1. Scope & applicability
Law 49-16 applies to leases of immovable property used for commercial, industrial, artisanal or professional activities. It replaced the older dahir of 1955 with a more modern, balanced framework.
- Retail shops, restaurants, cafés
- Office space for professional services
- Industrial workshops, warehouses
- Medical and liberal professions (under conditions)
- Excluded: short-term furnished leases, seasonal tourism, residential
2. Minimum duration & renewal right
A commercial lease must have a written form and a minimum duration of 2 years (written, registered for renewal rights). After 2 years of effective occupation, the tenant acquires the right to renewal (droit au renouvellement), one of the most important protections in Moroccan commercial property law.
The right to renewal means the landlord cannot terminate at the end of the lease without either:
- A legal reason for non-renewal (tenant default, landlord's personal/family use, demolition for reconstruction), AND
- Paying an eviction indemnity (indemnité d'éviction) to compensate tenant loss
3. Eviction indemnity (indemnité d'éviction)
The indemnity compensates the tenant for the loss of:
- Goodwill (fonds de commerce) — built customer base, reputation, location
- Relocation costs — physical move, fit-out of new premises
- Renovation loss — unamortised improvements
- Staff costs — possible layoffs due to closure
- Other damages — loss of clientele, re-establishment
The indemnity can be substantial — typical benchmarks: 1.5 to 3 years of annual rent for retail, 1-2 years for offices. For a prime retail shop with strong goodwill, it can exceed 5-7 years of rent.
4. Rent review (révision triennale)
Either party can request a rent review every 3 years, pegged to the office variance index. Disputes over new rent go before the competent tribunal. Market-rent alignment is capped to avoid abrupt jumps (+10-15% max per 3-year cycle typical).
5. Valuation impact
For RICS valuers, Law 49-16 creates several considerations:
- Reversion potential limited — Rent review caps prevent immediate market-rent alignment
- Tenant protection drives value — Long-leased assets with loyal tenants price at tighter cap rates
- Eviction contingency — If landlord plans to vacate, deduct present value of expected indemnity
- Vacant possession premium — Vacant properties trade at +10-20% premium vs. encumbered with tenants
6. Key-money (pas-de-porte)
Pas-de-porte is a lump sum paid by the incoming tenant to the landlord or outgoing tenant for a new lease or transfer. It compensates for the goodwill already built up in the location. For prime Casablanca retail, it can reach 500 000 to 3 000 000 MAD depending on traffic and visibility.
FAQ
When does the right to renewal start?
After 2 years of continuous effective occupation under a written, registered commercial lease. The tenant must have paid rent and operated their business consistently.
How is eviction indemnity calculated?
By a court-appointed expert (or mutual agreement). Key inputs: rent level, business turnover, years of occupation, local goodwill, tenant's industry. A RICS-certified expert provides the defensible number.
Can the landlord refuse to renew?
Only for limited legal reasons (default, personal/family use, demolition). In all other cases, refusal triggers the eviction indemnity obligation.
Does Law 49-16 apply to offices in CFC?
Yes — CFC tax incentives apply to tenants; the lease itself remains under standard Law 49-16 regime.