{"id":2125,"date":"2024-10-22T17:23:00","date_gmt":"2024-10-22T17:23:00","guid":{"rendered":"https:\/\/studio-mauro.it\/non-categorizzato\/commercial-goodwill-allowance-what-it-is-when-it-is-claimed-and-what-its-value-is\/"},"modified":"2024-10-22T17:23:00","modified_gmt":"2024-10-22T17:23:00","slug":"commercial-goodwill-allowance-what-it-is-when-it-is-claimed-and-what-its-value-is","status":"publish","type":"post","link":"https:\/\/studio-mauro.it\/en\/real-estate-law\/commercial-goodwill-allowance-what-it-is-when-it-is-claimed-and-what-its-value-is\/","title":{"rendered":"Commercial goodwill allowance: what it is; when it is claimed; and what its value is"},"content":{"rendered":"

Article 34 of the Law of July 27, 1978, No. 392 <\/strong> provides forcommercial goodwill compensation<\/strong>. This regulatory provision turns out to be a compensation to be paid by the landlord to the tenant of commercial premises under certain circumstances. Here are the main features of this allowance: <\/p>\n

    \n
  1. It is due when the lease is terminated by the landlord’s will: If the landlord decides not to renew the lease when it expires, the tenant is entitled to the indemnity. This applies to commercial, industrial, handicraft or tourist interest activities. <\/li>\n
  2. Amount of allowance: The allowance is equal to 18 months’ salary of the last rent paid. For hotel operations, the allowance is equal to 21 monthly payments. <\/li>\n
  3. Additional allowance: If the property is reused for the same or similar activity within one year after the termination of the contract, the tenant is entitled to additional allowance equal to that already received.<\/li>\n
  4. Exclusions: The allowance is not due if the termination of the contract is caused by the tenant’s default, if the tenant himself decides not to renew the contract, or if the activity carried out does not involve direct contact with the public.<\/li>\n<\/ol>\n

    These rules are intended to compensate the tenant for the loss of business goodwill, which represents the firm’s ability to generate profits due to its location and customer base acquired during the course of the contract.<\/p>\n

    What are the requirements for getting the allowance?<\/strong><\/p>\n

    In order to obtain the business goodwill allowance, the tenant must meet the following requirements:<\/p>\n

      \n
    1. Commercial lease<\/strong> contract: The contract must be for premises used for commercial, industrial, craft or tourist interest.<\/li>\n
    2. Termination of contract by landlord’s will<\/strong>: The indemnity is due only if the landlord decides not to renew the contract when it expires. If the tenant decides not to renew the contract, the indemnity is not due. <\/li>\n
    3. Activities with direct contact with the public<\/strong>: The activity carried out on the premises must involve direct contact with the public of users and consumers. If the activity does not involve such contacts, the allowance is not due. <\/li>\n
    4. Absence of arrears<\/strong>: The tenant must not be in arrears with rent payments. If the contract is terminated due to the tenant’s delinquency, the indemnity is not due. <\/li>\n
    5. Timing of reuse<\/strong> of the property: If the property is reused for the same or similar activity within one year after the termination of the contract, the tenant is entitled to an additional allowance.<\/li>\n<\/ol>\n

      These requirements are established to ensure that compensation is paid only in situations where the tenant suffers real economic loss due to the termination of the lease.<\/p>\n

       <\/p>\n

      What happens if the tenant decides to voluntarily close the business?<\/strong><\/p>\n

      If the tenant decides to voluntarily close the business and not renew the lease, he or she is not entitled to business goodwill indemnity. The indemnity is provided only in cases where the termination of the lease is by the landlord’s will and not by the tenant’s decision. In other words, the indemnity is designed to compensate the tenant when it is the landlord who decides not to renew the contract, thus causing economic harm to the tenant who loses commercial goodwill because he is no longer allowed to conduct his business on the premises in question. If, on the other hand, it is the tenant who chooses to close the business, this decision is presumed to have been made consciously and without duress, so no compensation is provided. <\/p>\n

       <\/p>\n

      What happens if the landlord decides to renew the contract with different terms?<\/strong><\/p>\n

      If the landlord decides to renew the lease but with different terms, the situation may vary depending on the proposed new terms and the agreement between the parties. Here are some possibilities: <\/p>\n

