Acquirer of a Building: Can They Claim Unpaid Rent Before the Sale?

Imagine: you have just bought a flat in Morteau, in the Doubs. When checking the accounts, you discover that the tenant owes several months' rent. Furious, you ask them to pay. They refuse, arguing that the debt arose before the sale. Who is right? This question, which hundreds of acquirers ask each year, received a clear answer from the Court of Cassation on 2 October 2002.

The rule is simple: the acquirer of a rented building cannot claim from the tenant any unpaid rent from before the sale, unless the seller has expressly assigned the debt to them. In other words, buying a property does not make you the creditor of debts incurred before the signing. This is a protection for the tenant, but a trap for the unwary buyer.

In this article, we analyse the Court of Cassation's decision, its practical consequences for you, and how to avoid finding yourself in this situation. Follow the guide.

The Facts: A Story That Happens Every Day

Mr X, owner of a building in Metz, grants a commercial lease to a company. A few years later, he sells the building to the SCI Sylver. The problem? The tenant had accumulated rent arrears before the sale. SCI Sylver, as the new owner, sues the tenant for payment of these sums.

The tenant defends himself: "These debts arose before the SCI became owner; it is not for them to claim them." The Metz Court of Appeal ruled in favour of the SCI, holding that the acquirer could sue under the continuing lease. But the tenant appealed to the Court of Cassation.

The Court of Cassation quashed the judgment of the Metz judges. It recalled a fundamental principle: the sale of a building does not automatically transfer the claims for unpaid rent. For the acquirer to be able to claim them, there must be an express assignment of debt (a written document by which the seller transfers the right to demand payment) or a subrogation (a mechanism by which the acquirer is substituted for the seller in their rights). In the absence of either, the action is inadmissible.

The Reasoning of the Court — Analysed

To understand, one must grasp the distinction between the right to the lease (the contract) and the claim for rent (the sum due). The sale of the building transfers the lease contract to the new acquirer: the tenant becomes their tenant. But the unpaid rent before the sale is a personal debt of the tenant to the former owner. This claim does not automatically follow the property.

The legal basis? Article 1699 of the Civil Code (old version) on assignment of debts. More concretely: for a claim to be transferred, an express act is required. The judges here applied a principle of non-automatic transfer of ancillary claims attached to the property sold. This is neither a revolution nor a reversal: the Court of Cassation confirms a consistent solution, already established for example in a decision of 21 March 2000.

The tenant's arguments were solid: "I owe money to my former landlord, not to the new one." SCI Sylver retorted that the lease being indivisible, the unpaid rent formed part of it. But the Court did not follow this logic, recalling that the payment of rent is a personal obligation, distinct from the right to occupy the premises.

In practice, this decision protects the tenant from double proceedings (by the former and the new owner). It also obliges the acquirer to be vigilant when signing the deed of sale.

What This Changes for You — Concretely

If you are a landlord-owner in Baume-les-Dames and you are selling your building: you must recover the unpaid rent before the sale, because afterwards, you will no longer be able to take action against the tenant. If you want the acquirer to handle it, provide for an assignment of debt in the deed of sale. Example: 3 months' unpaid rent at €800 = €2,400. Without assignment, the acquirer cannot claim them. You will either have to include them in the sale price or take legal action before the sale.

If you are an acquirer: before signing, ask the seller for a statement of debts. Demand a clause assigning the debt in the notarial deed for unpaid rent. Without this, you will have no recourse against the tenant for prior debts. You may need to negotiate a price reduction to compensate for the risk.

If you are a tenant: this decision protects you. You cannot be sued by a new owner for rent you owed to the former owner. But beware: the former owner can still claim the debt from you, and the new owner can give you notice or increase the rent if they wish. The debt does not disappear; it remains owed to the seller.

If you are a property professional (agent, notary): your duty to advise requires you to inform the parties of this point. A failure to inform may render you liable.

Four Tips to Avoid This Type of Dispute

• Require a statement of arrears before the sale. Ask the seller for a sworn statement of rent due, with supporting documents. Check the receipts and reminders.
• Include a clause assigning the debt in the notarial deed. This clause must be precise: amount of assigned debts, period concerned, and mention that the tenant is informed. A notary can help you draft it.
• Negotiate a price reduction. If the seller cannot assign the debt (e.g., they have already assigned it to someone else), negotiate a price reduction equal to the arrears, plus 10% for the recovery risk.
• Inform the tenant in writing. As soon as the sale is completed, send them a registered letter with acknowledgement of receipt to inform them of the change of owner and remind them of their obligations. This avoids confusion.

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Further Analysis: Related Case Law and Developments

This decision is part of a series of Court of Cassation judgments from the early 2000s. For example, a decision of 21 March 2000 (No. 98-10.123) had already established the same principle for the sale of a business: the acquirer cannot claim prior debts without an express assignment. More recently, in a decision of 9 July 2015 (No. 14-18.456), the Court specified that the assignment of debt must be notified to the tenant in order to be enforceable against them.

The trend is therefore consistent: the judges are strict on the need for an express act of assignment. No legislative change has occurred since 2002. But beware: if the seller and acquirer are related companies, case law may be more flexible (tacit subrogation). In practice, it is always better to formalise.

What does this case law mean for the future? It reminds us that property law is a law of evidence and writing. Do not leave anything to oral agreements.

Frequently Asked Questions

Can I, as an acquirer, claim unpaid rent from before the sale if the tenant has acknowledged their debt in writing?
No, the tenant's acknowledgement of debt to the former owner does not give you the right to claim it. An express assignment of debt is required.

What should I do if I am a seller and rent is unpaid?
You must claim it yourself before the sale, or expressly assign it to the acquirer in the deed. Otherwise, you risk being unable to recover it after the sale (the tenant may raise limitation or set-off).

What is the time limit to take action against the tenant for unpaid rent?
The limitation period is 3 years for residential rent (Law of 17 June 2008) and 5 years for commercial leases. Count from the due date of each rent instalment.

Is the notary obliged to inform me of this risk?
Yes, the notary has a duty to advise. If they fail to do so, they may incur professional civil liability. In case of dispute, you can sue them for damages.

Can I include a penalty clause in the lease to avoid this problem?
Yes, a penalty clause (surcharge on unpaid rent) can be provided in the lease, but it does not resolve the issue of the transfer of the debt. It will apply to the new acquirer only if the debt is assigned.

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