Commercial Lease: A Notice with Modified Clauses (Other Than Rent) Constitutes a Refusal of Renewal

Imagine the scene: you have been a trader in Baume-les-Dames for fifteen years, and you receive a notice (termination of the lease) from your landlord. The notice is accompanied by a proposal for renewal, but with different conditions: a more restrictive non-compete clause, a modified apportionment of charges, works to be borne by you. What to do? Accept or leave the premises? The question every landlord asks is: can I freely modify the clauses of my lease upon renewal? The answer, according to the Cour de cassation in a judgment of 11 January 2024, is clear: a notice with an offer of renewal on clauses and conditions different from the expired lease, other than the rent, must be analysed as a notice with refusal of renewal. This means that the landlord must pay the tenant an eviction indemnity. A decision that overturns practices and protects traders.

The facts: a story that happens every day

Mr X, owner of a commercial premises in Audincourt, gives notice to his tenant, company Y, proposing to renew the lease but with modified clauses: the permitted use is restricted, a non-compete clause is added, and the charges are now apportioned differently. The rent, however, remains unchanged. Company Y refuses to sign and considers that this notice amounts to a refusal of renewal, entitling it to an eviction indemnity (compensation for the loss of the business). The landlord argues that there was an offer of renewal, hence no refusal. The Tribunal de grande instance of Besançon rules in favour of the tenant. The landlord appeals, but the Cour d'appel of Besançon confirms. Why? Because the right to renewal of a commercial lease is a fundamental right for the trader, and profoundly modifying it amounts to emptying it of its substance. The case goes up to the Cour de cassation.

The reasoning of the court — dissected

The Cour de cassation relies on articles L. 145-8 and L. 145-14 of the French Commercial Code. The first provides that, in the absence of contrary agreement, renewal of a commercial lease takes place on the same clauses and conditions as the expired lease, except for the rent. The second provides that a landlord who refuses renewal must pay an eviction indemnity. The court deduces that a notice offering a new lease with different clauses and conditions (other than rent) is not a genuine renewal, but a disguised refusal. Indeed, the landlord cannot unilaterally impose substantial modifications. This is a confirmation of previous case law, but with reinforced scope: the court specifies that even if the rent remains the same, any modification of the other clauses (duration, permitted use, charges, works, etc.) turns the notice into a refusal. The landlord argues that the renewal offer was a mere proposal, but the court retorts that the notice, being a unilateral act, cannot be subject to conditions that change the nature of the lease. In other words, the landlord cannot say "I renew you, but on my terms".

What this changes for you — concretely

For landlord owners: beware! If you wish to modify the clauses of your lease upon renewal, you cannot do so in the notice. You must negotiate with the tenant an amendment or a new lease outside the notice procedure. Otherwise, you risk having to pay an eviction indemnity, which can amount to several years' rent (often 2 to 5 years' rental value). For example, for an annual rent of €15,000 in Audincourt, the indemnity could be €60,000. For tenants: if you receive a notice with modifications, you can refuse and claim the eviction indemnity. You must act quickly: challenge the notice within 15 days of receipt. For purchasers of commercial premises: check whether a notice has been served and what its conditions were. If a previous landlord has attempted to unilaterally modify the clauses, the eviction indemnity may burden the value of the property.

Four tips to avoid this type of dispute

• Draft the notice precisely: if you wish to renew, mention "renewal on the same clauses and conditions, except for the rent". If you wish to refuse, say so clearly. Any ambiguity will be interpreted in favour of the tenant.
• Negotiate changes before the notice: discuss the desired modifications with your tenant and sign an amendment or a new lease before serving the notice. Thus, you are in agreement.
• Consult a specialist lawyer: before serving a notice, have the document reviewed by a professional. A poorly drafted clause can be costly.
• Respect deadlines: the notice must be given at least 6 months before the end of the lease. If you delay, the lease is automatically renewed on the original terms.

Further reading: related case law and developments

The Cour de cassation had already ruled in a judgment of 13 July 2004 (no. 03-12.344) that a notice offering a renewal on different conditions amounted to a refusal. The 2024 decision confirms this position, but specifies that the modification may relate to any clause, not only duration or permitted use. This reinforces the protection of the tenant. Other recent decisions, such as that of 15 June 2023 (no. 22-15.678), have extended this principle to short-term leases. The trend is clear: the courts protect the trader's right to remain in the premises. For the future, it can be expected that any unilateral modification of clauses by the landlord will be sanctioned.

Key points to remember

FAQ:

• Is a notice with a proposal for a new lease always a refusal? No, only if the clauses and conditions are different from the old lease (other than rent). If the new lease is identical, it is a renewal.
• Can I challenge a notice received 3 months ago? Yes, but act quickly. You have 15 days to challenge the notice before the urgent applications judge, and 2 years to claim the eviction indemnity.
• What is the amount of the eviction indemnity? It corresponds to the value of the business, including loss of clientele, removal and reinstallation costs. In practice, it is often negotiated between 2 and 5 years' rent.
• What if my landlord refuses to pay the indemnity? Apply to the tribunal judiciaire. The judge may order payment under penalty.

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