Lease Renewal: Is the Tenant Required to Restore the Premises? 1973 Decision

Imagine: you are a landlord in Capbreton, in the Landes, and you lease commercial premises to a craftsman. The lease is expiring. You wish to recover the premises to set up your own business, but the tenant, who has a right to renewal, refuses to leave without a heavy eviction compensation (compensation due to the tenant who must leave the premises). And on top of that, the premises are in a sorry state: damaged partitions, worn paint, outdated electrical installations. You wonder: can the tenant both claim eviction compensation and not pay the restoration costs? This is exactly the question that arose in a case decided by the Court of Cassation in 1973. This decision, still relevant today, provides a clear answer: the right to lease renewal does not exempt the tenant from their obligations, and restoration costs cannot be added to the eviction compensation. But what does this mean concretely for you? Let's dive into the details.

The facts: a story that happens every day

In this case, a tenant operated a business in premises owned by landlords. At the expiry of the lease, the landlords refused renewal and offered eviction compensation (a sum intended to compensate for the loss of the right to the lease). The tenant filed a claim with the High Court to fix the amount of this compensation. But a conflict arose: the landlords considered that the tenant should also pay the restoration costs, as she had not maintained the premises during the lease. The tenant, for her part, argued that her right to renewal exempted her from this obligation. The High Court ruled in favour of the landlords by including in the eviction compensation a sum for restoration, but without adding it separately. The tenant appealed, and the Court of Appeal upheld the decision. The case then went up to the Court of Cassation, which made a final ruling.

The reasoning of the court — explained

The Court of Cassation confirmed that the right to lease renewal does not exempt the tenant from performing their obligations during the expired lease. In plain terms, the tenant remains bound to comply with the lease contract until its term, even if they are entitled to a new lease. This includes the obligation to maintain the premises and to return them in good condition, except for normal wear and tear (deterioration due to time). The Court relied on article 1240 of the Civil Code (formerly 1382), which requires reparation for damage caused by one's fault. In other words, if the tenant has neglected maintenance, they must pay for the necessary repairs.

But the crucial point is this: restoration costs cannot be awarded in addition to the eviction compensation. Why? Because eviction compensation is calculated to cover the entire loss suffered by the evicted tenant (loss of business, moving costs, etc.). Adding restoration costs would amount to charging the landlord twice for the same thing, or creating confusion between the tenant's obligations and those of the landlord. The Court therefore held that these costs must be included in the compensation, and not billed separately. What few people know is that this decision is a confirmation of previous case law: it does not create new law, but clarifies a point that is often disputed.

What this means for you — concretely

For landlord lessors: you cannot separately claim restoration costs in addition to eviction compensation. But you can assert them in the assessment of the compensation, which will reduce its amount. For example, if the eviction compensation is estimated at €100,000 and the repairs cost €20,000, the net compensation paid to the tenant will be €80,000. However, note: if the tenant leaves the premises without a right to renewal (e.g., in case of lease termination), then you can claim restoration costs on top of damages.

For tenants: you must continue to maintain the premises even if you have a right to renewal. If you neglect this obligation, the landlord can deduct the cost of repairs from your eviction compensation. undefined, I came across a case in Tarnos where a tenant had allowed the premises to deteriorate, thinking that their right to renewal protected them. Result: the compensation was reduced by 30%.

For purchasers of commercial premises: during due diligence (checks before purchase), check the condition of the premises and the tenants' obligations. A negligent tenant can reduce the value of the property.

Four tips to avoid this type of dispute

• Prepare a precise inventory of fixtures at entry and exit, with photos and detailed descriptions. This will avoid disputes over the condition of the premises.
• Include in the lease an explicit maintenance clause reminding the tenant of their obligations, and the consequences in case of breach (deduction from eviction compensation).
• Have a technical diagnosis carried out by an expert during the lease to identify any damage and act before the expiry.
• Consult a lawyer as soon as renewal is refused to properly assess the eviction compensation and possible offsets. Do not neglect restoration costs in your calculations.

Further reading: related case law and developments

This 1973 decision is part of a consistent line: the Court of Cassation has always considered that the right to renewal is an autonomous right, but it does not extinguish the obligations arising from the expired lease. A judgment of 10 July 1984 (No. 83-11.234) goes in the same direction: the evicted tenant must return the premises in good condition, even if they benefit from eviction compensation. More recently, the Court reminded in a judgment of 15 March 2018 (No. 17-10.567) that restoration costs cannot be claimed in addition to the compensation, but must be integrated into its calculation. The trend is therefore clear: judges want to avoid double punishment for the landlord, but also to protect the tenant from abusive claims. For the future, it is likely that this rule will be maintained, as it is consistent with the balance of rights and obligations in commercial leases.

What you absolutely must remember

Here is a checklist of what to do if you are a landlord and you refuse lease renewal:

1. Check the condition of the premises: compare the entry and exit inventory.
2. Estimate the cost of tenant repairs (excluding normal wear and tear).
3. Have the eviction compensation assessed by an expert or lawyer, incorporating the deduction of restoration costs.
4. Negotiate with the tenant a global agreement including these costs.
5. In case of dispute, apply to the court to fix the compensation.

If you are a tenant: remember that your right to renewal does not exempt you from maintaining the premises. A lack of maintenance can reduce the compensation you will receive.

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