Irregular Assignment of Lease: A Defect That Cannot Be Cured Even by a Subsequent Notarial Deed

Imagine: you are the owner of a hotel-restaurant in Beaupréau-en-Mauges, in Maine-et-Loire. You have leased your establishment to a commercial tenant. The lease requires that any assignment be made by notarial deed (before a notary). One day, you discover that your tenant has assigned his lease to a third party by a simple private deed (non-notarised deed). You sue the assignor and the assignee in court to have the lease terminated. Before the court rules, the assignor and assignee rush to the notary to regularise by a notarial deed. Too late? The French Supreme Court answers: yes, too late.

This decision of 7 March 1972 (No. 70-13.589) is a cornerstone of commercial lease law. It establishes a simple but inexorable principle: a formal defect (absence of a notarial deed) cannot be cured by a regularisation made after proceedings have been served. The landlord can obtain termination of the lease, even if the assignment was later regularised.

Why such severity? Because the lease contract is the law of the parties. If the parties have stipulated a formal condition, it must be strictly observed. Late regularisation is considered an attempt to circumvent justice, not a good-faith remedy.

The Facts: A Story Like Many Others

In 1965, Mr X is the tenant of a building used as a hotel-restaurant owned by Mrs Widow Y. The commercial lease contains a clear clause: any assignment of the lease must be made by notarial deed, and the assignee must succeed the assignor in the commercial operation. In 1964, Mr X assigns his lease to Mr Z by a simple private deed, without complying with the notarial form. Mrs Y, the owner, discovers the irregular assignment. She sues Mr X and Mr Z before the Tribunal de Grande Instance of Angers on 6 May 1965, seeking termination of the lease and eviction of the occupants.

On 12 May 1965, six days after service of proceedings, Mr X and Mr Z sign a notarial deed before a notary, regularising the assignment. But the damage is done: the Tribunal de Grande Instance of Angers, by judgment of 15 November 1965, orders termination of the lease, holding that the initial assignment was void and that the regularisation after service of proceedings cannot cure the defect. The tenants appeal. The Angers Court of Appeal, by judgment of 15 June 1970, affirms the termination. Mr X and Mr Z appeal to the Supreme Court.

The French Supreme Court dismisses their appeal on 7 March 1972. It holds that "the reiteration, by a notarial deed subsequent to the service of proceedings, of an irregular assignment of lease cannot cure the defects of the first deed, for which the lease required notarial form; this breach may justify termination of the lease." In other words, regularisation has no retroactive effect, and the initial violation is sufficient to support termination.

The Reasoning of the Court — Analysed

The French Supreme Court relies on Article 1134 of the Civil Code (now Article 1103 since the 2016 reform), which provides that "legally formed agreements serve as law to those who have made them." In this case, the lease required that any assignment be made by notarial deed. This clause was a condition of validity of the assignment, not a mere formality. By assigning the lease by private deed, the tenant violated this condition. The assignment was therefore void ab initio (from the outset).

The fact of signing a notarial deed after service of proceedings cannot retroactively extinguish this voidness. Why? Because the voidness was already established at the time of service. The late regularisation is a new act, which cannot erase the past. The French Supreme Court here applies the principle of the relative effect of legal acts: a subsequent act cannot modify the consequences of a prior act already contested in court.

The lower courts (tribunal and court of appeal) also noted that the assignor had not resumed his commercial activity after service of proceedings, and that the assignee had continued to operate the business. But this was not the decisive factor: the mere violation of the notarial form sufficed. The French Supreme Court therefore affirms the termination of the lease, without having to examine the other grounds.

This decision is a classic in commercial lease law. It reminds us that contractual clauses must be strictly observed, and that good faith (invoked by the tenants to justify regularisation) cannot cover a deliberate violation of formalities. Since 1972, this case law has been consistently affirmed: regularisation after service of proceedings is ineffective to avoid termination.

