Commercial Lease: Does Trading Before Registration Count Towards the Duration?

You are the owner of a commercial property in Cambrai. Your tenant started trading a business before even being registered on the Register of Commerce and Companies (RCS). When you serve notice, he claims the commercial lease status, which requires at least two years of trading. Can he count the period before his registration? The question divides landlords and tenants. The Court of Cassation ruled in 1983: yes, this period can be taken into account. Analysis.

The facts: an everyday story

Mr. X, owner of a commercial property in Cambrai, leased a unit to Mr. Z, who traded a clothing business there. Mr. Z started his activity on 1 January 1979, but only registered on the register of commerce on 1 July 1979. The lease provided for a monthly rent of 800 francs (approx. €122). In September 1980, the landlord served notice (the act by which the landlord notifies the tenant of the end of the lease) by simple letter for 30 September 1981. Mr. Z contested the notice, claiming he benefited from the commercial lease status (legal protection granted to a tenant trading a business) and that the notice was invalid. The landlord argued that Mr. Z had not traded the business for two years at the date the notice took effect, because the period before registration should not count. The case was brought before the Tribunal d'instance of Douai, then on appeal to the Cour d'appel of Douai, which ruled in favour of the tenant. The landlord appealed to the Court of Cassation.

The reasoning of the court — explained

The Court of Cassation dismissed the landlord's appeal. It held that the lower courts could properly consider that trading the business before registration was sufficient to calculate the trading period required by Article 4 of the Decree of 30 September 1953 (now codified in Article L. 145-8 of the Commercial Code). This article requires the tenant to have traded the business for at least two years to benefit from the status. The Court considered that registration on the register of commerce is merely an administrative formality that does not condition the reality of commercial trading. In other words, what matters is actual trading, even if it began before registration. The landlord argued that registration was a condition of being a trader (Article L. 121-1 of the Commercial Code). But the Court replied that this condition does not prevent taking into account earlier activity for calculating the trading period. The decision confirms previous case law favourable to tenants.

What this means for you — practically

For landlords: if you serve notice on a tenant who started trading before registration, you cannot ignore that period. For example, a tenant who opened his business on 1 March 2022 but only registered on 1 September 2022 can claim the status from 1 March 2024, not just from September 2024. In Marchiennes, a landlord recently lost his right of repossession for this reason. For tenants: you must keep all evidence of trading before registration (supplier invoices, rent receipts, customer testimonials). For buyers of a business: check the actual start date of trading, not just the registration date. In case of dispute, the judge will assess the evidence on a case-by-case basis.

Four tips to avoid this type of dispute

• Register your activity from the first day of trading: even though a legal period of 15 days is allowed, do not delay. Prompt registration secures your rights.
• Diligently keep all documents proving the start of trading: invoices, leases, work receipts, bank statements. In case of challenge, you can demonstrate the reality of the activity.
• For landlords, include in the lease an obligation to register: specify that failure to register within a given period may lead to termination of the lease. This protects you in case of fraud.
• When serving notice, calculate the trading period including the period before registration: to avoid a void notice, take into account the actual start date of activity, even if it precedes registration.

Further reading: related case law and developments

This decision is part of a consistent line: the Court of Cassation prioritises actual trading over formalities. In an earlier judgment of 7 June 1978 (No. 76-14.987), it had already ruled that trading without registration could be taken into account for acquiring the status. Since 1983, no decision has contradicted this principle. However, the Pinel law of 2014 strengthened information obligations on registration, but without changing the substance. The trend is therefore stable: the pre-registration period counts. In future, the legislature may clarify the conditions of proof, but for now, case law remains favourable to tenants.

Key takeaways

FAQ:

1. Can I count trading before my registration to obtain the status? Yes, if you prove actual and continuous trading.
2. Can the landlord refuse to take this period into account? No, he cannot ignore it, but he can challenge the reality of the trading.
3. What are the time limits for action? You must act before the notice takes effect. In case of dispute, issue a claim within two years of the notice.
4. What if the landlord serves notice ignoring this period? Challenge the notice before the tribunal judiciaire. You can claim damages for abusive notice.
5. What is the cost of proceedings? Expect between €1,500 and €5,000 in legal fees, depending on complexity.

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