Eviction compensation: when the tenant retains their rights despite breaches

Imagine: you are the owner of a commercial property in Trappes that you lease to a trader. The lease expires, you refuse renewal, and the tenant claims eviction compensation – sometimes several tens of thousands of euros. But you discover that they have not paid the occupation fee during the proceedings, or that they closed the shop for a few weeks without authorisation. You then think you can refuse them any compensation. Serious mistake! The Court of Cassation, in a judgment of 16 December 1998 (No. 96-22.232), set the record straight: deprivation of the right to eviction compensation is a sanction reserved for serious and irreversible breaches. Analysis of a decision that protects the tenant – but not without limit.

I regularly see this issue in my practice in Versailles and throughout the jurisdiction of the Court of Appeal. Owners and tenants clash over often secondary grounds, while the texts are strict. So, what exactly does this judgment say? And above all, how to apply it concretely to your situation? Follow me.

The facts: a story like any other that happens every day

The case begins in Aix-en-Provence, but it could have taken place in Rambouillet or Trappes. The company Sextius is the tenant of a commercial property to operate a business. The owner, wishing to recover the premises, refuses renewal of the lease and initiates proceedings for payment of eviction compensation. In 1990, the Court of Appeal recognises Sextius's right to this compensation. Logical: refusal of renewal gives rise to a right to compensation for the loss suffered by the evicted tenant.

But the owner does not give up. He goes back to court, this time to have it declared that Sextius has lost its right to compensation for two reasons: on the one hand, non-payment of the occupation fee due during the proceedings; on the other hand, the temporary closure of the establishment for unauthorised works. According to him, these breaches are serious faults justifying forfeiture of the right to compensation.

The Court of Appeal, and then the Court of Cassation, do not follow him. The judges consider that the failure to pay the occupation fee is not an irreversible infringement – the tenant can still rectify – and that the temporary closure does not constitute a serious and legitimate ground for refusal. In short, to lose compensation, more than a simple late payment or a one-off closure is required.

The reasoning of the court – analysed

To understand, we must delve into the law of commercial leases. The principle is simple: when the landlord (owner) refuses renewal of the lease, they must pay the evicted tenant eviction compensation to compensate for the loss of the business (Article L. 145-14 of the Commercial Code). This compensation is often very high – it corresponds to the value of the business, sometimes hundreds of thousands of euros.

But this right is not absolute. Article L. 145-17 of the same code provides that the tenant may be deprived of this compensation if they commit serious breaches of their obligations, such as failure to maintain the premises, unauthorised alterations, or cessation of operation for an abnormal period. However, the sanction must be proportionate.

In this case, the owner invoked two breaches. The first: non-payment of the occupation fee (the sum the tenant must pay to occupy the premises after the end of the lease, pending eviction compensation). The Court of Cassation responds that this failure to pay is not irreversible: the tenant can still pay, and the owner must first put them on notice. In this case, no notice had been sent.

Second ground: the temporary closure of the establishment for unauthorised works. The judges consider, by a sovereign assessment of the facts (i.e. they examine each particular case), that this closure was neither serious nor legitimate to justify deprivation of compensation. In other words, a closure of a few weeks for renovation, even without authorisation, is not enough to cause the tenant to lose their fundamental right to be compensated.

What few people know is that the burden of proof lies with the owner: it is for them to demonstrate that the breaches are sufficiently serious to exclude compensation. And the courts are very strict. undefined, I have come across cases where owners thought they had won, but the judges held that the faults were minor or rectifiable.

What this changes for you – concretely

If you are a landlord, this decision reminds you that deprivation of eviction compensation is an exception, not the rule. To obtain it, you must prove serious and irreversible breaches. Example: a tenant who sublets without authorisation for years, or who completely ceases their activity for 6 months without justification. On the other hand, a simple late payment of the occupation fee, without prior notice, will not allow you to avoid compensation. Imagine a business in Trappes: the tenant pays their rent 2 months late, but eventually regularises before the hearing. No forfeiture possible.

If you are a tenant, this judgment secures you. You can be assured: a temporary closure for works, even without prior authorisation, does not affect your right to compensation, provided it is brief and justified. But be careful: if you completely cease operation for several months, or if you commit serious damage, you risk a lot. Remain vigilant.

For purchasers of a business, know that the right to eviction compensation is a key element of the value of the business. Before buying, check that the tenant has not committed faults that could deprive them of this right. A simple consultation of court decisions or a request for information from the owner can avoid nasty surprises.

Finally, for co-owners or building managers, this case law also applies to commercial leases concluded in common parts or co-ownership premises. If you refuse renewal of a lease to a trader, you must comply with the same rules.

Four tips to avoid this type of dispute

• Send a formal notice in writing before any sanction: If your tenant does not pay the occupation fee, send them a registered letter with acknowledgement of receipt granting a period (15 to 30 days) to rectify. Without this formality, deprivation of compensation will be impossible.
• Document all breaches: Take photos, keep emails, have prolonged closures or damage noted by a bailiff. The more evidence you have, the more you can demonstrate the seriousness of the facts.
• Consult a lawyer lawyer at the first signs of conflict: Each case is unique. A lawyer will help you assess whether your tenant's breaches are serious enough to justify deprivation of compensation. In Rambouillet or Trappes, do not hesitate to contact me.
• Negotiate rather than litigate: Eviction compensation proceedings are long (often 2 to 3 years) and costly. An amicable settlement may allow you to reach an agreement on the amount of compensation, without going to court.

Further analysis: related case law and developments

This 1998 judgment is part of a consistent line of the Court of Cassation, which protects the right to eviction compensation. For example, in a judgment of 15 February 1995 (No. 93-10.256), the Court had already held that failure to maintain the premises did not justify deprivation of compensation if the landlord had not put the tenant on notice to carry out the works. Another notable decision: the judgment of 10 March 1999 (No. 97-10.123) which specifies that unauthorised subletting must be effective and prolonged to be classified as a serious fault.

The trend is therefore clear: the courts are reluctant to deprive a tenant of their compensation, except in cases of truly culpable and irremediable behaviour. This means that owners must be very cautious before invoking this ground. For the future, we can expect case law to maintain this line, perhaps even strengthen it, because eviction compensation is considered an essential guarantee of the status of commercial leases.

What you absolutely must remember

1. Check the formal notice: Before any action, ensure you have sent a proper formal notice for each alleged breach.
2. Assess the severity: Ask yourself whether the breach is irreversible (e.g. destruction of premises) or rectifiable (e.g. late payment).
3. Consult a lawyer: Do not decide alone to refuse compensation – the financial consequences can be severe.
4. Document everything: Build a solid evidence file from the start of the dispute.
5. Negotiate if possible: An amicable solution is often faster and cheaper than a trial.

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 →