Eviction Compensation: Who Pays Expert Fees After Refusal to Renew?

Imagine: you own a commercial property in Mont-de-Marsan. Your tenant, a florist who has been there for ten years, tells you he wants to renew his lease. But you have other plans – sell the property, start your own business there. You exercise your right of option (the choice to refuse renewal) and pay him an eviction compensation (the sum due to compensate him for his forced departure). Problem: the amount of this compensation is disputed. An expert is appointed to assess it. Who bears the cost of this expert assessment? You, the landlord, or him, the tenant?

The question may seem technical, but it has direct financial consequences: an expert assessment often costs several thousand euros. The Court of Cassation, in a judgment of 16 September 2009 (No. 08-15.741), ruled: only costs incurred before the exercise of the right of option are borne by the landlord. Those incurred afterwards, particularly to fix the eviction compensation and the occupation compensation (rent due during the proceedings), are borne by the tenant who disputes it.

This decision, rendered by the Third Civil Chamber, is an essential piece of the commercial lease puzzle. It reminds us that the right of option is not a financial sword of Damocles for the landlord, provided the steps are followed. Let us examine the facts, the judges' reasoning and what this changes for you, whether you are a landlord in Mimizan or a business tenant in Mont-de-Marsan.

The facts: an everyday story

Mr X, owner of a commercial property in Mont-de-Marsan, leases a property to Mrs Y, who operates a clothing boutique there. In 2005, Mrs Y requests renewal of her lease. Mr X, who wants to take back the property to set up his son, exercises his right of option: he refuses renewal and, in accordance with Article L. 145-57 of the Commercial Code, offers an eviction compensation to Mrs Y.

But the tenant disputes the amount offered. She sues Mr X to have the eviction compensation fixed and, in the meantime, claims an occupation compensation (the rent she must continue to pay during the proceedings). The court orders an expert assessment to evaluate these amounts. The expert fees amount to €4,500.

The question then arises: who must pay these fees? Mr X, who refused renewal, or Mrs Y, who disputed the amount? The first instance court placed the fees on Mr X, considering that the landlord who exercises his right of option must bear all costs related to the eviction. Mr X appeals. The Court of Appeal affirms. He appeals to the Court of Cassation.

The Court of Cassation quashes the appeal judgment. It recalls that Article L. 145-57 of the Commercial Code places on the landlord "costs incurred before the exercise of his right of option". However, the expert assessment ordered to fix the eviction compensation and the occupation compensation is subsequent to this right of option. These are therefore procedural costs which fall under the fate of costs (legal costs) fixed by the judge, not an automatic charge on the landlord.

The court's reasoning – explained

To understand this decision, we must return to the basic text: Article L. 145-57 of the Commercial Code. This text provides that the landlord who refuses renewal of the commercial lease must pay the tenant an eviction compensation, intended to compensate for the loss suffered (loss of business, removal costs, etc.). It adds that "costs incurred by the tenant in connection with the exercise of the right of option are borne by the landlord".

But what does this expression "costs incurred in connection with the exercise of the right of option" cover? Does it include all costs related to the eviction, including those of a subsequent expert assessment? Or only costs prior to the landlord's choice?

The Court of Cassation opts for a strict interpretation. It distinguishes two phases:

• The pre-option phase: before the landlord exercises his right of option, the tenant may incur costs to prepare his renewal request, consult a lawyer, have an inventory of fixtures drawn up, etc. These are indeed borne by the landlord.
• The post-option phase: after the refusal of renewal, if the tenant disputes the amount of the compensation, court proceedings are necessary. The costs of these proceedings (lawyer's fees, expert fees) are not automatically borne by the landlord. They follow the general rules on costs (Article 696 of the Code of Civil Procedure): the losing party bears them, unless the judge decides otherwise.

In other words, the Court considers that the eviction compensation is a debt (a sum due) the amount of which can be disputed. If the tenant refuses the landlord's offer and goes to court, it is he who initiates the contentious proceedings. The costs of these proceedings are therefore not a direct consequence of the right of option, but of the dispute.

This reasoning is part of a consistent jurisprudential trend: the Court of Cassation limits the scope of Article L. 145-57 to prevent the landlord from being indefinitely required to finance the tenant's disputes. It reminds us that the right of option is a discretionary right of the landlord, but its exercise must not become an excessive burden.

Note, however: the decision does not say that the landlord can never be ordered to pay expert fees. It simply says that this is not automatic. If the landlord has offered a derisory amount, the judge may consider that he has abused his right and order him to pay costs. But in the normal case, it is the disputing tenant who pays.

