Property Litigation: Solution

Imagine: you are the owner of a small building in Tarnos, in the Landes. Your tenant calls you one morning, panicked: a pipe has burst, water has flooded everything, the floors are warped, the walls blackened with mould. The contractors' quotes exceed €80,000, while the flat is only worth €60,000. What should you do? Does the lease continue? Can you terminate it? And does your tenant still have to pay rent?

This is exactly the type of situation the Court of Cassation ruled on in a judgment of 8 March 2018 (No. 17-11.439). A decision that clarifies Article 1722 of the Civil Code, an obscure but essential provision for any landlord or tenant. So, what does the law say when the rented dwelling is destroyed or rendered uninhabitable? The answer is clear: the lease is automatically terminated. But beware, this automatic termination is not so simple to invoke. Analysis.

In this article, I will explain concretely what this decision means for you, whether you are a landlord in Parentis-en-Born or a tenant in Mont-de-Marsan. I will break down the reasoning of the judges, give you practical advice, and show you how to avoid ending up in a legal dead end. Because, believe me, I have seen cases where ignorance of these rules cost the parties thousands of euros.

The Facts: A Story That Happens Every Day

The case begins in Toulouse, but it could just as easily have taken place in Tarnos. A property investment company (SCI) leases commercial premises to an operating company. The lease is signed in 2012. But in 2014, the lessor SCI discovers that the premises are in an advanced state of disrepair. Water infiltration, cracks, electrical problems... In short, the premises are practically unusable.

What does the owner do? She invokes Article 1722 of the Civil Code and notifies her tenant, on 3 June 2014, of the automatic termination of the lease. She considers that the property is "totally destroyed" because the cost of restoration work exceeds the value of the premises themselves. The tenant disputes this: in her view, there is no total destruction, so no automatic termination. She sues the lessor to have the termination annulled and to obtain damages.

The court of first instance rules in favour of the tenant. The lessor appeals. The Court of Appeal of Toulouse, in a judgment of 10 January 2017, upholds the decision: it considers that the premises are not totally destroyed, as they can be repaired. But the SCI does not give up and appeals to the Court of Cassation. The Court of Cassation, in its judgment of 8 March 2018, quashes the appeal judgment and remits the case to another court of appeal. Why? Because the lower court judges had not sufficiently examined whether the impossibility of using the premises was absolute and definitive, or whether the cost of the work exceeded the value of the property.

The Reasoning of the Court — Analysed

The Court of Cassation restates the principle laid down in Article 1722 of the Civil Code: "If, during the term of the lease, the leased thing is totally destroyed by a fortuitous event, the lease is automatically terminated." A "fortuitous event" is an unforeseeable event beyond the control of the parties, such as a flood, fire, or serious latent defect. But the Court goes further. It clarifies that total destruction is not limited to the physical collapse of the building. It can also result from two situations:

• The absolute and definitive impossibility of using the property in accordance with its intended purpose: for example, if a flat becomes completely unsanitary and uninhabitable, even if it is still standing.
• The need to carry out work whose cost exceeds the value of the property: if the repairs cost more than the dwelling is worth, it is considered economically destroyed.

In short, the Court of Cassation broadens the concept of destruction. It is not only the stone that falls, but also the impossibility of using the property or the lack of profitability of the repairs. In the Toulouse case, the Court of Appeal had simply noted that the premises were not physically destroyed. But it had not checked whether the cost of the work exceeded the market value (the sale price) of the premises. However, the estate agents' certificates produced by the lessor showed that the cost of restoration exceeded the value of the property. The Court of Cassation therefore considered that the lower court judges should have examined this point. In other words, if the work exceeds the value of the property, the destruction is legally total, even if the walls are still standing.

Beware, however: the burden of proof lies with the party invoking the termination. It is for the landlord (or the tenant, as the case may be) to demonstrate that the conditions of Article 1722 are met. In my practice, I have come across cases where landlords thought they could terminate the lease overnight without solid proof. Result: they ended up being ordered to pay damages for wrongful termination.