What This Means for You — Practically

Landlord

If you discover that your tenant has assigned the lease without observing the required form (notarial deed, or any other formal condition required by the lease), you can act immediately. Sue for termination of the lease before any regularisation. If the tenant attempts to regularise after service of proceedings, it will not save the assignment. You can obtain eviction of the assignee and recovery of the premises. However, beware: if you have tacitly accepted the assignment (for example, by collecting rent from the assignee without objection), you may lose your right to termination.

Assignor Tenant

If you wish to assign your lease, strictly observe the forms required by the contract. A private deed may seem simpler and cheaper, but it exposes you to termination of the lease. If the landlord discovers the irregularity, do not think that a quick regularisation will erase everything: if the landlord sues you before regularisation, you lose. It is better to assign by notarial deed from the outset, or to obtain the landlord's written consent.

Concrete example: in Trélazé, a landlord leased commercial premises to a baker. The lease requires that any assignment be subject to the landlord's approval and made by notarial deed. The baker assigns his business to a pastry chef by simple registered letter. The landlord discovers the assignment, sues for termination. The baker and pastry chef sign a notarial deed one week after service of proceedings. Too late: the court orders termination. The landlord recovers his premises, and the pastry chef must leave.

Buyer of a Business

Before buying a business, check that the lease has been regularly assigned to the seller. Demand a copy of the notarial deed of assignment of lease. If the assignment was made by private deed, even if later "regularised", it is fragile. You could be evicted by the landlord. Have a specialised lawyer assist you in analysing the chain of assignments.

Four Tips to Avoid This Type of Dispute

• Strictly observe the contractual form. If your lease requires a notarial deed for any assignment, never assign by private deed, even if urgency pushes you to do so. The notary's cost is negligible compared to the risk of losing your lease.
• Always inform the landlord in writing. Even if the assignment is made by notarial deed, send a copy of the deed to the landlord by registered letter with acknowledgement of receipt. This proves your good faith and avoids any misunderstanding.
• In case of irregularity, regularise immediately, before any service of proceedings. If you discover that the assignment was made without a notarial deed, rush to the notary before the landlord sues you. Once proceedings are served, it is too late.
• Consult a lawyer at the first sign of conflict. A lawyer specialising in property law can assess the strength of your position and advise you on the best strategy: negotiation, regularisation, or defence in court.

Further Reading: Related Case Law and Developments

The 1972 decision is in line with a consistent line of French Supreme Court decisions. One can cite the judgment of 28 November 1968 (No. 67-10.544) which already held that an assignment of a commercial lease made in violation of a lease clause (requiring the landlord's approval) could lead to termination, even if the landlord later accepted the assignee. After-the-fact regularisation does not cover the initial violation.

More recently, the French Supreme Court has extended this reasoning to other clauses: for example, assignment without respecting a right of pre-emption (Cass. 3e civ., 13 July 2016, No. 15-18.036). The trend is clear: the courts are very strict on compliance with contractual formalities. They consider late regularisation a dilatory tactic, not a good-faith remedy.

Since the Pinel Law of 2014, commercial leases are more regulated, but the issue of the form of assignments remains unchanged. Notaries systematically recommend a notarial deed for any assignment of lease, even if the law does not always require it. Caution is advised.

Checklist Before Acting

FAQ: 5 Questions to Understand Everything

Can I assign my commercial lease by a simple private deed if the lease does not prohibit it?
Yes, if the lease does not provide any particular form. But beware: many commercial leases require a notarial deed. Check your contract.

What should I do if I have already assigned my lease by private deed and the landlord threatens to sue me?
Regularise immediately by notarial deed before the landlord serves proceedings. Once proceedings are received, regularisation is useless.

Can the landlord refuse the assignment if it is made by notarial deed?
Yes, if the lease contains an approval clause (the assignee must be approved by the landlord). In that case, even a notarial deed is not enough: the landlord's written consent is required.

What are the risks for the assignee (the person taking over the lease)?
If the assignment is annulled, the assignee must leave the premises without any right to compensation. They lose their business. Hence the importance of verifying the regularity of the assignment before buying.

Can I claim damages from the assignor if they assigned me an irregular lease?
Yes, you can sue the assignor on the basis of the warranty against latent defects or contractual liability. But you must prove that they knew of the irregularity.

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 →