Commercial lease: the lessor's good faith irrelevant for the right of repentance

Imagine: you are the owner of a commercial premises in Hérouville-Saint-Clair, let for years to a ready-to-wear brand. The lease expires, you serve notice with refusal of renewal, and the tenant replies that he intends to remain in the premises. You thought you were entitled to recover your property, but the law offers him a secret weapon: the right of repentance. And if your good faith makes no difference? That is what the Court of Cassation ruled in a judgment of 13 January 1999.

On that day, the High Court held that, in order to benefit from the right of repentance provided for in Article 5 of the Decree of 30 September 1953, the lessee does not have to prove the lessor's bad faith. A decision that made many landlords tremble, and which continues to fuel litigation before the commercial courts of Caen, Paris or elsewhere.

So, concretely, what does this judgment say? And above all, how can you anticipate it to avoid being trapped, whether you are landlord or tenant? Let's dive into the details.

The facts: a story that happens every day

The company Dea France, tenant of commercial premises in Paris, receives from its landlord a notice with refusal of renewal. The landlord invokes a legitimate and serious reason, without specifying which. The company Dea France, assisted by a specialised advisor, does not agree: it considers that the notice is irregular and intends to rely on the right of repentance provided for by the 1953 Decree.

This right allows the lessee, under certain conditions, to request the renewal of his lease after having received a notice. But for that, the landlord must have acted in bad faith. At least, that is what the landlord argued before the Paris Court of Appeal. According to him, the company Dea France, advised by a professional, could not ignore the rules and had to prove his bad faith.

The Court of Appeal agrees with him on one point: it denies the lessee the status of professional, within the meaning of Article 1147 of the Civil Code (now 1231-1), considering that he did not commit any fault. But it refuses to require the landlord's bad faith for the application of the right of repentance. The landlord appeals to the Court of Cassation.

The Court of Cassation, on 13 January 1999, dismisses the appeal. It affirms that, with regard to the requirements of Article 5 of the Decree of 30 September 1953, the good or bad faith of the landlord is irrelevant. Only the objective conditions set out in that text matter. A clear and final position.

The reasoning of the court — dissected

The heart of the dispute concerned the interpretation of Article 5 of the Decree of 30 September 1953, which governs the right of repentance in commercial leases. This text allows the lessee who has received a notice to request the renewal of his lease, even after the expiry of the response period, provided that certain conditions are met: in particular, that the landlord has not already granted a new lease or sold the premises to a third party in good faith.

The question was whether, for the lessee to exercise this right, he must also demonstrate that the landlord acted in bad faith when serving the notice. The landlord argued yes, because the notice was given for a legitimate and serious reason. The Court of Appeal, upheld by the Court of Cassation, said no.

The judges considered that the text does not make the right of repentance conditional on the good or bad faith of the landlord. It is a purely objective condition: the lessee must simply prove that he meets the legal conditions, without having to probe the landlord's intentions. This is a strict application of the letter of the decree, without adding a subjective condition.

This solution is in line with the protective logic of the status of commercial leases, which aims to guarantee the stability of the trader in his premises. It confirms that the right of repentance is a favour granted to the lessee, not a sanction of the landlord's behaviour.

Note that the Court of Cassation did not follow the landlord's argument on the professional status of the lessee. It considered that even assisted by an advisor, the lessee was not a legal professional within the meaning of Article 1147, and his ignorance of the rules did not constitute fault. But this part of the reasoning is secondary: the essential point is the irrelevance of the landlord's good faith.

What this changes for you — concretely

For the landlord: you must be extremely vigilant when serving notice on your commercial tenant. If you do so for a reason that is not perfectly justified, or if you omit a formality, the tenant may exercise his right of repentance and obtain renewal of the lease, even if you were in good faith. Concretely, this means that you will not be able to recover your premises for several years, and you will have to pay an eviction indemnity if you refuse renewal. Example: in Ifs, a landlord gave notice to his tenant to carry out renovation works, but those works were not sufficiently detailed in the notice. The tenant exercised his right of repentance and obtained renewal. The landlord had to pay him €50,000 in compensation for the loss suffered.

For the tenant: this right is a lifeline. If your landlord gives you notice, even for an apparently valid reason, you can, within 15 days of the notification, request renewal. You do not have to prove that the landlord is in bad faith. You simply need to meet the legal conditions (actual operation, absence of forfeiture clause, etc.). However, this right is not absolute. If the landlord has already concluded a new lease with a third party or sold the premises to a good faith purchaser, the right of repentance is extinguished.

For the purchaser: if you buy commercial premises, always check whether the tenant has exercised his right of repentance before the sale. Otherwise, you could find yourself with a renewed lease that you cannot challenge. A recent example in Hérouville-Saint-Clair: a purchaser bought vacant premises, but the tenant had in the meantime exercised his right of repentance without the seller informing him. Result: legal proceedings and damages.

For the co-owner: if the premises belong to a co-ownership, the syndic must be informed of any notice. An error in the notification may open the right of repentance, even if the landlord is in good faith.

Four tips to avoid this type of dispute

• Draft a valid notice: respect the mandatory particulars (specific reason, time limit, offer of renewal or refusal). Have it served by a bailiff, especially if the premises are located in a pressured area such as Caen or Hérouville-Saint-Clair.
• Check that the reason for refusal is real and serious: necessary works, repossession for personal use, etc. A vague or non-existent reason may be reclassified as a notice without offer of renewal, giving rise to an eviction indemnity.
• Anticipate the tenant's reaction: as soon as you serve notice, prepare for a possible request for repentance. If the tenant responds within 15 days, you cannot go back.
• Consult a specialised lawyer before any notification: a professional in property law in Caen or Paris can help you secure your approach. The cost of a consultation (a few hundred euros) is negligible compared to potential damages.

In-depth: related case law and developments

This 1999 judgment is part of a consistent line of the Court of Cassation. Already, in a judgment of 20 March 1989 (No. 87-17.456), the Court had held that the right of repentance was a potestative right, i.e., it is exercised unilaterally, without the landlord being able to oppose it, provided the objective conditions are met. More recently, a judgment of 8 July 2020 (No. 18-25.375) clarified that the lessee could exercise this right even after receiving an eviction indemnity, as long as it has not been accepted.

The trend is therefore towards maximum protection of the tenant. The courts, particularly those in Caen, apply the text strictly. A notable exception: if the lessee has committed a serious fault (e.g., failure to operate), the right of repentance may be excluded. But the landlord's good faith remains irrelevant.

For the future, case law is expected to maintain this line. The reform of commercial lease law (Pinel law, ELAN law) did not change this point. Landlords must therefore be extra cautious.

Checklist before acting

FAQ:

1. Can I give notice to my tenant without a reason? No, the notice must be motivated. Otherwise, it is void and the tenant can request renewal.
2. What is the time limit for exercising the right of repentance? 15 days from the notification of the notice. After this period, the right is lost.
3. Does the right of repentance apply if the landlord has sold the premises? No, if the sale was concluded with a good faith purchaser before the exercise of repentance, the right is extinguished.
4. What if my tenant exercises his right of repentance? You must accept the renewal of the lease, unless you can justify a serious and legitimate reason (e.g., non-performance of obligations). Otherwise, you will have to pay an eviction indemnity.

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