Holiday Letting: Does Your Lease Permit Subletting? Key 2018 Decision

Picture the scene: you own a flat in Roquebrune-Cap-Martin, with a breathtaking view of the Mediterranean. A couple of tenants seem perfect: they sign a standard residential lease, pay their rent on the dot. But one day, the management company tells you that your flat is actually being let to tourists on Airbnb, night after night. You thought you were safe from prosecution because it's not you who lets it by the day? Wrong. The French Supreme Court, in a judgment of 12 July 2018 (No. 17-20.654), ruled: a landlord may be ordered to pay a civil fine if he grants a lease that allows the tenant to sublet temporarily to transient customers, even without having sought the required administrative authorisation. But what exactly does that change? Let's decode this decision that is shaking landlords on the Côte d'Azur.

This case pits a Monégasque landlord against the state authorities. The lease he signed with his tenant contains a clause authorising subletting. Problem: in Monaco as in Nice, letting dwellings to tourists is strictly regulated by Article L. 631-7 of the French Building and Housing Code, which requires prior authorisation from the mayor for any change of use. By authorising subletting without this authorisation, the landlord exposes himself to a fine of up to €50,000 per dwelling. What few people know is that the law punishes not only the person who lets directly, but also anyone who, through his lease, enables someone else to do so. In other words, a simple subletting clause in a contract can cost you dearly.

In this judgment, the Supreme Court clarifies the conditions for the penalty: it is not necessary that the landlord actively encouraged the unlawful subletting. It is enough that he knew of the unlawful conditions of operation and did nothing to prevent them. 'The landlord must ensure that his tenant complies with the regulations,' summarises Maître Zakine. 'If he turns a blind eye, he becomes an accomplice.'

The facts: a story that happens every day

Mr X, owner of a flat in Monaco, lets his property to a tenant under a standard residential lease. The contract contains a clause authorising the tenant to sublet the dwelling, without specifying the duration or conditions. The tenant then puts the flat up for holiday letting on platforms like Airbnb, for stays of a few days to a few weeks. Tourists come and go without ever taking up residence there.

The Monaco town council services, alerted by neighbours, note that the dwelling is being used as a furnished tourist accommodation without authorisation. They draw up a report and sue Mr X before the Nice Regional Court (Tribunal de grande instance). The landlord defends himself: 'It's not me who lets to tourists, it's my tenant. I just signed a standard lease.'

The court rules in favour of the town council and orders Mr X to pay a civil fine of €25,000 under Article L. 651-2 of the Building and Housing Code. Mr X appeals, but the Nice Court of Appeal upholds the judgment. He appeals to the Supreme Court. The Supreme Court dismisses his appeal: 'The landlord who grants a lease authorising the tenant to sublet temporarily, without checking that the dwelling is authorised for a change of use, commits a fault engaging his liability.' The case is remitted to the Lyon Court of Appeal for the final amount of the fine to be fixed.

The court's reasoning — broken down

To understand this decision, we need to go back to the legal framework. Article L. 631-7 of the Building and Housing Code prohibits letting a dwelling used as a residence for short-term stays to transient customers without prior authorisation from the mayor. This authorisation, called 'change of use', is necessary even if the landlord is not the direct lessor. Article L. 651-2 of the same code provides for a civil fine of up to €50,000 per dwelling for any infringement of this prohibition.

The Supreme Court here applies the principle that 'no one can rely on their own turpitude': the landlord cannot ignore the intended use of his property. By authorising subletting, he facilitated the infringement. The judges emphasise that the lease contained an express subletting clause, which shows that Mr X was aware that his tenant might let to tourists. He should have ensured that the dwelling was authorised for that use or, failing that, prohibited subletting.

This decision confirms earlier case law: as early as 2016, the Supreme Court had penalised a landlord who had allowed his tenant to sublet on Airbnb (Civ. 3e, 9 June 2016, No. 15-13.784). The 2018 judgment goes further by clarifying that mere knowledge of the unlawful conditions is sufficient, even without active participation. 'In other words, if you know that your tenant is subletting seasonally and you do not react, you are liable,' explains Maître Zakine.

