Building Lease (Bail Emphytéotique): Who Can Bring a Decennial Liability Claim? The French Supreme Court’s Answer

Imagine: you own a plot of land in Mérignac. You grant a building lease to a developer who constructs an office building on it. A few years later, cracks appear. The roof leaks. Who can sue the constructor? You, the landlord, or the building lessee, who built and occupies the premises? A crucial question, worth hundreds of thousands of euros. Well, the French Supreme Court (Cour de cassation) has just decided. In a judgment of 11 July 2024, it rules that, unless the lease provides otherwise, a building lease transfers to the lessee (the building lessee) the rights to bring decennial liability claims from the time of entry into possession and for the entire duration of the lease. A decision that reshuffles the cards.

This case pitted the company Cadusun, owner of a plot of land, against its building lessee, who had construction carried out. Defects appeared. Who should have sued the contractor? The Rennes Court of Appeal had held that the building lease conferred the claims on the building lessee. The French Supreme Court confirms. But what exactly does this transfer mean? And what are its limits? Analysis.

Because behind the legal technicality, there is a simple question: if you are a building lessee, can you claim compensation for construction defects without the owner’s consent? And if you are a landlord, are you discharged from all liability? The answer is nuanced. Follow me behind the scenes of this decision.

The facts: a story like many others

In 2010, the company Cadusun, owner of a plot of land in Mérignac, grants a long-term building lease to a lessee. The latter has constructions erected on the land. But defects soon appear: water seepage, cracks, non-conformities. The building lessee sues the contractor under the decennial liability guarantee. Problem: the lease does not specify who can sue the constructors. The contractor contests: according to him, only the landlord (Cadusun) has standing to sue, because he is the owner of the structure.

The Rennes Court of Appeal, in its judgment of 15 December 2022, rules in favour of the building lessee. It considers that the building lease confers on the latter a real right over the installation, which allows him to sue. The contractor appeals to the Supreme Court. But the Supreme Court dismisses his appeal and confirms the judgment. It specifies that the transfer of decennial liability claims to the lessee is automatic, unless the lease provides otherwise, and applies from the time of entry into possession and for the entire duration of the lease.

What is striking is the twist: the contractor argued that only the owner could sue. But the Court recalls that the building lessee, although not the owner of the land, has enjoyment of the structure and bears the risks. It is therefore up to him to sue. A common-sense logic, but one that was not self-evident.

The reasoning of the court — dissected

The reasoning of the French Supreme Court is based on Articles L. 451-1 et seq. of the Rural and Maritime Fishing Code, which govern building leases. Article L. 451-1 defines a building lease as a long-term lease (18 to 99 years) conferring on the lessee a real property right. This real right allows the building lessee to dispose of the property like an owner, subject to the rights of the landlord.

The Court infers that, given the purpose of the building lease — to allow the lessee to build and operate — the transfer of decennial liability claims is inherent in the contract. Why? Because the building lessee is the one who suffers the defects: he uses the structure, enjoys its fruits, and bears the risks. The decennial liability guarantee (Article 1792 of the Civil Code) protects the project owner against serious defects. In a building lease, the lessee is treated as the project owner.

The Court specifies that this transfer occurs by itself, i.e., automatically, from the time of entry into possession and for the entire duration of the lease. It is not necessary for the contract to expressly stipulate it. However, a contrary clause could exclude it. But in the absence of such a clause, the building lessee holds the claim.

This decision confirms a jurisprudential trend: the courts increasingly recognise the autonomy of the building lessee. It relieves the landlord from having to manage construction disputes that do not directly concern him. And it protects the building lessee, who has invested in the construction.

What this changes for you — concretely

If you are a building lessee (lessee under a building lease), this decision gives you a direct right to sue the constructors. Concretely, if you notice cracks, water seepage, or any other defect covered by the decennial liability guarantee (ten years after completion), you can sue the contractor without having to ask the owner for permission. Example: you built an office building in Bordeaux for €2 million. Five years later, the roof leaks. You can sue the roofer alone. Warning: you must act within ten years of the completion of the works.

If you are a landlord owner, this decision relieves you of decennial liability claims, unless you have stipulated otherwise in the lease. You therefore do not have to monitor construction defects. But check your contract: if you want to retain control over claims, you must insert a clause reserving the exercise of claims to the landlord.

If you are a constructor, know that your sole interlocutor for defects is the building lessee, unless the lease provides otherwise. This simplifies matters: you cannot be sued by the owner while the building lease is in force.

Finally, if you are a purchaser of property subject to a building lease, you should know that the right to bring decennial liability claims belongs to the building lessee. If you want to recover this right, you will need to negotiate it during the acquisition.

Four tips to avoid this type of dispute

• Include an express clause in the building lease: specify who (landlord or lessee) may exercise decennial liability claims. If you want it to be the landlord, write it in black and white. Otherwise, the law attributes it to the lessee.
• Carry out a formal acceptance of the works (réception) in the presence of both parties: even if the building lessee is the constructor, a formal acceptance with the landlord sets the starting point for the decennial guarantee and avoids disputes.
• Keep all site documents: plans, invoices, acceptance reports, insurance contracts. In the event of defects, these documents are essential for taking action.
• Ensure that the building lessee takes out a structural defects insurance (assurance dommages-ouvrage): this insurance allows for rapid compensation without waiting for a court decision. It is mandatory for any project owner, which includes the building lessee.

Further reading: related case law and developments

This decision follows the French Supreme Court’s judgment of 13 January 2021 (No. 19-22.514), which already recognised that a building lease confers on the lessee a real right allowing him to bring decennial liability claims. The present decision goes further by affirming the automatic nature of this transfer.

Before 2021, some courts of appeal required an express clause. Now, the trend is clear: the transfer is automatic, unless otherwise stipulated. This provides certainty for building lessees and simplifies litigation.

In the future, one can expect constructors to try to invoke limitation of liability clauses in the lease. But the Court recalls that the decennial guarantee is a matter of public policy: it cannot be contracted out. However, the landlord and lessee can agree on a different allocation of claims, but that does not affect the constructor’s liability.

Key points to remember

• Q: As a building lessee, can I sue the constructor without the owner’s consent?
  A: Yes, unless the lease provides otherwise. The French Supreme Court confirms this.
• Q: Can the owner still sue the constructor?
  A: No, as long as the building lease is in force, unless the contract provides otherwise.
• Q: What if the lease says nothing?
  A: By default, the claim belongs to the building lessee. To attribute it to the landlord, an express clause is required.
• Q: What is the time limit for bringing a decennial liability claim?
  A: Ten years from the acceptance of the works. After this period, the claim is time-barred.
• Q: Does this decision apply to building leases entered into before 2024?
  A: Yes, because it interprets existing law. It applies to all current leases, unless a contrary clause has been stipulated.

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