Judicial liquidation and notice to quit for sale: the landlord must comply with the law of 6 July 1989

You are the owner of a flat in Mimizan, and unfortunately your company is placed in judicial liquidation (collective procedure that closes the business). The liquidator (the person responsible for realising the company's assets) informs you that he wants to sell the dwelling you rent to a tenant. Can he do so without respecting the usual rules for notice to quit for sale (6 months' notice, price stated, offer to sell to the tenant)? This is the question the Court of Cassation answered on 7 October 2020 (appeal no. 19-10.685).

This decision, which concerns a dispute in the Landes, is of direct interest to landlord owners and tenants in Mimizan, Tarnos and throughout France. In short, the Court ruled that the liquidator, even in judicial liquidation, must comply with Article 15 of the law of 6 July 1989 (which governs residential leases): he must serve a notice to quit for sale with a 6-month notice period, state the price and conditions of sale, and the notice acts as an offer to sell in favour of the tenant. In other words, judicial liquidation does not allow the tenant's rights to be circumvented. But what exactly does this change? Let's delve into the facts.

This case is a perfect illustration of the tensions that can arise between insolvency law (which aims to pay creditors as quickly as possible) and the right to housing (which protects the tenant). How should you react if you are in this situation? Read on.

The facts: a story like many that happen every day

Imagine: in Tarnos, a company named "Alexandre" (which we will call Company A) owns a flat that it leases to a family, the K. family (Mr and Mrs K.). Company A is in judicial liquidation. The liquidator, appointed by the commercial court, decides to sell the flat vacant (i.e., without a tenant) to obtain the best price. To do this, he must first terminate the lease. The liquidator brings proceedings (before the rent judge) to have the lease terminated, without having first served a notice to quit for sale on the tenant.

The K. family contest this: they argue that the liquidator must comply with the law of 6 July 1989, which requires a 6-month notice period and a priority offer to sell to the tenant. The liquidator, on the other hand, relies on Article L. 641-11-1, IV of the Commercial Code (which governs judicial liquidation): according to him, this text allows the liquidator to freely dispose of assets without being bound by the rules of lease law. The court of first instance (the judge for protection disputes) rules in favour of the liquidator and terminates the lease. The K. family appeal. The Court of Appeal of Pau (which covers the Landes) upholds the decision. The K. family then appeal to the Court of Cassation (the highest French judicial court).

The Court of Cassation quashes the Court of Appeal's decision. It considers that the liquidator, as landlord, must comply with Article 15 of the law of 6 July 1989. This text is of public policy (mandatory, cannot be derogated from). The liquidator should have served a notice to quit for sale, with a 6-month notice period, stating the price and conditions of sale, and this notice acts as an offer to sell in favour of the tenant. Article L. 641-11-1, IV of the Commercial Code does not exclude the application of these provisions. In short, judicial liquidation does not allow overriding the tenant's rights.

The reasoning of the court — broken down

The Court of Cassation relies on two texts: Article 15, I and II of Law No. 89-462 of 6 July 1989 (the law on residential leases) and Article L. 641-11-1, IV of the Commercial Code (relating to judicial liquidation). The first text provides that to terminate a residential lease with a view to selling the dwelling, the landlord must respect a 6-month notice period and serve a notice which must state the price and conditions of sale. This notice acts as an offer to sell in favour of the tenant: the tenant has a right of pre-emption (priority to buy) during the first two months of the notice period. The second text provides that the liquidator may sell assets of the company in liquidation by private agreement, without special formalities.

The judges of the Court of Cassation interpreted these two texts so as to reconcile them. They considered that the second text does not exclude the application of the first. In other words, the liquidator may indeed sell the property, but must do so in compliance with the protective rules for the tenant. This reasoning is logical: the right to housing is a fundamental right, and the law of 6 July 1989 is of public policy. Even in judicial liquidation, the tenant retains his rights.

This decision confirms a jurisprudential trend already underway: courts protect the tenant even in the face of collective proceedings. This is not a reversal, but a confirmation. The liquidator's arguments (quick sale needed) did not convince the Court. What few people know is that this solution also applies in judicial reorganisation (proceedings to safeguard the company): the insolvency practitioner must also comply with lease law.

