3-Year Derogatory Lease: Beware of Cumulative Durations Since 2014

Picture the scene: in Tarnos, in the commercial zone of Porte des Landes, a hair salon manager has been operating his premises for nearly four years. His initial lease was a 23-month derogatory lease, renewed once. At the end of the second lease, the landlord offers him a new 12-month seasonal lease. The trader accepts, thinking he is doing the right thing. But here's the catch: the law does not allow more than three years of cumulative derogatory leases for the same premises and the same business. This decision of the French Supreme Court of 22 October 2020 forcefully reminds us of this.

What question does every owner of commercial premises in the Landes ask? "Can I multiply derogatory leases to avoid the protective status of commercial leases?" The answer is no, since the Pinel Law of 18 June 2014. And the French Supreme Court has just locked the system: it does not matter that the tenant waived the status each time; the total duration cannot exceed three years.

In this article, I will explain simply what this decision changes for you, whether you are a landlord in Saint-Vincent-de-Tyrosse or a trader in Mont-de-Marsan. We will look at the facts, the judges' reasoning, and above all the practical consequences to avoid falling into the trap.

The Facts: A Story That Happens Every Day

Mr X, owner of commercial premises in Tarnos, rents his property to a hairdresser since 2015. The first derogatory lease (a short-term lease that escapes the commercial lease status) is signed for 23 months. Upon expiry in 2017, a second 23-month derogatory lease is concluded, with the tenant expressly waiving the protective status. In 2019, the landlord proposes a third 12-month derogatory lease. The tenant refuses and claims the application of the commercial lease status, which would give him a right to renewal and a capped rent.

The landlord brings the case before the High Court of Mont-de-Marsan, seeking the tenant's eviction. He is unsuccessful: the judge considers that the cumulative duration of the three leases (23 + 23 + 12 = 58 months, nearly 5 years) exceeds the permitted three years. The landlord appeals, then appeals to the Supreme Court. The Supreme Court confirms: since the law of 18 June 2014, the total duration of successive derogatory leases for the same business in the same premises cannot exceed three years from the effective date of the first lease. In short, it does not matter that the tenant waived each time: the clock starts ticking from the beginning.

The Reasoning of the Court — Analysed

The French Supreme Court relies on Article L. 145-5 of the Commercial Code, resulting from the 2014 Pinel Law. This text allows parties to derogate from the commercial lease status for a maximum period of three years. But beware: the accumulation of several derogatory leases must not exceed this duration. The reasoning is simple: the law intended to limit the precariousness of traders. If one could indefinitely chain derogatory leases, the protective status would be circumvented.

In this case, the landlord argued that each waiver of status (a clause by which the tenant agrees not to benefit from the status) was valid and that the clock should reset. But the Court rejects this argument: the waiver cannot have the effect of extending the maximum three-year period. In other words, the three-year period runs continuously from the first lease, regardless of successive waivers.

What few people know is that this interpretation is a confirmation of earlier case law, but with reinforced scope. Before 2014, parties could conclude as many derogatory leases as they wished. The law changed the game. The judges remind that the objective is to protect the trader, as the weaker party, against landlords who would keep them in a precarious situation.

What This Changes for You — Practically

For landlord lessors: if you signed a first derogatory lease in 2021, you will no longer be able to propose a second after 2024 without the tenant being able to claim the status. Example: in Saint-Vincent-de-Tyrosse, a landlord rents premises at €800/month under a two-year derogatory lease. If he renews once for one year, the clock reaches three years. Upon expiry, the tenant can demand a commercial lease and the rent will be capped according to the Commercial Rent Index (ILC), potentially a reduction if the market has fallen.

For tenants: if you have occupied premises for more than three years under several derogatory leases, you can demand the commercial lease status. However, beware: you must act quickly, as the right to renewal is subject to a two-year limitation period from the expiry of the lease.

undefined, I have encountered cases where traders in Mont-de-Marsan had signed four seasonal leases of 6 months each. The Supreme Court would say that the cumulative duration of 24 months is less than three years, so it is valid. But beware: if you exceed three years, the status applies automatically, even if the tenant signed waivers.

Four Tips to Avoid This Type of Dispute

• Do not accumulate more than three years of derogatory leases for the same premises and the same business. From the first lease, set yourself a maximum limit of three years, including renewals.
• Have an express and informed waiver clause drafted for each new lease, even if its effectiveness is limited by the decision. It may be useful in case of dispute over the duration.
• Prefer a short-term commercial lease (1 to 3 years) if you want to avoid the status for a long time. But know that upon expiry, the tenant will have the right to renewal.
• Consult a lawyer lawyer before signing a derogatory lease, especially if you have already had a previous lease with the same tenant. A simple check can avoid costly litigation.

Besoin d'un conseil personnalisé ? Contactez Maître Zakine — première consultation 30 min à 45€.

Further Insight: Related Case Law and Developments

This decision is part of a consistent line. The French Supreme Court had already ruled (Cass. 3rd Civ., 22 March 2018, No. 16-28.380) that the three-year period runs from the effective date of the first lease, without the possibility of renewing it by a new waiver. Another decision (Cass. 3rd Civ., 11 July 2019, No. 18-17.489) specified that the waiver of status must be express and unambiguous. The trend is clear: judges protect the trader against schemes aimed at circumventing the status.

For the future, we can expect the Court to continue to sanction any exceeding of the three-year duration, even in case of apparent agreement between the parties. The message is clear: the commercial lease status is a matter of public policy; one can only derogate from it within the strict limits provided by law.

Summary and Next Steps

FAQ

Q: Can I sign a 23-month derogatory lease, then another 23-month one for the same premises?
A: No, the cumulative duration would be 46 months, i.e., more than three years. Upon expiry of the first lease, the second derogatory lease cannot exceed 13 months (36 - 23).

Q: What should I do if I have already exceeded the three years of derogatory leases?
A: The tenant can claim the commercial lease status. You must then offer them a commercial lease or initiate eviction proceedings, but beware: the judge could reclassify the relationship as a commercial lease with retroactive effect.

Q: Is the waiver of status useless?
A: Not entirely. It can be useful to demonstrate the parties' intention, but it does not allow exceeding the three years. It remains recommended for short-term leases.

Q: What are the time limits for action?
A: The tenant has two years from the expiry of the last lease to request renewal. After this period, they lose their right.

Q: Can I conclude a derogatory lease with a legal person (SARL, SAS)?
A: Yes, the same rules apply. Beware of the cumulative duration.

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 →