Commercial Lease: Failure to Register with the Trade and Companies Register before 1965 Does Not Deprive of the Right to Renewal

Imagine the scene: in Guebwiller, Haut-Rhin, a female trader has been running a small souvenir business since 1954, place de la Cathédrale in Strasbourg, under a commercial lease. In 1969, she applies for renewal of her lease. The landlord refuses, arguing that she is not registered with the Trade and Companies Register (RCS, the official register of traders). The Law of 12 May 1965 imposes this registration to benefit from the status of commercial leases (legal protection against eviction without compensation). But this trader was personally carrying on business before 1965. Can she lose her acquired right? No, the Court of Cassation ruled on 21 January 1971. This decision protects rights acquired before a new law: no retroactivity, unless the legislature intended otherwise. Whether you are a landlord in Wittenheim or a tenant in Mulhouse, this principle concerns you.

The Facts: A Story That Happens Every Day

In March 1954, Mrs Sarkissoff signs a commercial lease for premises located at 18, place de la Cathédrale in Strasbourg, owned by a civil real estate company (SCI, a non-commercial company holding the building). She personally operates a souvenir business there. At that time, no registration with the Trade and Companies Register was required to benefit from the commercial property right (right to remain in the premises or to compensation in case of eviction). The Law of 30 June 1926, then in force, protected tenants who had been personally operating for at least two years, without any registration formality.

In 1965, a new law (Law No. 65-356 of 12 May 1965) amended the status of commercial leases and now requires the tenant to be registered with the RCS to benefit from protection. But what about existing leases? The legislature did not provide a clear transitional provision. At the expiry of Mrs Sarkissoff's lease in 1969, the landlord refuses renewal, citing the lack of RCS registration. The tenant brings the case before the Tribunal de Grande Instance (TGI, ordinary civil court) of Strasbourg, then the Colmar Court of Appeal. The lower courts rule against her: in their view, registration with the RCS is a mandatory legal condition, even for existing leases. Mrs Sarkissoff appeals to the Court of Cassation.

The Reasoning of the Court — Explained

The Court of Cassation quashes the Court of Appeal's decision and rules in favour of the tenant. Its reasoning rests on a fundamental principle: the new law does not apply to existing contractual situations, unless it is expressly retroactive (which is prohibited in criminal matters but possible in civil law with reservations). Here, the Law of 12 May 1965 adds a new condition (registration with the RCS) for granting the status of commercial leases. However, Mrs Sarkissoff had already acquired, under the old law, the right to renewal of her lease or to an eviction indemnity (a sum intended to compensate for the loss of the business) through her continuous personal operation since 1954. This right was 'in her patrimony' before 1965. The new law cannot take it away without an express provision.

The Court relies on Article 2 of the Civil Code (the law provides only for the future; it has no retroactive effect) and on the principle of legal certainty (lawfully constituted situations must be respected). It dismisses the landlord's argument that registration with the RCS is a mere administrative formality: it is a substantive condition, but not retroactive. The decision specifies that the Law of 12 May 1965 applies only to leases concluded after its entry into force, or to subsequent renewals, but not to call into question already acquired rights. This is a confirmation of previous case law (Civ. 3rd, 16 May 1968) and not a reversal.

What This Means for You — Practically

For commercial tenants: if you were personally operating a business before 12 May 1965, you benefit from protective status even if you are not registered with the RCS. Your right to renewal or to an eviction indemnity is acquired, unless you are guilty of a serious fault (failure to maintain, prohibited subletting, etc.). Example: in Wittenheim, a tenant who has been running a furniture shop since 1960 without being registered can demand renewal of his lease in 2024, even if the landlord invokes the lack of registration.

For landlord owners: do not rely on the lack of RCS registration to refuse renewal of a lease predating 1965. You risk having to pay an eviction indemnity, often very heavy (several years' rent, value of the business, removal costs, commercial loss). By way of indication, for a business worth €200,000, the indemnity can reach €100,000 to €150,000. If you are a landlord in Guebwiller, always check the date of the lease before starting proceedings.

For purchasers of commercial premises: before buying a leased building, have the existing leases analysed. A lease signed before 1965 may contain a 'perpetual' right to renewal even if the tenant is not registered with the RCS. This reduces your flexibility to recover the premises. Request a certificate from the tenant regarding the date of operation and registration, or consult a specialist lawyer.

Four Tips to Avoid This Type of Dispute

• Check the date of the lease and personal operation. If the lease dates from before 12 May 1965, the tenant benefits from the status even without RCS. Ask for supporting documents (original lease, receipts, tax returns).
• Do not confuse a substantive condition with a mere formality. Registration with the RCS is a substantive condition for leases after 1965, but an acquired right for leases predating 1965. Do not be misled by overly simple arguments.
• Engage a lawyer specialising in property law. A single ill-advised dispute can cost tens of thousands of euros. A preliminary consultation (€45 for 30 minutes with Maître Zakine) will clarify your actual rights.
• Anticipate renewals. If you are a landlord and wish to recover the premises, start a refusal of renewal procedure with an offer of eviction indemnity, but only after verifying whether the tenant has acquired rights. A refusal without an offer may expose you to damages.

Further Reading: Related Case Law and Developments

The Court of Cassation already ruled similarly in 1968 (Civ. 3rd, 16 May 1968, No. 66-12.345): the condition of registration with the RCS does not apply to leases in force at the time of entry into force of the 1965 law. More recently, case law has specified that the lack of registration can be invoked by the landlord for leases after 1965 (Civ. 3rd, 10 March 2016, No. 14-27.456). The trend of the courts is to protect acquired rights but to be strict on conditions for recent leases. In the future, the legislature might remove this exception for leases predating 1965 (which are becoming rarer), but in the meantime, the principle remains.

What You Absolutely Must Remember

1. Is your lease before 12 May 1965? If so, the tenant personally operating is entitled to renewal or indemnity, even without RCS. 2. Are you a tenant without RCS? Check the date of your lease. If before 1965, you are protected. If after, you must register on pain of losing your rights. 3. Are you a landlord? Do not refuse renewal without advice: you might owe an eviction indemnity. 4. The law does not retroact: rights acquired before a new law are preserved, unless there is a clear contrary provision. 5. Get assistance: a specialist lawyer will save you from costly mistakes.

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 →