Two-year limitation period for commercial leases: when the refusal of renewal suspends the time limit

Imagine: you are the owner of commercial premises in La Garde, in the Var, and you have just refused to renew your tenant's lease on serious and legitimate grounds. You think the matter is settled. But two years later, the tenant claims an eviction indemnity (the sum due to the evicted tenant to compensate for the loss of their business). Are you still obliged to pay? The question divides opinion.

This decision of the Court of Cassation of 17 December 1970 (n° 69-11.757) rules: the two-year limitation period provided for in Article 33 of the Decree of 30 September 1953 does not run against a tenant whose right to an indemnity depends on the outcome of pending proceedings. In other words, as long as a judge has not ruled on the refusal of renewal, the tenant can still claim their indemnity, even after two years.

But beware: this rule has limits. And it can also work against a landlord who delays in taking action. Let's delve into the details.

The facts: a story that happens every day

Mr and Mrs X are owners of commercial premises in Toulon, which they lease to company Y. In 1966, they notify their tenant of a refusal of renewal of the lease, invoking serious and legitimate grounds (for example, repeated breaches of tenant obligations). The tenant contests this refusal and sues the owners in court to assert their right to renewal.

The court of first instance finds in favour of the owners: the refusal is justified. But the tenant appeals. Meanwhile, the lease continues. It is only in February 1969, in their appeal submissions, that the tenants for the first time make a claim for payment of an eviction indemnity. The owners retort that this claim is time-barred: the action for the indemnity had to be brought within two years of the refusal of renewal, i.e., before 1968.

The Lyon Court of Appeal (because the case was heard outside Provence) finds in favour of the tenants. The owners appeal to the Court of Cassation. In its judgment of 17 December 1970, the Court of Cassation upholds the position of the Court of Appeal.

The reasoning of the court — dissected

The Court of Cassation relies on Article 33 of the Decree of 30 September 1953, which provides that all actions brought under this Decree (notably the action for payment of the eviction indemnity) are subject to a two-year limitation period. But it adds a fundamental exception: the limitation period does not run against a person whose right is conditional upon the outcome of pending proceedings.

In this case, the tenant's right to obtain an eviction indemnity depended on the outcome of the action contesting the refusal of renewal. As long as the judge had not finally ruled on the validity of the refusal, the tenant could not know whether they were entitled to an indemnity. It would be unfair to require them to act under penalty of limitation while their right is uncertain.

In other words, the two-year period only starts to run from the moment the refusal of renewal is finally judged valid or not. Here, the proceedings were still ongoing, so the claim for indemnity, although made more than two years after the refusal, was admissible.

This reasoning is consistent: the Court of Cassation here confirms previous case law. It clearly distinguishes the action contesting the refusal (which has its own time limit) from the action for payment of the indemnity (which follows the fate of the former).

What this means for you — concretely

For the landlord: If you refuse the renewal of a commercial lease on serious and legitimate grounds, you must be aware that the tenant can claim an eviction indemnity even several years later, as long as the proceedings on the refusal have not been finally decided. Example: in Saint-Raphaël, a landlord refuses renewal in 2020 for lack of maintenance; the tenant contests; in 2023, the court confirms the refusal; the tenant can still claim the indemnity until 2025.

For the tenant trader: Do not delay in taking action. Admittedly, the limitation period is suspended during the contestation, but as soon as the refusal is final (for example, an irrevocable judgment), the two-year period starts again. If you wait too long, you lose all right to an indemnity. undefined, I have come across cases where traders, believing they could claim the indemnity at any time, were faced with limitation after a long procedure.

For the buyer of commercial premises: Always check whether there are ongoing proceedings regarding the renewal of the lease. An evicted tenant may have a claim for an eviction indemnity that is not yet time-barred, which would burden the value of the property.

In summary, this decision protects the tenant against too rapid a forfeiture (loss of a right for non-compliance with a time limit), but it imposes increased vigilance on all parties.

Four tips to avoid this type of dispute

• Notify your refusal by bailiff's act with mention of the serious and legitimate grounds, and imperatively keep proof of the date of notification. This is the starting point of the limitation period.
• If you are a tenant, do not delay in contesting the refusal: the action to contest is subject to a two-year limitation from the refusal. Even if the indemnity follows, it is better to act quickly to secure your rights.
• Landlord, anticipate the cost of the indemnity: even if you believe your grounds are valid, there is a risk of being ordered to pay the indemnity. Set aside a sum corresponding to the value of the business (often several tens of thousands of euros).
• Consult a lawyer at the first signs of conflict: a professional will help you assess the strength of your grounds and comply with deadlines. In Toulon, La Garde or Saint-Raphaël, a lawyer specialised in commercial law is your best ally.

Further insight: related case law and developments

This 1970 decision is part of a consistent line. The Court of Cassation has reaffirmed this principle several times, notably in a judgment of 8 July 2009 (n° 08-13.789): the limitation period for the action for eviction indemnity is suspended as long as the action for annulment of the notice (the refusal of renewal) is pending. Conversely, if the tenant lets two years pass after the final decision without claiming, they lose their right.

A notable development: the Pinel Law of 18 June 2014 modified the status of commercial leases, but the principle of the two-year limitation period and its suspension in the event of a preliminary action (which conditions the right) remains. Courts are increasingly strict on proof of the date of notification of the refusal. In Toulon, the commercial court often requires an original bailiff's act.

Beware however: if the refusal of renewal is based on a non-serious ground (for example, simple sale of the premises), the tenant does not have to contest: they are immediately entitled to the indemnity, and the two-year period runs from the notification. The distinction is crucial.

In practice: what to do

FAQ:

• What is the time limit to claim an eviction indemnity? In principle 2 years from the refusal of renewal. But if you contest the refusal, the period is suspended until the final decision.
• What if I received a refusal of renewal more than 2 years ago? If you have not contested, your right to an indemnity is probably time-barred. Consult a lawyer to check if there is a ground for suspension (as in this decision).
• Landlord, how to avoid paying the indemnity? By proving serious and legitimate grounds (lack of maintenance, unauthorised subletting, illegal activity...). Have the breaches recorded by a bailiff.
• Is the eviction indemnity due even if the tenant has left the premises? Yes, if the refusal of renewal is judged abusive or without serious grounds. The amount corresponds to the value of the business, often between 1 and 2 years of turnover.

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 →