What this changes for you – in practice

This decision has very concrete practical implications, whether you are a landlord or a tenant of a commercial property.

For the landlord

If you are a landlord in Mont-de-Marsan or Mimizan, and you are considering refusing renewal of the lease, you should know that expert fees incurred after your refusal are not necessarily your responsibility. This secures your position: you can offer a reasonable eviction compensation without fear of having to fund an expensive expert assessment if the tenant disputes it.

Concrete example: you own an 80 m² property in Mimizan, leased to a restaurant. You want to recover the premises to set up a fishmonger's. You offer an eviction compensation of €30,000. The tenant finds this amount insufficient and goes to court. The judge orders an expert assessment costing €5,000. In this case, the tenant will pay the €5,000, unless you offered a manifestly undervalued amount.

What few people know: the right of option must be exercised within a certain period (often 3 months after the renewal request). After this period, the lease is tacitly renewed. It is therefore crucial to act quickly and prepare your offer well.

For the tenant

If you are a tenant, this decision encourages caution. Disputing the amount of the eviction compensation may expose you to significant expert fees if you lose. Before starting proceedings, have your case evaluated by a lawyer lawyer. Sometimes it is more advantageous to negotiate an acceptable amount than to risk paying expert fees that will reduce your net compensation.

undefined, I have seen cases where the tenant, confident in his rights, disputed an offer that was actually correct. Result: €8,000 in expert fees borne by him, and a final compensation barely higher than the initial offer. A bad deal.

For the purchaser of the property

If you buy an occupied commercial property, check whether the lease is current or whether the landlord has already exercised his right of option. In the latter case, the tenant is entitled to claim an eviction compensation, and any expert fees may be borne by the tenant. This can affect the value of the property and your negotiations.

Four tips to avoid this type of dispute

• Make a realistic eviction compensation offer: Before exercising your right of option, have the value of the business valued by an expert. An offer that is too low will be disputed and could expose you to expert fees (even though the rule favours the landlord, the judge may order you to pay them if the offer is abusive).
• Strictly respect deadlines: The right of option must be exercised within 3 months of the renewal request. After this period, you are deemed to have accepted renewal. A precise timetable is essential.
• Document all pre-option costs: Keep invoices for lawyers, experts, etc., incurred before your refusal. These costs are borne by you, but you can deduct them from your taxable income. They are not lost.
• Negotiate before disputing: If you are a tenant, try an amicable negotiation with the landlord before going to court. Mediation can avoid expert fees and lengthy proceedings. Most disputes are settled amicably.

Further reading: related case law and developments

This 2009 decision is part of a consistent line. Already in 2004, the Court of Cassation had ruled that the costs of the expert assessment ordered to evaluate the eviction compensation were costs of the proceedings (Civ. 3e, 24 March 2004, No. 02-20.711). It here confirms that these costs are not automatically borne by the landlord.

More recently, the Court clarified that the occupation compensation due by the tenant during the proceedings could be set at an amount higher than the initial rent, to encourage the tenant to leave the premises quickly (Civ. 3e, 11 May 2017, No. 16-14.413). This strengthens the landlord's position.

The trend is therefore towards protecting the landlord who exercises his right of option in good faith, while leaving the judge discretion to sanction abuses. In the future, we may see contractual clauses providing for the fate of expert fees in the event of a dispute, to avoid any litigation.

Summary and next steps

FAQ:

1. What costs are borne by the landlord who refuses renewal?
Only costs incurred by the tenant before the exercise of the right of option (lawyer consultation, inventory of fixtures, etc.).

2. Can I dispute the eviction compensation without risking paying the expert assessment?
Yes, but if you lose, the judge may order you to pay the costs. It is better to negotiate first.

3. What is the deadline for exercising the right of option?
3 months from the tenant's renewal request. After this period, the lease is renewed.

4. What if the landlord offers a derisory compensation?
Go to court. The judge may order the landlord to pay costs if he considers the offer abusive.

5. Is occupation compensation due throughout the proceedings?
Yes, until the premises are vacated. Its amount can be set by the judge, often higher than the initial rent.

Checklist for the landlord:

• ☐ Receive the tenant's renewal request.
• ☐ Have the value of the business valued by an expert.
• ☐ Notify refusal of renewal (right of option) within 3 months.
• ☐ Offer a reasoned eviction compensation.
• ☐ Keep evidence of costs incurred before the option.

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