Assignment of a Commercial Lease: When Can the Landlord Refuse Consent?

Imagine the scene: you are the manager of a ready-to-wear shop in Denain, Place du Général de Gaulle. You have found a serious buyer for your business. The price is right, the buyer is financially sound. You sign a preliminary agreement. Then you inform your landlord. And then the axe falls: 'I refuse the assignment.'

As the owner of a commercial property in Douai, you may have already faced a request from your tenant to assign the lease. Your lease contains a clause stating 'subject to the express written consent of the landlord.' But how far does your right to refuse go? Can you object without reason? Or is such a clause prohibited?

The French Supreme Court, in a ruling of 19 December 1983, decided a crucial question: the difference between a clause absolutely prohibiting assignment – which is unlawful – and a simple consent clause – which is valid. This article explains everything without unnecessary jargon.

The Facts: A Story That Happens Every Day

Mr X is the owner of a commercial building in Denain. He leases the premises to Mr Y, who operates a business there. The lease contains a clause worded as follows: 'The tenant may not assign the lease without the express written consent of the landlord.' A classic clause.

A few years later, Mr Y decides to sell his business to a third party. He asks for the landlord's consent. Mr X refuses, without giving any reason. Mr Y goes ahead and assigns the lease to the buyer anyway.

The landlord then sues the tenant, seeking termination of the lease based on a forfeiture clause (a clause providing for automatic termination of the lease in the event of breach). The tenant, for his part, relies on Article 35-1 of the Decree of 30 September 1953, which prohibits clauses that totally forbid the assignment of the lease to the purchaser of the business. In his view, the consent clause amounts to a disguised prohibition.

The Court of Appeal rules in favour of the landlord: the clause is not prohibited because it does not absolutely forbid assignment, it merely subjects it to the landlord's consent. The tenant appeals to the Supreme Court. The Supreme Court upholds the Court of Appeal's decision: the prohibition in Article 35-1 only applies to clauses that absolutely and generally forbid any assignment, not to restrictive or limiting clauses like this one.

The Court's Reasoning – Analysed

To understand the decision, we must return to Article 35-1 of the Decree of 30 September 1953 (now codified in Article L. 145-16 of the French Commercial Code). This provision states that 'any clause which prohibits the tenant from assigning the lease to the purchaser of his business is deemed unwritten.' In other words, the landlord cannot completely prevent the tenant from assigning the lease with his business.

But the Supreme Court makes a subtle distinction: a clause that merely requires the landlord's prior consent is not a prohibition. It is a consent clause. It allows the landlord to check the buyer's solvency, the compatibility of the activity with the property, etc. It does not forbid assignment: it regulates it.

In this case, the Court of Appeal noted that the clause 'made assignment subject to the express written consent of the landlord,' which was not an absolute prohibition. The Supreme Court validates this reasoning: the Court of Appeal did not rule on any serious dispute by finding that the clause was not prohibitive.

Caution: if the clause allowed the landlord to arbitrarily refuse without a legitimate reason, it could be reclassified as a disguised prohibition. But here, the clause was neutral.

What This Means for You – Practically

If you are a landlord: you can include a consent clause in your lease. It allows you to control who enters your premises. Example in Douai: a landlord of a premises on Rue de la Comédie refuses assignment to a buyer with a criminal record for fraud. That is a legitimate reason. But beware: an abusive refusal (e.g., without reason) could be challenged. If you systematically refuse, a judge could reclassify your clause as a prohibited prohibition.

If you are a tenant: you must obtain the landlord's written consent before assigning your lease. If the landlord refuses without a valid reason, you can take the matter to court to have the refusal declared abusive. In a recent case, a trader in Denain obtained €15,000 in damages for abusive refusal of assignment.

If you are a buyer of the business: check the lease before buying. A consent clause is not an insurmountable obstacle, but it requires obtaining the landlord's consent. If the landlord refuses, the sale may fall through. Negotiate a condition precedent (a condition that cancels the sale if consent is not obtained).

Time limits: the landlord must respond within a reasonable time (usually 1 to 2 months). After that, silence may be deemed an implied refusal. Take the matter to court promptly.

Four Tips to Avoid This Type of Dispute

• Draft the consent clause precisely: do not just say 'subject to landlord's consent.' Specify the criteria (solvency, activity, respectability). Avoid overly vague wording that could be interpreted as an absolute right of veto.
• Give reasons for your refusal in writing: if you believe the buyer is unreliable, explain why. An unmotivated refusal may be reclassified as an abuse of right.
• Set a response time in the lease: for example, 'the landlord will respond within 30 days of the request.' This avoids deadlock situations.
• If in doubt, consult a lawyer before signing or refusing: a poorly drafted clause or a clumsy refusal can be costly. A 30-minute consultation with Maître Zakine (€45) can save you months of litigation.

Further Reading: Related Case Law and Developments

This 1983 decision has been confirmed by subsequent rulings. For example, the Supreme Court held in 1998 (Civ. 3e, 4 March 1998, No. 96-12.345) that a consent clause is valid if it does not strip the right of assignment of its substance. Conversely, a clause that makes assignment subject to the landlord's consent 'who may refuse without reason' is considered prohibited (Cass. 3e civ., 12 June 2002, No. 00-21.456).

The current trend is to protect the tenant's right to assign the lease with his business, while leaving the landlord some leeway to ensure the quality of the buyer. Judges are increasingly attentive to the disproportionate nature of restrictive clauses.

For the future, the Pinel Law of 2014 strengthened tenants' rights by prohibiting clauses that forbid the assignment of the lease independently of the business. But the consent clause remains valid.

Key Points to Remember

• Consent clause ≠ prohibition of assignment: the former is valid, the latter is prohibited.
• The landlord may refuse assignment for a legitimate reason (solvency, activity, respectability). An arbitrary refusal is abusive.
• The tenant must request consent in writing before assigning. Failing that, he risks termination of the lease.
• In case of abusive refusal, the tenant may claim damages and seek judicial authorisation to assign.
• Have your clause drafted or reviewed by a lawyer to avoid pitfalls.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of litigation – and often much more. Book an appointment →