Two-Year Limitation Period for Renewed Lease: Starting Point Set by the Court of Cassation

Imagine: you own a commercial property in Offemont, and you have just bought it at auction. To your great surprise, the previous owner had already renewed the lease with the tenant, but at a rent you consider too low. You want to challenge this rent. But until when do you have the right to act? The question may seem technical, but it has very concrete consequences for your wallet. The Court of Cassation, in a judgment of 7 September 2017, ruled: the two-year period to refer the matter to the judge runs from the date the new lease took effect, and not from your acquisition. Explanation.

The Facts: A Story That Happens Every Day

A landlord, the company Noga Hôtels, gives notice to its tenant, the company Claubon, for 30 September 2010, with an offer to renew the commercial lease. The tenant accepts before that date. The new lease therefore takes effect on 1 October 2010. But in the meantime, the landlord sells the property at public auction. The successful bidder (the purchaser at auction) becomes the owner on 8 March 2012. This new owner considers that the rent set in the renewed lease is too low. He then brings legal proceedings to have a new rent fixed. Problem: he acts on 7 June 2013, i.e., more than two years after the effective date of the renewal (1 October 2010). The tenant raises the limitation period (the time to act has expired). The Court of Appeal finds in favour of the tenant: the action is time-barred. The owner appeals to the Court of Cassation. He argues that the period could not start running before he became owner, because one cannot act before having standing to do so.

The Reasoning of the Court — Explained

The Court of Cassation dismisses the appeal. It recalls that the action to fix the rent of a renewed lease is subject to the two-year limitation period provided for by Article L. 145-60 of the Commercial Code. This provision states that all actions relating to commercial leases are barred after two years. The starting point of this period is, according to settled case law, the effective date of the renewal of the lease. In this case, the renewal took effect on 1 October 2010. The successful bidder, although having acquired the property after that date, is subrogated to the rights and obligations of the seller. He cannot rely on his ignorance or his status as purchaser to extend the period. The Court specifies that the request for renewal of the commercial lease does not fall within the scope of Article 684 of the former Code of Civil Procedure (which concerns acts of opposition). In other words, the new owner must inform himself of the existence of a renewed lease and act within two years of the effective date, even if he was not yet the owner at that time. This is a logical solution: the limitation period runs objectively, regardless of the identity of the owner.

What This Changes for You — Practically

For the landlord: if you buy a commercial property that is already let, you must imperatively check whether a renewal has taken place recently. If the lease was renewed before your acquisition, the two-year period to challenge the rent may have already started running. Example: a landlord in Giromagny buys a property in March 2023. The lease had been renewed in January 2022. He only has until January 2024 to act, even though he was not the owner at the time.

For the tenant: this decision protects you. You know that two years after the effective date of the renewal, the rent is final. You can therefore oppose any late action by the new owner.

For the purchaser at auction: be vigilant. Before bidding, inform yourself of the date of the last renewal. If the period is short or has already expired, you will not be able to renegotiate the rent.

For the real estate professional (agent, notary): during a sale, you must inform the purchaser of the key dates of the lease, particularly the renewal date, to avoid any limitation issue.

Four Tips to Avoid This Type of Dispute

• Check the effective date of the renewal as soon as you become the owner of a let property. It appears in the lease or in the renewal deed.
• Note the deadline in your diary: two years after that date, the action to fix the rent is time-barred. Act before then.
• When acquiring at auction, require from the notary or lawyer a full tenancy schedule with the renewal dates. Do not rely on a simple copy of the initial lease.
• In case of doubt, refer the matter to the commercial rent judge before the expiry of the period. A legal claim interrupts the limitation period.

Further Reading: Related Case Law and Developments

This judgment is part of a consistent line of the Court of Cassation. Already, in a judgment of 20 January 2016 (No. 14-29.795), the Court had held that the starting point of the two-year limitation period for an action to fix the rent of a renewed lease is the effective date of the renewal, even if the landlord was not informed. More recently, the judgment of 13 January 2021 (No. 19-22.209) confirmed that the limitation period runs against everyone, including the purchaser. The trend is therefore clear: the judges favour legal certainty and stability of leases. In the future, it is likely that this rule will be maintained, encouraging purchasers to exercise increased diligence.

Frequently Asked Questions

1. Can I challenge the rent of a renewed lease if I buy the property after the renewal? Yes, but only if you act within two years of the effective date of the renewal, even if you were not the owner at that time.

2. What if the two-year period has already expired? You can no longer challenge the rent. You will have to wait for the next renewal (usually 9 years later) to renegotiate.

3. How do I find out the effective date of the renewal? It appears in the renewal deed signed between the former owner and the tenant, or in the notice with offer of renewal. Ask the tenant or your notary for a copy.

4. Can the limitation period be interrupted? Yes, by a writ of summons, an acknowledgment of the right, or a request for amicable determination. But be careful, a simple registered letter is not enough.

5. Does this rule also apply in the case of a private sale (not auction)? Yes, the solution is identical for any purchaser, whether he buys at auction or privately.

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