What this means for you — practically

If you are a landlord: you must check that your dwelling is authorised to be let as furnished tourist accommodation before signing any lease that permits subletting. If you do not want tourist letting, insert a clause expressly prohibiting subletting. Otherwise, you risk a fine ranging from €25,000 to €50,000 per dwelling, not to mention legal costs. For example, a flat in Roquebrune-Cap-Martin let for €800 per month could cost you €30,000 in fines if the tenant sublets it to tourists.

If you are a tenant: know that subletting without your landlord's written consent is prohibited (except for exceptions), and if your lease allows subletting, you must ensure that the dwelling complies with the regulations. In the event of a dispute, you may be jointly and severally liable with the landlord for the payment of the fine.

If you are a buyer: before buying a let property, ask to see the lease and check that there is no subletting clause. If the property has been used for tourist letting without authorisation, the buyer could inherit the proceedings.

If you are a co-owner: the co-ownership regulations may prohibit holiday letting. Even if the landlord has an administrative authorisation, the management company can take action. The 2018 case law reinforces the possibility for the management company to seek recourse against the landlord.

How to react? If you are in this situation, you should immediately consult a lawyer specialising in property law. A landlord in Monaco, after this decision, had to pay a €30,000 fine and €5,000 in legal fees. 'undefined, I have come across cases where the landlord was completely unaware that his tenant was subletting. But the law does not forgive ignorance,' warns Maître Zakine.

Four tips to avoid this type of dispute

• Draft a lease without a subletting clause: expressly prohibit any subletting, even partial, except with prior written consent. Use wording such as 'The tenant shall not sublet the dwelling, in whole or in part, nor assign the lease, except with the express written consent of the landlord.'
• Check the change-of-use authorisation: before signing a lease that permits subletting, ask the town council whether the dwelling is classified as furnished tourist accommodation or has obtained a change-of-use authorisation. In Nice, for example, the procedure can take 2 months.
• Monitor online listings: carry out regular searches on Airbnb, Booking.com or Leboncoin to see if your property is being offered for rent. If so, send your tenant a formal notice to cease within 8 days, on pain of termination of the lease.
• Use a professional: a lawyer lawyer can draft a compliant lease and advise you on the risks. 'The cost of a consultation (€45) is negligible compared to a €50,000 fine,' recalls Maître Zakine.

Further reading: related case law and developments

This decision is part of a strict jurisprudential trend against abusive holiday lets. In 2016, the Supreme Court had already penalised a landlord who had allowed his tenant to sublet on Airbnb without reacting (Civ. 3e, 9 June 2016, No. 15-13.784). The 2018 judgment confirms and clarifies that mere knowledge of the unlawful conditions is sufficient. Moreover, the Court of Justice of the European Union, in a judgment of 22 September 2020 (Case C-724/18), upheld national regulations requiring authorisation for short-term lets, thereby reinforcing the legitimacy of penalties.

Since 2018, the courts of Nice, Marseille and Lyon have been applying this case law systematically. 'Judges are increasingly strict, because the housing shortage in high-demand areas pushes them to protect the traditional rental stock,' observes Maître Zakine. The future? A possible extension of liability to the platforms themselves, but for now, it is the landlord who pays.

Checklist before taking action

1. If you are a landlord and your lease permits subletting:
   • Check whether the dwelling has a change-of-use authorisation from the town council.
   • Send a recorded delivery letter to your tenant prohibiting any holiday subletting.
   • Consult a lawyer to amend the lease if necessary.
2. If you discover that your tenant is subletting to tourists:
   • Gather evidence (screenshots of listings, neighbour testimonies).
   • Send the tenant a formal notice to cease within 8 days, by recorded delivery with acknowledgement of receipt.
   • If they refuse, apply to the Judicial Court (tribunal judiciaire) for termination of the lease and damages.
3. If you are a tenant and wish to sublet:
   • Obtain your landlord's written consent.
   • Check whether the dwelling is authorised to be let as furnished tourist accommodation (ask the town council).
   • Respect the maximum duration of 120 days per year if you are in Paris, or the local regulations elsewhere.

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 →