Commercial lease and subletting: when is the tenant's notice valid?

Imagine: you own a commercial premises in Douarnenez, let to a company which sublets part of it to a fur shop. The principal tenant gives you notice (termination of the lease). But the subtenant wants to stay. At what date must one look to determine whether the subtenant is entitled to renewal of their lease? This question, which may seem technical, is nevertheless crucial for hundreds of traders and lessors. The Court of Cassation, in a judgment of 21 November 1974, ruled: it is the situation on the effective date of the notice that counts, not that on the day the lessor gave consent to the sublease. Analysis.

What few litigants understand is that the reference date changes everything. If one takes the date of consent, the subtenant could lose their right to renewal if the principal lease has been terminated in the meantime. On the other hand, by looking at the effective date of the notice, the subtenant who was peacefully carrying on their business is protected. This decision, rendered nearly fifty years ago, remains a reference for all commercial leases subject to the decree of 30 September 1953.

So, concretely, how does this work for a landlord in Audierne or a trader in Quimper? Follow me in this step-by-step analysis.

The facts: a story that happens every day

Mr X, owner of a building in Douarnenez, granted a commercial lease to company Y. This lease expressly authorised subleases for residential or commercial use. In 1968, company Y sublet part of the premises to the company Fourrures Krick, with the consent of Mr X. The sublease was for commercial use, for a fur business corresponding to the subtenant's objects.

But then: on 30 June 1970, company Y gave notice to Mr X for 31 December 1970. This notice terminated the principal lease. The company Fourrures Krick, which was still carrying on its business, then requested renewal of its commercial lease. Mr X refused, considering that the subtenant was not entitled to renewal because the principal lease had been terminated.

The dispute was brought before the tribunal de grande instance of Quimper, then before the cour d'appel of Rennes. The cour d'appel ruled in favour of Mr X: it held that the subtenant's right to renewal is assessed on the date of the lessor's consent to the sublease, and that on that date, the principal lease was still in force. But the Court of Cassation quashed this judgment, holding that the relevant date is that of the effective date of the notice.

The court's reasoning — dissected

The Court of Cassation relies on Article 4 of the decree of 30 September 1953 (now codified in Article L. 145-4 of the Commercial Code), which governs the right to renewal of commercial leases. It recalls that the subtenant's right to renewal is conditional on the existence, on the effective date of the notice, of a principal commercial lease in force. In this case, the notice given by the principal tenant took effect on 31 December 1970. On that date, the principal lease was terminated. It does not matter that Mr X consented to the sublease before that date: what matters is the situation at the time the notice takes effect.

The lower court judges (cour d'appel) had made an error by looking at the date of consent. The Court of Cassation criticises them for this: they should have checked whether, on 31 December 1970, the company Fourrures Krick was still carrying on its business on the premises, and whether the principal lease was still in force. In fact, the principal lease had ended, so the subtenant could not benefit from renewal.

This solution is logical: the right to renewal is a personal right of the tenant, which ends with the principal lease. The subtenant cannot have more rights than its own lessor (the principal tenant). If the principal lease ends, the subtenant becomes an occupier without right or title, unless it negotiates a new lease directly with the landlord.

What this changes for you — concretely

For the lessor landlord: you have an interest in checking that your principal tenants do not give notice without you having planned for the fate of subtenants. If you wish to keep a subtenant, you can grant them a new lease directly. Example: a landlord in Audierne had premises let to a company which sublet to a florist. The principal tenant gave notice. The landlord was able to sign a new lease with the florist, but with an increased rent. Without this decision, the florist could have claimed renewal at the old rent.

For the principal tenant: if you give notice, you must inform your subtenants. They will have to leave the premises or negotiate directly with the landlord. Warning: if you have sublet without authorisation, you could be ordered to pay damages.

For the subtenant: you cannot rely on automatic renewal if the principal lease is terminated. You must ensure the duration of the principal lease and, if possible, obtain a clause in your sublease that protects you in case of notice by the principal tenant. For example, a substitution clause allowing you to become a direct tenant.

Four tips to avoid this type of dispute

• Check the duration of the principal lease before signing a sublease. Ask the principal tenant for a copy of their lease and make sure it is not about to expire or be subject to notice.
• Have the sublease consented to by the landlord in writing. This will give you proof that the lessor accepted your presence, even if it does not guarantee renewal.
• Negotiate a substitution clause in your sublease agreement. This clause will allow you, in the event of termination of the principal lease, to become the landlord's direct tenant on the same terms.
• Anticipate the principal tenant's departure. If you learn that they are going to give notice, contact the landlord to negotiate a new lease before the deadline.

Further reading: related case law and developments

This 1974 decision has been confirmed subsequently. For example, the Court of Cassation held in a judgment of 13 May 1998 (No. 96-14.216) that the subtenant cannot rely on the right to renewal if the principal lease has been terminated before the effective date of the notice. Conversely, if the principal lease is still in force on that date, the subtenant may request renewal, even if the principal tenant has given notice (Cass. 3e civ., 10 March 1993, No. 91-14.427).

The current trend is to protect the bona fide subtenant, but without granting them more rights than the principal tenant. Thus, the subtenant must be vigilant and inquire about the situation of the principal lease. Since the Pinel Law of 2014, commercial leases have been strengthened, but this principle of the effective date of the notice remains unchanged.

In practice: what to do

FAQ:

1. Can I, as a subtenant, remain on the premises if the principal tenant gives notice? No, not automatically. You must negotiate a new lease with the landlord.

2. Can the landlord refuse to relet to me? Yes, unless you have a substitution clause or benefit from a right to renewal (which is rare).

3. What are the time limits for action? As soon as you learn of the notice, contact the landlord. If you wait, you risk eviction.

4. Can I claim an eviction indemnity? No, because you are not the principal tenant. Only the principal tenant may be entitled to it.

5. What if the landlord refuses to relet to me? You can try to negotiate, or leave the premises. In case of dispute, consult a lawyer.

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 →