Commercial lease and non-commercial activity: when rent review is compulsory

Imagine you are in Grasse, the owner of commercial premises that you lease to a medical analysis laboratory. The lease is signed, the rent is fixed, everything is fine. But then the tenant asks for a rent review, invoking the 1953 decree on commercial leases. Except that... the laboratory activity is not a commercial activity in the legal sense. So, does this decree apply? And if both parties have provided in the lease that the review is to be carried out according to this decree, is that valid? This is exactly the question that the Court of Cassation decided in 1988. And the answer is clear: yes, the parties are free to set the terms of the lease, even for a non-commercial activity. But what does this mean for you?

The facts: a story like many others

Mr. Dupont, owner of premises in Nice, leases them to a medical analysis laboratory. The lease stipulates that the rent will be reviewed in accordance with the decree of 30 September 1953, which normally governs commercial leases. However, the activity of a medical analysis laboratory is a liberal profession, not a commercial activity. In principle, the 1953 decree does not apply to leases for premises used for non-commercial activities. But the parties provided for it in the contract. The tenant then requests a rent review based on this decree. The owner refuses, arguing that the decree cannot apply because the activity is not commercial. The dispute goes to the Court of Appeal, which rules in favour of the tenant: it considers that the parties intended to subject the rent review to the 1953 decree. The owner appeals to the Court of Cassation. The Court of Cassation dismisses the appeal and upholds the Court of Appeal's decision.

The reasoning of the court — explained

The Court of Cassation had to interpret the intention of the parties. The principle is that, for leases not subject to a specific regime (such as the commercial lease status), the parties are free to set the terms they wish. In other words, contractual freedom (the right of the parties to decide what they want in the contract) is the rule. Here, the parties had inserted a clause providing that the rent review would be carried out according to the 1953 decree. The Court of Appeal examined their common intention (what they intended together) and concluded that they indeed wanted this decree to apply. The Court of Cassation validates this reasoning: it considers that the Court of Appeal has sovereignly (definitively, without control by the Court of Cassation) assessed the intention of the parties. In short, even if the lease is not subject to the commercial lease status, the parties may freely decide to refer to it for certain clauses, such as rent review. However, be careful: this does not mean that the entire commercial lease status automatically applies. Only the clauses expressly provided for in the lease will be retained. What few people know is that this decision is a classic example of contractual freedom in lease law.

What this means for you — practically

For you, as a landlord in Grasse or Nice, this decision reminds you that the contract is law between the parties. If you sign a lease with a tenant carrying out a non-commercial activity (liberal profession, craftsman, etc.), you can perfectly well provide that the rent review will follow the rules of commercial leases. But be careful: if you do not want this review, do not include it. For the tenant, it is the opposite: if you want to benefit from a regulated review, negotiate a clause to that effect. Concretely, if you own premises leased to a doctor in Nice, and the lease provides for a review based on the commercial rent index (ILC), this will apply even if the medical activity is not commercial. A numerical example: annual rent of €12,000, review of 3% per year, i.e. €360 increase per year. Without a clause, the review would be free, so potentially higher or lower. If you are in this situation, you must check your lease: what does it say about the review? If nothing is provided, the review will be carried out under general law, i.e. freely, but with six months' notice.

Four tips to avoid this type of dispute

• Draft the review clause precisely: clearly state whether you refer to the 1953 decree, the ILC index or another mechanism. Do not leave any ambiguity.
• Check the nature of the activity: before signing, determine whether the tenant's activity is commercial or not. This will influence the application of the commercial lease status.
• Consult a lawyer lawyer: in Grasse or Nice, have your lease reviewed by a professional to avoid ambiguous clauses. undefined, I have seen cases where a single poorly drafted sentence cost thousands of euros.
• Anticipate amendments: if the activity changes during the lease (for example, a laboratory becomes a pharmacy), renegotiate the review clauses to avoid conflicts.

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Further reading: related case law and developments

This 1988 decision is part of a consistent line: the Court of Cassation has always recognised the freedom of the parties in derogatory leases (leases not subject to the status). For example, in a decision of 10 March 1993 (No. 91-15.247), it held that parties to a professional lease may validly agree to a triennial review clause, even if the commercial lease status does not apply. The trend is therefore towards valuing the intention of the parties. For the future, with the multiplication of liberal activities (doctors, lawyers, architects), this case law remains relevant. Courts will continue to interpret clauses based on the intention of the parties, without being limited to the strict legal framework.

In practice: what to do

FAQ:

1. Can I request a review of my rent if my activity is not commercial? Yes, if your lease expressly provides for it.

2. What if my lease says nothing about review? You can request a review every three years, but without a cap, unless it is abusive.

3. What are the time limits for challenging a review clause? You have a period of five years from the signing of the lease to bring an action for nullity.

4. How much does a consultation with a lawyer to check my lease cost? Expect between €150 and €300 for a lease analysis in Grasse.

5. Can I include a review clause in a residential lease? No, residential leases are governed by the 1989 law, which imposes strict rules.

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 →