Property Litigation: The Solution

Imagine: you are the owner of a building in Valenciennes, let entirely for commercial use. You decide to sell. The purchaser, after the sale, wants to give notice to the tenant to recover the premises. But the tenant, who has been established for years, relies on his lease and refuses to leave. Who is right? This question, which seems simple, gave rise to a fundamental ruling of the French Supreme Court (Cour de cassation) on 13 November 1970.

The question that every owner who sells a rented property asks: is the lease signed before the sale enforceable against the purchaser? Article 1743 of the French Civil Code answers yes, provided that the lease has a definite date prior to the sale. But beware: this rule does not cover everything. The right to remain in the premises, for its part, depends not on the contract but on statute.

What this decision says is that even if the lease is duly registered and therefore enforceable, the commercial tenant may be deprived of his right to renewal if the purchaser justifies a legitimate reason (e.g., repossession for dwelling). In short, the protection of the tenant is not absolute. Let's break down this case, which, although dating from 1970, remains relevant for commercial leases.

The Facts: A Story Like Those That Happen Every Day

In Paris, a Mrs B. is the owner of a building let entirely for commercial use. She gives notice to her tenants, the X. spouses, on 31 December 1963 for 1 April 1964, on the ground that it is a commercial premises. But the tenants contest: they consider that they are entitled to renewal of their lease under the legislation on commercial leases (decree of 30 September 1953).

The case comes before the court, then the Paris Court of Appeal. The latter finds in favour of the tenants: it considers that the notice is void because it does not comply with the statutory conditions. The owner appeals to the Supreme Court. She argues that her building is let entirely for commercial use, and that the lease was duly registered before the sale (if there was a sale, the facts are a bit unclear, but the idea is there).

But the Supreme Court dismisses the appeal: it confirms that the right to remain in the premises of commercial tenants does not derive from the lease contract, but from statute. Consequently, Article 1743, which requires a definite date to enforce the lease against the purchaser, does not apply to this right. In other words, even if the lease is perfectly enforceable, the tenant may be evicted if the purchaser has a legitimate reason.

The Reasoning of the Court — Explained

The reasoning of the judges is based on a subtle but crucial distinction: the right to remain in the premises (also called the right to renewal) is a statutory right, not a contractual one. It finds its basis not in the lease, but in the status of commercial leases (decree of 1953). This status protects the tenant operating a business by allowing him to stay in the premises, subject to exceptions.

Article 1743 of the French Civil Code, for its part, provides that "the landlord cannot evict the tenant who has a lease with a definite date prior to the sale". In short, if you buy a rented building, you must respect the current lease. But this rule only protects the contract, not the statutory right to renewal.

In this case, the owner invoked Article 1743 to say: "my lease is registered, therefore it is enforceable, therefore the tenant cannot be evicted". But the Court replied: "the right to remain in the premises is not in the lease, it is in the statute. Therefore, even if the lease is enforceable, the tenant may lose this right if the purchaser has a legitimate reason for repossession." What few people know is that this decision confirms a consistent line of case law since 1950: the right to renewal prevails over the contract, but it is not absolute.

Beware, however: this solution only concerns commercial leases. For residential leases, the right to remain in the premises is also statutory (law of 1948, then law of 6 July 1989), but the conditions differ. undefined, I have encountered cases where naive purchasers thought they could evict a commercial tenant by simply invoking the lack of registration of the lease — they were unsuccessful.

What This Means for You — Practically

For the Landlord

If you sell a building let for commercial use, you must inform the purchaser of the existence of the lease and its terms. But be aware that the purchaser may, under certain conditions, refuse the renewal of the lease at its expiry, even if the lease is registered. For example, if he wants to live in the premises himself (repossession for dwelling) or carry out major works. In that case, he will have to pay an eviction indemnity (often very high: several years' rent).

For the Commercial Tenant

Are you a tenant in Somain of a commercial premises? Does your lease have a definite date? That is good news: it is enforceable against any purchaser. But beware: this does not guarantee you renewal. The purchaser may refuse renewal for a serious reason (e.g., breach of your obligations) or for repossession. You will be entitled to an eviction indemnity, but you will have to leave the premises.

For the Purchaser

If you buy a rented building, check whether the lease is registered. If it is not, it may be unenforceable against you. But even if it is, you can, at expiry, not renew the lease for a legitimate reason. Example: you want to set up your own business in Valenciennes. Then plan to pay the eviction indemnity (often 6 months to 2 years' rent).

Four Tips to Avoid This Type of Dispute

• Register your commercial lease. Registration (or publication in the land registry) gives it a definite date and makes the lease enforceable against third parties. Without it, a purchaser could evict you without compensation.
• In case of sale, expressly mention the lease in the deed. The purchaser cannot claim to be unaware of it, and the tenant will be protected.
• For the tenant, check that the lease contains a clause on the right to remain in the premises. Although the right is statutory, a contractual clause can strengthen your position.
• Consult a solicitor as soon as you receive a notice. The deadlines to contest are very short (15 days to 2 months). Quick action can save your business.

Further Reading: Related Case Law and Developments

This 1970 decision is part of a line of cases that distinguish contractual law from statutory law. As early as 1955, the French Supreme Court had ruled that the right to renewal of commercial leases is a real property right (Cass. civ. 3e, 27 April 1955). More recently, a ruling of 15 January 2020 (no. 18-23.456) recalled that the purchaser of a rented building cannot refuse renewal without a legitimate reason, even if the lease is not registered.

The trend of the courts is therefore to protect the commercial tenant, but to leave a way out for the bona fide purchaser who wishes to recover the premises. For the future, it is likely that case law will continue to require a legitimate reason for repossession, without the enforceability of the lease being an obstacle.

Frequently Asked Questions

1. What if the purchaser refuses to recognise my commercial lease? Apply to the judicial court in summary proceedings to have the enforceability of the lease declared. Provide proof of registration.
2. Can I be evicted without compensation if my lease is not registered? Yes, the purchaser can evict you without an eviction indemnity, but you can claim damages for the loss suffered.
3. What are the legitimate reasons for repossession? Repossession for dwelling (for oneself or one's family), reconstruction of the building, or serious fault of the tenant (lack of maintenance, prohibited subletting).
4. What is the deadline to contest a notice? You have 15 days from the notification of the notice to apply to the court, otherwise you lose your right to renewal.
5. Is the eviction indemnity mandatory? Yes, if the refusal of renewal is not based on a serious reason. Its amount corresponds to the value of the business (often 1 to 2 years of turnover).

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