Recovery of Agricultural Land: Requirement for Administrative Authorisation for Family Companies

Picture the scene: in Mandelieu-la-Napoule, on the heights of Le Cannet, a couple of landowners decide to transfer their agricultural land to their son, a farmer. The latter, for tax and management reasons, contributes them to a civil farming company (SCEA) which he has created with his wife and children. Everything seems simple, family-run, almost automatic. But then the lessor, the usufructuary of the land, opposes this provision, citing a lack of administrative authorisation and a failure to provide information on the partners. This is where a crucial legal question arises: what are the obligations of a tenant under a rural lease when he wishes to make the land available to a company, even a family one? And must this company obtain administrative authorisation to farm? The Court of Cassation, in a judgment of 5 October 2017, provides clear answers, which directly affect owners and operators in our region, from the Grasse basin to the lands of the Landes.

This decision, which may seem technical, nevertheless touches on a daily reality: that of the transfer of agricultural holdings within a family framework. Many owners ask themselves: 'Can my son take over my land through his company? Do I have to give my consent?' And operators, for their part, wonder about the formalities to be completed. What the Court of Cassation says is that the obligation to obtain an administrative authorisation to farm (provided for in Article L. 411-48 of the Rural Code) applies to the company, even a purely family one, to which the land is made available. But in the case of a split ownership (usufruct and bare ownership), the tenant only has to inform the usufructuary of the provision, and he does not have to report changes in partners occurring after 1999.

In short, the law protects the freedom of organisation of the family farm, while recalling the administrative requirements. But beware: procedural errors can be costly. Let's dissect this judgment to understand what actually changes for you, in Mandelieu, Le Cannet or elsewhere.

The facts: a story like many that happen every day

Mr. X, owner in Mandelieu, granted a rural lease to Mr. Y, a farmer, on land situated in Le Cannet. The land is split: the usufruct belongs to Mr. Z (the lessor), and the bare ownership to his children. Mr. Y, the tenant, decides to make the land available to a company which he has formed with his wife and children: an SCEA, a purely family company. The lessor, Mr. Z, is not informed of this provision, nor of the changes in partners that occur a few years later (entry of a new family member).

The conflict breaks out: Mr. Z believes that the SCEA should have obtained an administrative authorisation to farm (under Article L. 411-48 of the Rural Code) before receiving the land, and that Mr. Y should have informed him of the provision as well as the changes in partners. He refers the matter to the rural lease tribunal to have the provision declared void and to obtain damages.

The Court of Appeal partly finds in favour of the lessor, but the Court of Cassation partially quashes the judgment. The legal journey is complex: several years of proceedings, expert reports, and finally a decision clarifying the rules of the game. This case shows how a simple family arrangement can degenerate into litigation if formalities are not complied with.

The reasoning of the court — deciphered

The Court of Cassation relies on two main texts: Article L. 411-48 of the Rural Code (which requires an administrative authorisation for the recovery of the leased property, particularly when it benefits a company) and Article L. 411-37 of the same Code (which obliges the tenant to inform the lessor of the provision of the land to a company).

First point: the administrative authorisation. The Court recalls that, according to Article L. 411-48, the recovery of the leased property for personal farming is subject to a prefectoral authorisation, unless there is a derogation for so-called 'family' properties (which allows for a simple prior declaration). However, in this case, the SCEA, although family-run, is a separate legal entity. The recovery in its favour does not automatically benefit from the simplified prior declaration regime. It must be verified whether the conditions for the derogation are met. The Court remands the case for verification of this point.

Second point: the obligation to inform in the event of split ownership. Article L. 411-37 provides that a tenant who makes land available to a company must notify the lessor by registered letter. However, when ownership is split (usufruct/bare ownership), the tenant is only required to inform the usufructuary, as he is the one who has the enjoyment of the property. The Court specifies that the bare owner does not have to be informed of the provision. In this case, Mr. Y had indeed informed the usufructuary, but not the bare owner (who was also the lessor in the deed). The Court considers this sufficient.