        \n
      1. Agreement between the parties<\/strong>: If the tenant accepts the new terms proposed by the landlord, the contract is renewed on the new agreed terms. In this case, no business goodwill allowance is due, as the contract continues without interruption. <\/li>\n
      2. Rejection of new conditions<\/strong>: If the tenant does not accept the new conditions proposed by the landlord and decides not to renew the contract, the tenant is not entitled to goodwill indemnity. The indemnity is due only if it is the landlord who decides not to renew the contract on the previous terms.. <\/li>\n
      3. Negotiation<\/strong>: The parties can negotiate to find a compromise that satisfies them both. If an agreement is reached, the contract can be renewed on the new terms agreed upon. <\/li>\n
      4. Legal Assistance<\/strong>: It may occur that the landlord instrumentally demands a high rent update in order not to reach a renegotiation agreement. In such cases, it is advisable for the tenant to get legal assistance to try to have it determined, including and possibly by a Judge, that the new conditions are unfair or discriminatory. <\/li>\n<\/ol>\n

         <\/p>\n

        What is the procedure to apply for the allowance?<\/strong><\/p>\n

        To claim business goodwill allowance, the tenant must follow a specific procedure. Here is what is necessary to put in place: <\/p>\n

          \n
        1. Notice of termination<\/strong>: When the landlord gives notice of the decision not to renew the lease, the tenant should note the date of termination and the reasons given.<\/li>\n
        2. Formal request<\/strong>: The tenant must send a formal request to the landlord to obtain the business goodwill allowance. This request must be made in writing and must include certain precise elements:\n
            \n
          • The details of the lease (start date, duration, monthly rent).<\/li>\n
          • The date of termination of the contract.<\/li>\n
          • The specific request for the allowance, calculated on the basis of statutory monthly payments (18 monthly payments for commercial, industrial, handicraft or tourist interest activities; 21 monthly payments for hotel activities).<\/li>\n<\/ul>\n<\/li>\n
          • Supporting documentation<\/strong>: It is helpful to attach to the application all documentation that can support the claim, such as copies of the lease agreement, receipts of rent payments, and any other evidence that proves entitlement to the allowance.<\/li>\n
          • Negotiation and agreement<\/strong>: In many cases, the landlord and the tenant can negotiate to reach an agreement on the amount and manner of payment of the indemnity.<\/li>\n
          • Legal Assistance<\/strong>: If the landlord refuses to pay the allowance or if no agreement is reached, the tenant can enlist the assistance of a lawyer to put in place the best strategy.<\/li>\n
          • Payment of indemnity<\/strong>: Once an agreement is reached or a favorable judgment is obtained, the landlord must pay the indemnity to the tenant in a manner agreed upon or determined by the court.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

            Article 34 of the Law of July 27, 1978, No. 392 provides forcommercial goodwill compensation. This regulatory provision turns out to be a compensation to be paid by the landlord to the tenant of commercial premises under certain circumstances. Here are the main features of this allowance: It is due when the lease is terminated…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[44],"tags":[],"yoast_head":"\nCommercial goodwill allowance: what it is; when it is claimed; and what its value is - Studio Legale Mauro<\/title>\n<meta name=\"description\" content=\"What you need to know about business goodwill allowance\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/studio-mauro.it\/en\/real-estate-law\/commercial-goodwill-allowance-what-it-is-when-it-is-claimed-and-what-its-value-is\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Commercial goodwill allowance: what it is; when it is claimed; and what its value is - Studio Legale Mauro\" \/>\n<meta property=\"og:description\" content=\"What you need to know about business goodwill allowance\" \/>\n<meta property=\"og:url\" content=\"https:\/\/studio-mauro.it\/en\/real-estate-law\/commercial-goodwill-allowance-what-it-is-when-it-is-claimed-and-what-its-value-is\/\" \/>\n<meta property=\"og:site_name\" content=\"Studio Legale Mauro\" \/>\n<meta property=\"article:published_time\" content=\"2024-10-22T17:23:00+00:00\" \/>\n<meta name=\"author\" content=\"Studio Legale Mauro\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Studio Legale Mauro\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/studio-mauro.it\/en\/real-estate-law\/commercial-goodwill-allowance-what-it-is-when-it-is-claimed-and-what-its-value-is\/\",\"url\":\"https:\/\/studio-mauro.it\/en\/real-estate-law\/commercial-goodwill-allowance-what-it-is-when-it-is-claimed-and-what-its-value-is\/\",\"name\":\"Commercial goodwill allowance: what it is; 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