Commercial lease renewed before 1965: tacit renewal and notice in accordance with local custom

You are the owner of a commercial property in Saint-Étienne, and your tenant has been established there for decades. The initial three-year lease, signed in the 1960s, was automatically renewed from year to year without anyone paying attention. Today, you wish to recover the premises to set up your son as a shopkeeper. Can you give notice? On what terms?

This question, although commonplace, has long divided the courts. It concerns the very classification of the lease: fixed term or indefinite duration? And the consequences are radical. A decision of the Court of Cassation of 21 November 1974 (No. 73-11.611) provides a clear answer: if the lease was renewed by tacit renewal before the Law of 12 May 1965, it becomes a lease of indefinite duration. And crucially, it can be terminated by a simple notice given in accordance with local custom, without having to comply with the new protective rules for tenants introduced by the Decree of 1953.

But beware: this solution does not apply to leases renewed after 1965. The devil is in the date. So, in practice, how do you know if your lease is affected? And what should you do if you are a tenant in this situation? Full analysis.

The facts: a story that happens every day

The case that gave rise to this decision pitted Mrs X, a commercial tenant, against the Y heirs, owners of a property located in Firminy, in the Loire department. The lease had been concluded for a term of three years at a date prior to 1965. At expiry, neither party had given notice, and the lease was renewed by tacit renewal (i.e. automatically, without a new written document) for a further three-year period, and so on.

On 28 January 1969, the owners gave notice to their tenant for 11 November following. Mrs X contested the validity of this notice. She argued that the lease, even if renewed by tacit renewal, remained a fixed-term lease, subject to the protective provisions of Article 3-1 of the Decree of 30 September 1953. According to her, the notice had to comply with a six-month notice period and be justified by a serious and legitimate reason.

The first instance judges, and then the Court of Appeal, ruled in favour of the owners. Mrs X appealed to the Court of Cassation. The High Court had to decide: what regime applies to a commercial lease created before 1965 and renewed by tacit renewal?

The reasoning of the court — dissected

The Court of Cassation dismissed the appeal. It recalled that the initial three-year lease, renewed by tacit renewal before the Law of 12 May 1965, had become a lease of indefinite duration. Why? Because before that law, the tacit renewal of a commercial lease did not create a new lease of the same duration, but transformed the contract into a lease of indefinite duration. This is what was provided for by Article 5 of the Decree of 30 September 1953 (now codified in Article L. 145-9 of the Commercial Code).

Consequently, the termination of this lease could only occur by notice given in accordance with local custom (Article 5, first paragraph of the Decree). In practice, this means that the notice period is that in force in the region for lettings not governed by the commercial leases regime. In Saint-Étienne and Firminy, local custom is often three to six months, depending on the sector.

The judges specified that Article 3-1 of the same Decree, which imposes a six-month notice period and a requirement to give reasons for the notice, does not apply. Why? Because this text, introduced by the Law of 12 May 1965, has no retroactive effect. It only governs leases concluded or renewed after its entry into force. However, Mrs X's lease had been renewed before 1965: it remains subject to the former law.

The Court therefore upheld the notice given on 28 January 1969 for 11 November following, i.e. a notice period of more than nine months, well above local custom. The question of the amount of the compensation for eviction was not at issue in this appeal.

What this means for you — in practice

For landlord owners: if your lease was concluded before 1965 and was renewed by tacit renewal before that date, you can give notice without cause, subject to respecting local custom. In Saint-Étienne, local custom is often a three-month notice period. You do not have to justify a serious and legitimate reason. But beware: if the lease was renewed after 1965, the protective regime applies, with a six-month notice period and limited grounds (sale, repossession for residential use, etc.).

For tenants: if you have been established for a long time in a property in Firminy or elsewhere, check the date of the initial lease. If it is prior to 1965 and was renewed by tacit renewal before 1965, you have a lease of indefinite duration. Your landlord can give you notice without cause, with a notice period often shorter than six months. You will only be entitled to compensation for eviction if you meet the conditions for commercial property rights (effective operation, registration in the commercial register, etc.).

Concrete example: imagine a lease signed in 1960 in Saint-Étienne for 3 years, tacitly renewed in 1963, 1966, etc. The renewal in 1963 (before 1965) transformed the lease into one of indefinite duration. The landlord can give notice with a 3-month notice period (local custom). If he does so in 2024, the tenant must vacate the premises in 3 months, unless he obtains a right to renewal through the operation of commercial property rights (Article L. 145-8 of the Commercial Code). But beware: the tenant must demonstrate continuous operation for at least 2 years and not have received a valid notice.

If you are a purchaser of a commercial property, check the date of the lease and its renewal history. A lease of indefinite duration can be terminated quickly, which affects the value of the business.

Four tips to avoid this type of dispute

• Check the date of your lease and its renewals. If the initial lease is prior to 1965, determine the date of the first renewal by tacit renewal. It is this date that determines the applicable regime. Check rent receipts and correspondence.
• If in doubt, have the local custom confirmed. In Saint-Étienne, the notice period for leases of indefinite duration may vary depending on the type of business. Contact the Chamber of Commerce and Industry or a specialist lawyer to obtain a certificate.
• Give notice by bailiff's act. Even if local custom allows a simple registered letter, a bailiff's act provides you with certain proof of the date and content of the notice. Avoid disputes over the starting point of the notice period.
• Anticipate compensation for eviction. Even with a lease of indefinite duration, if the tenant has a right to renewal (acquired commercial property rights), you will have to pay them compensation for eviction if you refuse renewal. Have it assessed by an expert before giving notice.

Further analysis: related case law and developments

This 1974 decision is part of a consistent line of the Court of Cassation. Already, a decision of 19 June 1973 (No. 72-10.784) had held that the tacit renewal of a lease prior to 1965, occurring before 1965, transformed it into a lease of indefinite duration. The solution is therefore settled.

But beware: the Law of 12 May 1965 amended Article 3-1 of the 1953 Decree to impose a six-month notice period and strict grounds. Since then, any commercial lease renewed after 1965 is subject to this protective regime. Case law has clarified that the date of renewal (not the date of the initial conclusion) is decisive. Thus, a lease from 1960 renewed in 1966 by tacit renewal is subject to the new regime.

In practice, the question arises mainly for very old leases. Over time, these situations become rare. But they still exist, particularly in historic city centres where family-run businesses have been established for generations.

Summary and next steps

FAQ

1. A three-year lease signed in 1962 and tacitly renewed every three years — is it fixed-term or indefinite?
If the first renewal occurred before 1965 (e.g. in 1965 for a 1962 lease), it becomes indefinite. Otherwise, it remains fixed-term.

2. Can I give notice without cause if my lease is of indefinite duration?
Yes, provided you comply with local custom (notice period of 3 to 6 months depending on the region).

3. Can my tenant claim compensation for eviction?
Yes, if they have commercial property rights (effective operation for at least 2 years). The right to renewal is independent of the duration of the lease.

4. What should I do if I am a tenant and my landlord gives me notice with a three-month notice period?
Check if your lease was renewed before 1965. If so, the notice is valid. If not, challenge it before the judicial court.

5. Where can I find the local custom in Saint-Étienne?
Consult the Saint-Étienne Métropole CCI or a lawyer specialising in property law.

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