Assignment of Professional Lease: Can the Landlord Restrict Your Freedom to Assign?

Imagine: you own a professional premises in Saint-Doulchard, let to a tradesman. You have agreed to a rent increase up to the statutory maximum. But now your tenant wants to assign his leasehold interest to a third party, without asking for your consent. Can you prohibit it? This 1981 decision of the Court of Cassation gives a clear answer: yes, provided the lease so provides. But what exactly does this change for you, landlord or tenant? Let's delve into the details.

The facts: a story that happens every day

Mr Nougarède, tenant of premises used for professional purposes belonging to a landlord, wished to assign his leasehold interest alone, without the professional activity he carried on there. The lease contained a clause restricting assignment to the whole of the rights attached to the exercise of his profession. The landlord refused the isolated assignment. Nougarède brought proceedings, arguing that the maximum rent increase (provided for by law) entitled him to complete freedom of assignment. The Court of Appeal ruled against him, and the Court of Cassation confirmed this in 1981.

The reasoning of the court — broken down

The Court of Cassation relies on Article 1134 of the Civil Code (now Article 1103): agreements lawfully formed take the place of law for those who have made them. In other words, the lease is law between the parties. Here, the assignment clause was clear: it required the assignee to take over all the rights attached to the profession (goodwill, equipment, etc.). The tenant could not assign a bare "leasehold interest" without the activity. The Court rejects the tenant's argument that the rent increase (statutory cap) gave him an absolute right to assign freely. It recalls that the law does not prohibit the landlord from restricting assignment, even in the case of a maximum rent. In short, contractual freedom prevails over rent regulation.

What this means for you — practically

For landlords: you can insert a clause in the lease prohibiting the isolated assignment of the leasehold interest. Even if you have already applied a rent increase, this clause remains valid. However, it must be clearly drafted, e.g., "the tenant may assign his leasehold interest only together with all the rights attached to the exercise of his profession."

For tenants: if you are considering assigning your lease, check the clauses. If the lease requires a global assignment (goodwill + lease), you cannot assign the lease alone. In Aubigny-sur-Nère, a hairdresser wishing to sell his salon will have to include the lease in the sale, not assign it separately.

For purchasers: before buying a leasehold interest, ensure the lease authorises assignment. Otherwise, you risk the landlord's refusal.

Four tips to avoid this type of dispute

• Draft a precise assignment clause in the lease: state explicitly whether assignment is free, subject to approval, or limited to the assignment of the business. Example: "Any assignment of the leasehold interest is subject to the landlord's written consent, unless it occurs with the assignment of the entire craft business."
• Keep a written record of exchanges: if you refuse an assignment, notify your refusal by registered letter with acknowledgement of receipt, giving reasons for your decision.
• Anticipate tax consequences: assignment of a leasehold interest may generate capital gains. Consult a chartered accountant.
• Have your lease reviewed by a lawyer lawyer: Maître Zakine can check the compliance of your clauses with recent case law.

Further analysis: related case law and developments

This 1981 decision was subsequently confirmed: the Court of Cassation held that even with a regulated rent, the landlord can restrict assignment (Civ. 3e, 12 March 1985, n°83-16.789). However, caution: if the clause is considered abusive (e.g., total prohibition without legitimate reason), it could be annulled. undefined, I have encountered cases where the tenant wanted to assign his lease to a direct competitor: the landlord can legitimately refuse to protect his premises. The trend of the courts is to respect the parties' intention, provided the clause is clear and not discriminatory.

What you absolutely must remember

FAQ:

• Can I assign my leasehold interest if the lease says nothing? In principle, assignment is free, but the landlord may refuse if he has a serious reason (subject to any contrary clause).
• Can the landlord prohibit any assignment? Yes, if the lease so provides. But a total prohibition without any possibility of assignment in the context of a sale of the business may be revised by the court.
• What to do if the landlord abusively refuses? Apply to the judicial court for a court order authorising the assignment.
• What is the time limit to challenge a refusal? You have 5 years from the refusal (general limitation period).

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