Qualification of a Lease: Commercial or Professional? The Court of Cassation Rules

Imagine: you own commercial premises in Nice, Cours Saleya. You sign a lease with a lawyer or a doctor, who sets up their practice. The contract clearly states "commercial lease". Years later, a dispute arises: the tenant wants to benefit from the commercial lease status (which protects the goodwill) or, on the contrary, tries to escape their obligations by claiming it is a professional lease. Who is right?

This question was decided by the Court of Cassation in a judgment of 7 November 1973, still applicable today. The judges held that the trial judges have the power to reclassify a contract, beyond the terms chosen by the parties. In other words, just because the lease is called "commercial" does not make it legally commercial. What matters is the activity actually carried on.

For landlords and tenants in the Grasse region, this decision has concrete consequences. In Antibes or Grasse, a landlord may find themselves deprived of the right to recover possession or indexed rents if they have let to a liberal professional under the guise of a commercial lease. Conversely, a tenant may lose the protection of the commercial lease status. Analysis.

The facts: a story that happens every day

In this case, one Dastugue was the usufructuary (the person with the right to use and receive income from a property without being the owner) of a building. He had sold the bare ownership (ownership without the right of use or income) to the X spouses. Then, he leased a floor of the building to a tenant, for the exercise of his profession. The contract was drafted as a commercial lease.

Upon the death of the usufructuary, the spouses, having become full owners, contested the validity of the lease. According to them, the usufructuary could not alone grant a commercial lease on a building, because Article 595 of the Civil Code (in its then current version) prohibited the usufructuary from leasing a building for commercial use without the consent of the bare owner. They argued that the lease was in reality a professional lease (because the tenant exercised a liberal profession), which changed the situation.

The dispute was brought before the courts. The trial judges ruled in favour of the spouses: they reclassified the lease as "professional", finding that despite the terms of the contract, the intention of the parties was to use the premises for the exercise of the tenant's profession. The judges relied on their power to give acts their true legal classification, regardless of the name chosen.

The reasoning of the court — broken down

The Court of Cassation confirmed the reasoning of the trial judges. It reiterated a fundamental principle: judges have the power to reclassify the acts submitted to them. In short, if a contract is misnamed, the court can "reclassify" it into the correct legal category, even if it contradicts the apparent intention of the parties.

Why? Because the legal classification of a contract depends on its actual content, not its label. In this case, the fact that the lease mentioned a "commercial lease" did not prevent the judges from finding that the premises were used for the exercise of a liberal profession. However, the status of commercial leases (Decree of 30 September 1953) applies only to traders and craftsmen, not to liberal professions. The latter are governed by the professional lease (Law of 23 December 1986, but at the time, the rules were different).

Note, however, that this reclassification is not automatic. The judges must ascertain the real intention of the parties. In this case, the usufructuary had let to a liberal professional, and the contract contained a clause for professional use. The judges considered that the parties had deliberately chosen not to apply the commercial status. This is therefore a decision of fact, assessed freely by the courts.

What few people know is that this solution has been confirmed by many subsequent decisions. The case law is consistent: the classification of a commercial lease is excluded as soon as the activity carried on is liberal, even if the contract so stipulates. Conversely, a professional lease may be reclassified as commercial if the tenant carries on a commercial activity without stating it.

What this changes for you — practically

If you are a landlord on the Côte d'Azur, this decision directly concerns you. Suppose you let premises to an architect in Antibes, in the Safranier district. You sign a "commercial lease" to benefit from a longer term or higher rent. But if the architect ceases their liberal activity and sublets to a trader, beware: the lease could be reclassified as commercial, with all the protections that entails (right to renewal, eviction compensation). Conversely, if you want to recover the premises for your son, a professional lease allows you to give notice without compensation (subject to 6 months' notice).

For tenants: if you are a doctor, lawyer, or any liberal professional, know that you are not entitled to the status of commercial leases. You cannot demand renewal of your lease, nor eviction compensation if the landlord gives you notice. However, you can negotiate a professional lease with adapted clauses (term, rent review).

undefined, I have encountered cases where a notary in Grasse had signed a "commercial" lease for their practice. Upon retirement, they wanted to assign their lease to a colleague. The landlord refused, arguing that the lease was professional. Result: a long and costly procedure, which could have been avoided with proper drafting of the contract.

Four tips to avoid this type of dispute

• Do not rely on the title of the contract. Draft the lease according to the actual activity: if the tenant exercises a liberal profession, opt for a professional lease (Law of 23 December 1986). If it is a trader, a commercial lease (Decree of 30 September 1953).
• Insert an exclusive use clause. State that the premises may only be used for the exercise of the specified liberal profession. This will avoid any ambiguity and facilitate proof of the parties' intention.
• Check the landlord's capacity. If the landlord is a usufructuary, they cannot alone grant a commercial lease of more than 9 years without the bare owner's consent. If in doubt, require written consent from both.
• Engage a lawyer lawyer from the drafting stage. An informed advice in Antibes or Nice will cost you less than a trial. Maître Zakine can assist you in drafting a tailor-made lease adapted to your situation.

Further analysis: related case law and developments

This 1973 decision is part of a consistent line. The Court of Cassation reaffirmed this principle in a judgment of 10 July 1996 (No. 94-15.673): "trial judges freely assess the classification of a lease contract". More recently, in a judgment of 4 November 2020 (No. 19-16.200), the Court specified that the professional or commercial nature is assessed with regard to the activity carried on at the time of the conclusion of the lease, regardless of any subsequent change.

The trend of the courts is therefore clear: they look at reality, not words. This means that landlords must be vigilant: if a liberal tenant changes activity to become a trader, the lease may be reclassified as commercial, with all the constraints for the landlord. Conversely, a tenant who is refused renewal of their professional lease cannot invoke commercial status if their activity is liberal.

For the future, the Pinel Law of 18 June 2014 strengthened the protection of liberal professionals by granting them a right to renewal under certain conditions, but with rules distinct from commercial leases. The boundary thus remains blurred, and case law continues to refine it.

Key points to remember

• The classification of a lease depends on the actual activity, not the title of the contract. A "commercial" lease may be reclassified as professional if the tenant exercises a liberal profession.
• Judges have the discretionary power to reclassify. They may ignore the terms of the contract to ascertain the intention of the parties.
• Practical consequences: the status of commercial leases (tenant protection, right to renewal, eviction compensation) does not apply to liberal professions. Conversely, the professional lease offers less protection to the tenant.
• Prevention: draft a lease adapted to the activity, with an exclusive use clause, and engage a lawyer lawyer.
• In case of dispute: the burden of proof lies on the party contesting the classification. They must demonstrate that the actual activity differs from that stated.

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