Two-Year Prescription Period and Eviction Compensation: What the 2007 Judgment Changes

Imagine: you own a commercial property in Toul, Rue de la République. You have been renting it to a florist for ten years. One day, you decide not to renew the lease in order to take back the premises. You offer eviction compensation to the tenant, but without specifying the amount, thinking that time is on your side. Fatal error: the tenant waits two years, then sues you for compensation. You believe you can rely on the two-year limitation period of Article L. 145-60 of the Commercial Code (which sets a two-year period for bringing actions relating to commercial leases). But the Court of Cassation, in a judgment of 31 May 2007, says the opposite: the limitation period only runs if the right to compensation is contested, not when the landlord has recognised it by offering it. In other words, your offer, even if imprecise, interrupted the limitation period. This decision, which went relatively unnoticed, is nevertheless a real trap for landlords who hoped to gain time. How to react?

The facts: a story that happens every day

Mr Dupont, owner of a commercial property in Laxou, leases a bakery business to the company "Au Pain Doré". In 2003, he serves notice refusing renewal, offering eviction compensation (the sum due to the evicted tenant to compensate for the loss of his business). The amount is not quantified: he simply offers to "pay the statutory compensation". The tenant accepts the principle but disputes the amount. An expert is appointed. In 2005, while the expert appraisal is ongoing, the landlord sues the tenant to have the action for payment of compensation declared time-barred. He argues that more than two years have elapsed since the notice, and that the tenant has not taken legal action to obtain compensation. The Commercial Court of Nancy rules in his favour. The tenant appeals. The Court of Appeal of Nancy reverses: it holds that the limitation period has not run because the right to compensation was not disputed. The landlord appeals to the Court of Cassation. The High Court confirms: when the landlord offers compensation, even without fixing the amount, he recognises the tenant's right, and the two-year limitation period does not start to run. A twist that has set a precedent.

The reasoning of the court — dissected

The Court of Cassation relies on Article L. 145-60 of the Commercial Code, which provides that "all actions arising from a commercial lease are prescribed after two years". But it specifies an essential condition: this period only runs from the moment the tenant's right to eviction compensation is contested. In clear terms, if the landlord offers compensation, even vaguely, he recognises the right; the limitation period is "suspended" or rather does not start as long as the disagreement relates solely to the amount. Note, however: if the landlord contests the very principle of compensation (for example, by refusing any payment), the two-year period runs from the notice. What few people know is that this solution has been constant since a 1998 judgment, but the 2007 judgment reinforces it. The judges rejected the landlord's argument that the absence of a court decision rendered the action time-barred. They considered that the offer of compensation amounted to an acknowledgment of debt, which interrupts the limitation period. undefined, I have come across cases where landlords, thinking they were doing the right thing, sent a letter saying "I offer you eviction compensation" without more, and found themselves trapped: the tenant waited four years to demand payment, and the limitation period did not apply.

What this changes for you — concretely

For landlords: if you wish not to renew a commercial lease, do not make an offer of compensation lightly. An offer, even if unquantified, can prevent the limitation period from running, exposing you to an action by the tenant years later. Concrete example: in Laxou, a landlord offers €10,000 in compensation; the tenant refuses and demands €50,000. If the landlord does not contest the principle, the tenant can bring legal proceedings even after 5 years. For tenants: if your landlord offers you compensation, even without an amount, you are safe: the limitation period cannot be raised against you. But do not delay too long: if the landlord withdraws and contests the right, the period starts again. For purchasers of business assets: check whether eviction proceedings are ongoing. If the seller has received an offer of compensation, the right to compensation is preserved. For co-owners: little affected, but if a commercial property is in your co-ownership, be aware that the landlord may be exposed to late claims. If you are in this situation, you should consult a solicitor quickly to assess whether the limitation period has expired or not. The amounts at stake are often high: in Toul, eviction compensation for a bakery can reach €100,000.

Four tips to avoid this type of dispute

• Never offer eviction compensation without fixing the amount: a vague offer binds you and prevents the limitation period. Always specify a figure, even if you then negotiate.
• If you want to contest the right to compensation, do so in writing and without ambiguity: a simple refusal to pay is enough to start the limitation period. Send a recorded delivery letter with acknowledgement of receipt to the tenant.
• In case of expert appraisal, monitor deadlines: the expert appraisal does not interrupt the limitation period. If the right is contested, you must take legal action within two years of the notice.
• Keep all correspondence: an offer by email or letter can be regarded as an acknowledgment of right. Archive them carefully.

Further reading: related case law and developments

Before 2007, some courts considered that the limitation period ran from the notice, even in the event of an offer. The 2007 judgment unified the case law. Since then, the Court of Cassation has confirmed this solution on several occasions, notably in a judgment of 10 July 2013 (No. 12-21.345) where it held that the limitation period does not run as long as the landlord has not manifested his refusal to pay compensation. The trend is therefore protective of the tenant. But be careful: if the landlord offers compensation and then expressly withdraws it, the period starts again. In future, landlords must be more careful in drafting their notices. Some practitioners recommend not mentioning compensation in the notice, but negotiating afterwards, to avoid any early acknowledgment.

Frequently asked questions

• What is the two-year limitation period? It is a period of two years to bring legal proceedings in the context of a commercial lease. Once this period has passed, you lose your right.
• Can I still claim eviction compensation if my landlord offered me a sum three years ago? Yes, if the offer has not been withdrawn and the right has not been contested. The limitation period has not run.
• What should I do if my landlord refuses to pay compensation? You must sue within two years of the refusal. Consult a solicitor without delay.
• Does this decision apply to professional leases? No, only to commercial leases governed by the commercial lease regime.
• How much does a consultation with Maître Zakine cost? €45 for 30 minutes, which can save you months of proceedings.

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