Commercial lease without registration: the Court of Cassation validates voluntary submission

Imagine the scene: you are the owner of a commercial premises in La Motte-Servolex, a small dynamic town on the doorstep of Chambéry. You sign a lease with a hairdressing salon manager, clearly specifying in the contract that the status of commercial leases applies. Except that the tenant, newly installed, has not yet obtained his registration in the trade register. A few years later, the business is thriving, and you wish to serve notice to recover the premises. Your tenant invokes the status of commercial leases, and you believe you can ignore it because he was not registered initially. Who is right?

This question, which owners and tenants face every day, was answered by the Court of Cassation on 28 May 2020. And its answer is clear: when both parties have voluntarily submitted the lease to the status of commercial leases, the absence of registration of the lessee at the date of conclusion of the lease does not prevent the application of that status. In other words, your voluntary submission clause holds good, even if your tenant was not yet registered in the Trade and Companies Register (RCS).

This decision is the shield for leases concluded in uncertainty. It secures thousands of contracts and prevents owners, like you, from being caught out by an administrative formality that was not complied with. Let us examine more closely what this case tells us and what it actually changes for you.

The facts: a story like many that happen every day

Mr X, an owner from Chambéry, owns commercial premises in a building on Rue H. He leases them to SA Open Sud Gestion, a company operating a retail business. The lease contract, duly signed, expressly states that the parties agree to submit the lease to the status of commercial leases, as set out in Articles L. 145-1 et seq. of the Commercial Code. So far, everything seems normal.

However, at the time of signing, SA Open Sud Gestion was not yet registered in the Trade and Companies Register. It would be registered a few weeks later, but is the damage done? A few years later, the owner serves notice on his tenant to recover the premises. The tenant company contests this notice and invokes the status of commercial leases to obtain renewal of the lease. The owner argues that the status cannot apply because the lessee was not registered at the time the lease was concluded.

The case goes before the Tribunal de grande instance of Chambéry, then before the Court of Appeal of Chambéry. The lower courts rule in favour of the owner: in their view, the lessee's registration is a condition for the application of the status, and failing that, the lease falls outside the status, even if the parties provided for it. SA Open Sud Gestion appeals to the Court of Cassation. And then, surprise: the Court of Cassation quashes the judgment of the Court of Appeal and refers the case to the Court of Appeal of Grenoble. For the judges of the High Court, the voluntary submission of the parties to the status of commercial leases prevails over the absence of registration of the lessee. The lease is therefore indeed commercial, and the tenant can rely on the status.

The reasoning of the court — broken down

To understand this decision, we must go back to the texts. Article L. 145-1 of the Commercial Code sets out the scope of the status of commercial leases. It provides that the status applies to leases of premises in which a business is operated, provided that the lessee is registered in the trade register or the trades register. This registration condition is in principle mandatory: without it, no status.

But the Court of Cassation, in its judgment of 28 May 2020, introduces a major exception: where the parties have, by mutual agreement, submitted the lease to the status of commercial leases, this common intention prevails over the legal condition of registration. Why? Because the status of commercial leases is a protective mechanism for the tenant, but also a contractual framework that the parties can freely choose to adopt. Contractual freedom (Article 1103 of the Civil Code, which establishes the principle of the binding force of contracts) allows the parties to submit to a legal regime, even if the conditions for its application are not all met.

In this case, the lease contract stated in black and white: "the parties agree to submit this agreement to the status of commercial leases". This clause, clear and precise, left no doubt as to the parties' intention. Therefore, the absence of registration of the lessee at the date of signature could not call into question the application of the status. The Court of Appeal of Chambéry had therefore erred in ruling to the contrary.

This decision confirms a trend already initiated by the Court of Cassation: the enhancement of the parties' will. It is not a reversal, but a welcome clarification. The judges remind that the status of commercial leases is of public policy only in a protective sense for the tenant, but can be chosen by the parties beyond its legal conditions. In other words, one can always "do more" than the law, but not "less".

What this changes for you — practically

For you, a landlord owner in Chambéry or elsewhere, this decision is good news. If you have signed a lease with a voluntary submission clause to the status of commercial leases, you cannot then resile by invoking the tenant's lack of registration. On the other hand, if you have not provided for such a clause, the lack of registration still allows you to escape the status. A concrete example: you lease premises in La Motte-Servolex to a craftsman who is not yet registered in the Trades Register (RM). If your lease does not mention voluntary submission, you can serve notice without having to respect the 6-month notice period and without being required to pay an eviction indemnity. But if you have written "subject to the status of commercial leases", you are bound, even if registration occurred after signature.

For tenants, this is an additional security. If you have negotiated a voluntary submission clause, you are protected by the status from day one, even if your administrative papers are not in order. However, note that this protection only applies if the clause is drafted without ambiguity. Do not hesitate to have your lease checked by a lawyer.

Another scenario: you are a buyer of a business. Before buying, check whether the seller's lease contains a voluntary submission clause. If so, you inherit the status, even if the seller was not registered originally. This can affect the value of the business and your rights in case of notice.

Four tips to avoid this type of dispute

• Draft a clear voluntary submission clause: in your lease, write explicitly: "The parties expressly agree to submit this lease to the status of commercial leases provided for in Articles L. 145-1 et seq. of the Commercial Code." No vague wording like "the lease is subject to the status" without precision.
• Check the lessee's registration before signing: even if voluntary submission protects you, it is better to start on solid ground. Ask for a Kbis extract (for a company) or a D1 extract (for a trader) before signing.
• Provide for a condition precedent: in the lease, stipulate that the tenant undertakes to provide proof of registration within 30 days of signature. Failing that, the lease may be terminated automatically. This avoids situations of uncertainty.
• Use a lawyer to draft the lease: a commercial lease is a complex contract. A professional will prevent ambiguous clauses that could be interpreted against you. The cost of a consultation is negligible compared to the stakes of a dispute.

Further reading: related case law and developments

This decision is part of a line of case law favourable to contractual freedom. Already, the Court of Cassation had ruled, in a judgment of 10 July 2013 (No. 12-21.703), that the parties could submit a lease to the status of commercial leases even if the lessee operated a non-commercial activity, provided the clause was clear. Here, the Court goes a step further by setting aside the registration condition.

However, be careful: if the voluntary submission clause is absent, the courts remain strict on the registration condition. A judgment of the Court of Appeal of Versailles of 4 February 2020 (No. 18/06184) reminded that without registration, the lease falls outside the status, unless there is voluntary submission. The trend is therefore towards securing express clauses, but not towards generalisation.

For the future, we can expect judges to be increasingly attentive to the drafting of submission clauses. An imprecise or contradictory clause risks being invalidated. For example, if the lease mentions both "subject to the status" and "the tenant undertakes to register", the judge might consider that the parties intended to make the status conditional on registration. Hence the importance of clear drafting.

Summary and next steps

FAQ:

• What is the status of commercial leases? It is a set of protective rules for the commercial tenant, giving the right to renewal of the lease or an eviction indemnity in case of non-renewal.
• Can I do without registration if I am a tenant? Yes, if your lease contains a voluntary submission clause. Otherwise, registration is mandatory to benefit from the status.
• What are the time limits for contesting a notice? The tenant must contest the notice within 2 years of its service, otherwise he loses his rights. After this period, the lease is terminated automatically.
• What if my lease does not mention voluntary submission? You can ask the owner for an amendment to submit the lease to the status. If he refuses, you will need to prove your registration to benefit from the status.
• How much does a lawyer cost for a commercial lease? A 30-minute consultation with Maître Zakine costs €45. Drafting a full lease can range from €500 to €1,500, depending on complexity.

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 →