What This Means for You — Concretely

If you are a landlord: this decision gives you a powerful tool to exit a lease when the property is seriously damaged. But be careful, you must prove that the impossibility of use is absolute and definitive, or that the work exceeds the value of the property. For example, if your flat in Parentis-en-Born suffers a fire and the reconstruction quotes amount to €120,000 while the property is worth €100,000, you can invoke Article 1722. You must then notify the termination by registered letter with acknowledgement of receipt, stating the reasons and attaching supporting documents (quotes, expert reports). The lease ends immediately, without notice. But beware: if the tenant contests, the judge will decide.

If you are a tenant: this decision also protects you. If the dwelling becomes completely uninhabitable (for example, after a flood that destroys partitions and electricity), you can request termination of the lease and stop paying rent. But you must prove that the impossibility of use is absolute and definitive. A simple water leak is not enough. In a case I handled, a tenant in Mont-de-Marsan suffered a gas leak that made the flat dangerous. The landlord refused to carry out the work. We were able to obtain termination on the basis of Article 1722, because the impossibility of use was total (no gas, no heating, no cooking).

If you are a buyer or co-owner: be aware that this case law may have an impact on the value of the property. A building with a unit that is "economically destroyed" may see its value decrease. In a co-ownership, if a unit becomes uninhabitable and the co-owner can no longer pay their charges, this can create tensions.

Four Tips to Avoid This Type of Dispute

• Carry out a detailed inventory of fixtures at the start and end of the tenancy with photos. In the event of deterioration, you will have proof of the initial condition. Without this, it is difficult to prove that the property has become uninhabitable.
• Take out suitable multi-risk home insurance. Check that your policy covers water damage, fire, and natural disasters. Good insurance can cover the work and avoid termination.
• In the event of a disaster, call in a building expert or a bailiff. A bailiff's report or an expert's report is solid proof to demonstrate the impossibility of use or the excessive cost of the work.
• Consult a specialist lawyer before notifying a termination. A wrongful termination can expose you to damages. A lawyer will check that the conditions are met and help you build a solid case.

Further Reading: Related Case Law and Developments

This 2018 decision is part of a line of judgments that broadly interpret the concept of destruction. Already, in a judgment of 5 November 2003 (No. 01-13.977), the Court of Cassation equated with total destruction the impossibility of using premises in accordance with their intended purpose due to excessively costly compliance work. More recently, the Court reiterated that the loss of the leased thing can be economic (Cass. 3rd Civ., 12 September 2019, No. 18-18.523).

The trend is therefore towards reinforced protection of the tenant (who can free themselves from a property that has become unusable) and of the landlord (who can recover their property without delay). But the courts are demanding on evidence. It is not enough to allege costly work: precise quotes and an estimate of the market value of the property are required. In the years to come, we can expect the judges to further refine the criteria, particularly in case of disagreement between the parties on the cost of the work.

Frequently Asked Questions

• Can I terminate the lease if my tenant has caused intentional damage? No, Article 1722 only applies in the event of a fortuitous event (unforeseeable event). If the tenant is at fault, you must turn to termination for fault (Article 1729 of the Civil Code).
• What if the property is partially destroyed? Article 1722 only applies in the event of total destruction. If the destruction is partial, the lease continues, but you can request a reduction in rent or termination for non-performance of the landlord's obligations (Article 1719).
• Do I have to return the security deposit in the event of automatic termination? Yes, the security deposit must be returned to the tenant, less any tenant repairs not caused by the fortuitous event. But be careful: if the property is destroyed, there is often no contradictory check-out inventory, which can create disputes.
• What is the time limit for acting after the disaster? There is no legal time limit, but it is advisable to act quickly. If you wait too long, the judge may consider that you have waived the termination. In practice, notify the termination within weeks of the disaster.
• Can the tenant also invoke Article 1722? Yes, if the dwelling becomes uninhabitable through no fault of their own, they can request termination of the lease and stop paying rent. They must then prove the absolute and definitive impossibility of use.

Are you in a similar situation? A 30-minute initial consultation with Maître Zakine (€45) can save you months of litigation — and often much more. Book an appointment →