord, unless otherwise agreed in the lease. In commercial leases, it is not uncommon that the tenant's right to assign and/or sublease its leasehold is conditional upon a written approval from the landlord, which can only be withheld on just cause (which typically is that the new tenant has a different VAT status or that the transfer will have economic implications for the landlord).

6.19 Right to Terminate Lease

Force majeure events might give the tenant and/or the landlord a right to terminate the lease. Insolvency will also imply a termination of the lease (unless the bankruptcy estate enters into the lease, see 6.15 Effect of Tenant's Insolvency). Only events that constitute a material breach of contract will otherwise normally give the parties a right to terminate the lease. A typical event can be a persistent and severe breach of contract by one of the parties (eg, lack of rent payment).

6.20 Registration Requirements

There are no formal requirements for lease agreements under Norwegian law, nor are there any registration requirements. Lease agreements are normally not registered in the Land Register unless required by the lessee and accepted by the lessor.

The lessor's prior written consent is required if the lessee wants to register the agreement. Registration of a lease agreement in the Land Register currently costs NOK585 for paper-based submissions and NOK 540 for electronic submissions. It is common for the lessee to cover the costs of registration, including the fee.

6.21 Forced Eviction

Under certain circumstances, the landlord can initiate a forced eviction before expiry of the lease terms. The legal provisions are included in Chapter 13 of the Norwegian Enforcement Act, and do in summary include the following circumstances:

the tenant fails to pay the rent and the lease includes a specific provision stating that such breach of contract gives the landlord a right to forced eviction; and

if the tenant's breach of contract "obviously" gives the landlord a right to terminate the agreement.

6.22 Termination by Third Party

The government, a municipal authority or other third parties cannot directly enforce the termination of a lease. However, if the government expropriates a property on which a lease agreement exists, the government will terminate the lease (but the tenant will be entitled to compensation for losses).

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