Right of Retention of the Good Faith Tenant-Constructor: How Far Can They Retain the Property?

Imagine: you are a tenant of a plot of land in Valbonne, you invest €50,000 to build a commercial unit with the written consent of the owner. Five years later, the lease ends, and the owner demands vacant possession. But you have not been reimbursed for your works. What can you do? The Court of Cassation, in a judgment of 3 October 1990, gives a clear answer: the good faith tenant who built with authorisation may retain the property until they have received the added value. In other words, you will not be evicted without compensation. This decision, often overlooked, is nevertheless crucial for any lessee who has invested in constructions.

The Facts: A Story That Happens Every Day

Mr X, owner of a plot of land in Antibes, leases a property to Mr Y, a tradesman. The contract stipulates that the lessee may build "for building". Armed with this authorisation, Mr Y erects a 200 m² building to operate his business. At the end of the lease, the owner demands the return of the land free of any constructions. Mr Y then claims reimbursement of his works, i.e. €100,000. The owner refuses, arguing that the authorisation to build was void for being too vague. The tenant, however, is in good faith: he legitimately believed he could build.

The dispute comes before the Court of Appeal, which recognises that Mr Y brought added value to the property. It grants him a right of retention (the right to keep the property until compensated) pending determination of the compensation. The owner appeals to the Court of Cassation, arguing that the added value is not proven and that the right of retention cannot exist without an effective right to added value.

The Reasoning of the Court — Explained

The Court of Cassation dismisses the appeal. It recalls a fundamental principle: the good faith constructor is entitled to added value (the increase in value of the land due to the construction). This right stems from Article 555 of the Civil Code, which governs constructions on another's land. But note: the good faith of the constructor is presumed (it suffices that he legitimately believed he could build). Here, the tenant had authorisation "for building", even if that authorisation was later held void. The Court of Appeal found concrete added value: the land was worth €150,000 before, €250,000 after. The right of retention is therefore the logical consequence: as long as the owner has not paid the added value, the tenant may retain the property.

In short, the decision confirms that the good faith of the constructor is assessed at the time of construction, not retrospectively. The judges of fact have the final say on the existence of added value. This is consistent case law, but here the Court clarifies that the right of retention is not automatic: it requires effective added value, not merely potential.

What This Means for You — Practically

For the tenant: If you have built with the landlord's authorisation, you may remain on the premises until the compensation is fixed and paid. Example: in Antibes, a tenant who invested €80,000 in improvements may retain the commercial premises even after the lease ends, until the owner reimburses them.

For the landlord: You must prove that the construction brings no added value, or that the tenant was in bad faith. If you authorised the works, you cannot later challenge them to avoid paying.

For the buyer: If you buy a rented plot with constructions, check if a right of retention exists. You could be compelled to compensate the tenant.

For the co-owner: In a co-ownership, a co-owner who carries out works without authorisation does not benefit from this right. The decision only applies to good faith tenants.

If you are in this situation, you must act quickly: have the added value assessed by an expert, and put the owner on notice to compensate you. The right of retention ends upon payment.

Four Tips to Avoid This Type of Dispute

• Have a precise written authorisation drafted: Mention the nature of the works, their duration, and the conditions for their compensation at the end of the lease.
• Before building, obtain the landlord's express consent: Do not rely on a vague clause like "for building". Demand a signed document.
• Keep all evidence of your good faith: Correspondence, building permits, invoices. In case of dispute, you must demonstrate that you legitimately believed you could build.
• At the end of the lease, have the added value assessed by a property expert: This avoids disputes over the amount. In Valbonne, expect to pay between €500 and €1,500 for an expert report.
• If the landlord refuses, apply to the judicial court promptly: The right of retention is a powerful tool, but it must be recognised in court.

Further Reading: Related Case Law and Developments

The Court of Cassation had already affirmed this principle in a judgment of 12 June 1985 (No. 83-15.872): the good faith constructor is entitled to compensation equal to the added value. The 1990 decision confirms and clarifies that the right of retention is conditional on effective added value, not merely potential. Since then, the courts have been consistent: if the tenant builds with authorisation, they are presumed to be in good faith. However, note: if the authorisation is void ab initio (from the outset), good faith may be challenged. But in practice, judges often find good faith if the tenant legitimately believed they could build. This case law is now well established and unlikely to change.

Key Points to Remember

FAQ:

• Can I retain the property if the owner refuses to pay me? Yes, if you are a good faith constructor and the construction brings added value. The right of retention lasts until payment.
• What if the owner disputes the added value? Obtain a judicial expert report. The court will fix the amount.
• Does this right apply to residential tenants? No, only to commercial or agricultural leases where the lessee builds.
• What are the time limits to act? You must act as soon as the lease ends. The right of retention ceases if you leave the premises voluntarily.
• Can I assign my right of retention? Yes, together with the business. The new buyer benefits from the right.

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