Commercial subletting: when the landlord tacitly approves the subtenant

Picture the scene: in Blagnac, near Toulouse, a trader rents a shop for years. He sublets part of it to a craftsman, who pays the rent directly to the landlord, contributes to the works, and receives the safety commission inspection. Everything seems perfect. Until the day the head landlord wants to recover the premises and challenges the sublease. Can the subtenant stay?

This is precisely the question the French Supreme Court (Cour de cassation) decided on 4 May 2011 (appeal no. 09-72.550). And the answer is a small silent revolution for thousands of subtenants who, without knowing it, may benefit from a right to the lease (commercial lease status) even without a written contract with the landlord.

The stakes are colossal: a subtenant tacitly approved by the landlord can claim commercial lease status (protection against eviction, right to renewal, eviction compensation). Conversely, a landlord who ignores this rule risks being bound despite himself to an occupant he never formally accepted. So, how do you know if you are affected? Let's dive into the facts.

The facts: a story that happens every day

Mr. Dupont (fictitious name) owns a commercial building in Saint-Gaudens, a town in Haute-Garonne. In 1990, he signs a commercial lease with the company "Mode Express", which operates a clothing store. From the outset, the lease provides that the premises "may be sublet in full". Mr. Dupont therefore knows that the head tenant will not occupy the premises himself.

Some months later, "Mode Express" sublets the entire premises to the company "Chaussures Béranger", a shoe retailer. The sublease is signed for nine years, with the written consent of Mr. Dupont. But over the years, relations become more informal. The head lease is renewed several times, and each time, Mr. Dupont deals directly with the subtenant: he receives the rents, authorises fitting-out works, and the safety commission (the body responsible for checking fire safety standards) sends its reports directly to "Chaussures Béranger".

In 2005, "Mode Express" (the head tenant) gives notice (leaves the premises) to Mr. Dupont. But "Chaussures Béranger" continues to occupy the premises and demands renewal of its sublease. Mr. Dupont refuses, arguing that the initial sublease was never renewed and that he never formally approved the subtenant after the termination of the head lease. The subtenant brings the case before the Tribunal de grande instance of Toulouse to have his right to renewal recognised.

The Court of Appeal of Toulouse rules in his favour: it considers that Mr. Dupont tacitly approved the subtenant, because he knew from the beginning that the premises would be sublet, and because he maintained direct relations with him for years. Mr. Dupont appeals to the Supreme Court.

The reasoning of the court — dissected

The Supreme Court dismisses Mr. Dupont's appeal and confirms the Court of Appeal's decision. For the Court, the tacit approval (non-written acceptance) of the subtenant by the landlord is perfectly established. On what basis? The Commercial Code (Article L. 145-31) provides that the subtenant has no direct right to renewal against the landlord, unless the landlord has approved him. But nothing requires a written form: approval can be tacit.

The judges point to three elements:
- From the conclusion of the initial lease, the landlord knew that the premises were intended to be sublet in full (express clause of the lease).
- The clauses of the lease took this situation into account (for example, by setting the rent in relation to the subletting).
- Direct relations between the landlord and the subtenant continued during the successive leases: the landlord received the rents, authorised works, and the safety commission directly inspected the subtenant.

In short: the landlord cannot turn a blind eye to a sublease he has allowed, then claim it does not exist. The Supreme Court recalls that tacit approval is deduced from a combination of circumstances (a set of consistent facts), not from a single gesture. This decision is part of a protective trend for subtenants: the courts want to prevent the landlord from using the absence of written form to evict a trader who has invested and paid his rents.

Mr. Dupont's argument — that the sublease had not been renewed after the end of the head lease — did not convince. The court considered that the subtenant benefited from the protection of the commercial lease status (right to renewal) as soon as the landlord had tacitly approved him, irrespective of the duration of the sublease.

What this means for you — practically

This decision has immediate practical implications for three profiles.

For the subtenant: You are no longer at the mercy of a landlord who ignores your existence. If you have been subletting for several years, the landlord collects your rents without objection, authorises you to carry out works, or forwards safety commission letters to you, you can claim commercial lease status. Concretely, if the landlord wants to evict you, you are entitled to eviction compensation (financial compensation for the loss of your business), unless there is a serious reason. In Blagnac, a subtenant of a 100 m² premises in a busy area could thus obtain between €50,000 and €150,000 in compensation, depending on the duration of operation and profitability.