What this changes for you — concretely

For the landlord owner (or the liquidator): if you are in judicial liquidation and wish to sell a rented dwelling, you must imperatively serve a notice to quit for sale complying with Article 15 of the law of 6 July 1989. This means: 6-month notice period (from the lease renewal date), notice by registered letter with acknowledgement of receipt or by bailiff's act, stating the price and conditions of sale. The tenant then has 2 months to accept the offer. If he refuses or does not respond, you may sell freely, but only after the expiry of the notice period. Warning: if you do not comply with these rules, the termination of the lease may be annulled and you may be compelled to reinstate the tenant's rights, with damages to boot.

For the tenant: you are protected. If the liquidator attempts to evict you without a valid notice, you can challenge the termination of the lease before the judge. You have the right to purchase the dwelling at the conditions set out in the notice. If you consider the price excessive, you can refer the matter to the judge to have it modified (within 2 months of receiving the notice). Concrete example in Tarnos: a tenant pays rent of €500 per month for a flat valued at €80,000. The liquidator serves a notice with a price of €90,000. The tenant can challenge this price before the rent judge, who will set it at market value.

For the buyer: if you buy an occupied dwelling as part of a liquidation, ensure that the notice to quit for sale has been properly served. Otherwise, the tenant may remain in the premises and you may not be able to evict him easily. undefined, I have come across cases where the buyer, in a hurry, bought without checking and ended up with a protected tenant for months.

Four tips to avoid this type of dispute

• Check for the existence of a lease before any sale: Before signing a sale agreement, ask the seller (or the liquidator) to provide you with a copy of the lease and proof of notice served. If the dwelling is occupied, require a valid notice.
• Scrupulously respect the formalities of the notice: The notice to quit for sale must be served by bailiff's act or registered letter with AR, state the price and conditions of sale, and indicate that the tenant has a period of 2 months to purchase. Do not forget the 6-month notice period.
• Anticipate the collective procedure: If you are an owner and your company is in difficulty, consult a lawyer as soon as possible to organise the sale of the rented property in compliance with the rules. The liquidator is not entitled to disregard lease law.
• In case of dispute, refer the matter to the judge promptly: If the liquidator attempts to terminate the lease without notice, the tenant can refer the matter to the judge for protection disputes in summary proceedings to have the termination declared void.

Besoin d'un conseil personnalisé ? Contactez Maître Zakine — première consultation 30 min à 45€.

Further detail: related case law and developments

This decision is part of a line of tenant protection. Previously, the Court of Cassation had ruled, in a judgment of 13 September 2018 (no. 17-20.907), that the liquidator could not sell a rented dwelling without respecting the tenant's right of pre-emption. More recently, the Court extended this protection to the case of judicial reorganisation (judgment of 9 January 2020, no. 18-24.459). The trend is clear: judges give priority to the right to housing over the speed of collective proceedings.

For the future, it is possible that the legislature may intervene to clarify the rules, but in the meantime, liquidators must strictly comply with the law of 6 July 1989. Tenants, for their part, benefit from knowing their rights, especially in high-pressure areas such as the Côte d'Azur or the Landes coast, where property prices are high and attempts at forced sales are frequent.

Checklist before acting

FAQ: 5 practical questions

1. Can I be evicted without a notice to quit for sale in judicial liquidation? No. The liquidator must comply with the 1989 law. Without a valid notice, the termination of the lease is void.
2. What should I do if I receive a notice to quit for sale from a liquidator? Check the notice period (6 months) and the price. You have 2 months to accept the offer. If the price seems too high, consult a lawyer to challenge it.
3. Can the liquidator sell the dwelling to a third party without offering it to me first? No. The notice acts as an offer to sell. The tenant has a right of pre-emption for 2 months. If the liquidator sells to a third party without respecting this right, the sale may be annulled.
4. What are the risks for the liquidator who does not comply with these rules? He may be ordered to pay damages for violation of the right to housing, and the termination of the lease may be annulled.
5. Is an individual landlord (not a company) subject to the same rules? Yes, exactly the same. The 1989 law applies to all landlords, whether individuals or legal entities.

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 →