Third point: changes in partners. Law No. 99-574 of 9 July 1999 amended the obligation to provide information. Henceforth, the tenant does not have to inform the lessor of changes in partners occurring after this date, unless the lease provides otherwise. The Court specifies that this rule applies even if the lease was concluded before 1999, because the law is of immediate application. Therefore, in this case, the changes in partners occurring after 1999 did not have to be notified.

This reasoning is a confirmation of previous case law: it protects the freedom of management of family companies, while maintaining a minimum requirement of transparency towards the lessor.

What this changes for you — concretely

For landlord owners: you should know that when your tenant wishes to make your land available to a company, even a family one, that company must obtain an administrative authorisation to farm, unless it benefits from the simplified prior declaration regime. If you are a usufructuary, you must be informed of the provision, not necessarily the bare owner. But beware: if the lease is concluded with the bare owner, he may require to be informed. Check the clauses of your lease.

For farmers: if you create a family company to take over the land, you must check whether the administrative authorisation is necessary. Often, for family properties, a simple prior declaration is sufficient, but it must be made. Do not neglect this formality, on pain of voidness of the provision. Furthermore, you are not required to inform the lessor of changes in partners after 1999, which simplifies the life of evolving companies.

Concrete example: in Le Cannet, a farmer makes his land available to an SCEA with his children. He must inform the usufructuary (for example, the father) of this provision. But if, two years later, he brings in his daughter-in-law as a partner, he does not have to notify the lessor. On the other hand, the SCEA must have obtained the authorisation to farm (or the prior declaration) before the provision.

For notaries and advisers: be vigilant when drafting leases or company articles. Clearly mention the information obligations and the derogation regimes. A well-drafted clause can avoid years of proceedings.

Four tips to avoid this type of litigation

• Check the recovery regime before any provision. Consult the Departmental Directorate of Territories (DDT) to find out whether your company is subject to authorisation or prior declaration. Do not assume that the family nature exempts you from any formality.
• Systematically inform the usufructuary by registered letter with acknowledgement of receipt of the provision of the land to the company, even if the lease does not provide for it. Keep a copy of this letter. It is a simple and inexpensive proof.
• Do not notify changes in partners after 1999 unless the lease contains a clause to the contrary. This obligation was abolished by law, but some old leases may still provide for it. Re-read your contract.
• Use a lawyer lawyer for drafting the company's articles and the lease. Advice upfront costs less than a trial. In Mandelieu, Maître Zakine can assist you with these steps.

Besoin d'un conseil personnalisé ? Contactez Maître Zakine — première consultation 30 min à 45€.

Further reading: related case law and developments

This judgment follows a consistent line of the Court of Cassation. For example, in a judgment of 15 May 2014 (No. 13-17.230), the Court had already held that administrative authorisation to farm is necessary for any recovery by a company, even a family one, unless a derogation applies. It had also specified that the tenant must inform the lessor of the provision, but that changes in partners after the 1999 law are excluded from this obligation.

On the other hand, a more recent decision (Civ. 3e, 10 March 2021, No. 20-10.104) nuanced this: if the company is a family company, the judge must verify on a case-by-case basis whether the conditions for the derogation are met. The trend is therefore towards stricter control of the conditions for the prior declaration. Courts check that the company is indeed 'purely family' (all partners are related up to the 3rd degree) and that the farming is actually carried out by family members.

For the future, it can be expected that judges will be increasingly demanding regarding proof of the family character. It is therefore prudent to keep all evidence of kinship and effective participation in the farming.

Checklist before acting

FAQ: frequently asked questions

1. Do I need to obtain a prefectoral authorisation for my SCEA to take over the family land? Yes, unless your company meets the conditions for the simplified prior declaration regime (family properties). Consult the DDT to be sure.
2. Who must I inform of the provision of the land to a company? If ownership is split, inform only the usufructuary by registered letter. If it is in full ownership, inform the owner.
3. Do I have to notify the lessor of the arrival of a new partner in my company? No, if the change occurred after 9 July 1999. The law exempts you.
4. What happens if I forget the administrative authorisation? The provision can be annulled, and you risk damages. It is better to regularise quickly.
5. Can I contest a provision made without my consent as a bare owner? If you are a bare owner, you do not have to be informed, unless the lease contains a clause to the contrary. You cannot therefore object on that ground.

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. Make an appointment →