For the landlord: Beware of sublets you tolerate. If you allow a subtenant to occupy the premises without a written contract, you risk being bound by a restrictive status. You will not be able to recover the premises easily, and you will have to pay compensation if you want to part with the subtenant. Example: in Saint-Gaudens, a landlord who has tacitly approved a subtenant for ten years and wishes to sell his building vacant (without tenant) will have to negotiate a departure, often at a high price.

For the purchaser of a commercial building: Before buying, check who actually occupies the premises. A tacitly approved subtenant has a right to remain in the premises, even if the head lease is terminated. You could inherit an occupant you did not choose. A warranty clause in the sale deed can cover you.

If you are in this situation, you must act quickly: commercial lease status is acquired after continuous operation for two years. But tacit approval can be challenged. Have the direct relations recorded by a bailiff (huissier) or by registered letter.

Four tips to avoid this type of dispute

• For the landlord: draft a written approval clause. In the head lease, state that any subletting is subject to your prior written consent. In the event of subletting, require a notarised deed or at least a written document signed by you. This avoids any ambiguity.
• For the subtenant: formalise the landlord's consent. As soon as you are subletting, ask the building owner for written confirmation of his approval. A simple email or signed letter will do. Do not wait years.
• For both: keep a record of direct relations. Keep all proof of rent payments addressed directly to the landlord, work authorisations, safety commission letters. In case of a dispute, these documents prove tacit approval.
• For the purchaser: conduct a tenant enquiry. Before buying a commercial building, ask to see all current leases, but also rent receipts and correspondence. Question the occupants. If a subtenant occupies without a written lease, suspect tacit approval.

Further reading: related case law and developments

This 2011 decision is part of a consistent line of the Supreme Court. As early as 1997 ("Société Le Printemps" decision), the Court held that the landlord tacitly approves the subtenant when he directly receives the rents without protest. In 2006, a decision even admitted tacit approval by the mere fact that the landlord knew of the subletting and did not react. The 2011 decision goes further by specifying that knowledge from the outset of the lease is sufficient, even without direct receipt of rents.

However, lower courts (first instance courts and courts of appeal) remain demanding on evidence. Mere passive tolerance is not enough: positive acts by the landlord (receipt, authorisation, inspection) are required. Thus, a recent decision of the Paris Court of Appeal (2022) refused tacit approval because the landlord had never had direct contact with the subtenant, merely receiving the rent from the head tenant.

The trend is towards protecting the good faith subtenant (the one who legitimately believed they were authorised). But beware: a subtenant who moves in without any consent, even tacit, has no rights. The line is thin. For real estate professionals, this case law imposes increased vigilance during due diligence in business transfers.

What you absolutely must remember

FAQ

1. Am I automatically protected if I am a subtenant for more than two years?
No. Protection (right to renewal) is only acquired if the landlord has approved you, tacitly or expressly. Length of occupation alone is not enough, but it is a strong indication if accompanied by direct relations.

2. What if my head landlord has terminated the lease?
You can ask the building owner for a new direct lease. If he refuses, you can take the case to the judicial court to have your right to renewal recognised, based on tacit approval.

3. Can I be evicted without compensation?
Yes, if you are a subtenant without approval. But if the landlord has tacitly approved you, he must justify a serious and valid reason to refuse renewal, otherwise he must pay you eviction compensation.

4. How do I prove tacit approval?
By any means: rent receipts signed by the landlord, email exchanges, work authorisations, safety commission reports, witness statements. A bailiff's report is very useful.

5. Is an oral agreement enough?
In theory yes, but in practice it is very difficult to prove. Better to have a written document, even a simple one.

Checklist: what to do if you are a subtenant
1. Gather all documents proving direct relations with the landlord.
2. Send a registered letter to the landlord asking for written confirmation of your sublease.
3. Check whether the head lease allows subletting.
4. Consult a specialist lawyer to assess your situation.

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. Book an appointment →