The Granting of a Lease on a Building or

Leading case: cc • No. 91-15.160 • 1993-05-04 • View decision →

This decision provides important clarification for your property law. Here is what it changes for you.

The situation

The granting of a lease on a building or part of a building to a third party by the owner of the premises, after the premises have been vacated by a previous occupant occupying free of charge, cannot be equated to an assignment of a leasehold right subject to the transfer taxes provided for by Article 725 of the French General Tax Code, which can only take place between an outgoing tenant and an incoming tenant.

What the law says

This decision confirms the fundamental principles of property law.

Key points to remember

Strictly comply with the legal time limits for appeals
Keep all your supporting documents (titles, deeds, correspondence)
Anticipate: preventative advice always costs less than litigation

For an analysis of your situation: 30-min consultation at €45 with Maître Zakine.

📌 Does this apply to your situation? Maître Cécile Zakine, French real estate lawyer, practises throughout France.
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Practical use cases

Landlord leasing after free occupancy

In Paris (75010), a landlord owns a flat previously occupied rent-free by a friend. After the friend leaves, the landlord grants a standard lease to a new tenant. The tax authorities try to impose transfer taxes on this transaction, arguing it is an assignment of leasehold rights.

Practical application:

This case law confirms that a new lease granted after a free occupancy is not an assignment of leasehold rights. Therefore, transfer taxes under Article 725 of the French General Tax Code do not apply. The landlord should resist any tax reassessment and provide evidence that the prior occupant was not a tenant (e.g., no rent paid, no lease agreement). Keep all documents showing the free occupation arrangement.

First-time buyer checking tax liability

In Lyon (69002), a first-time buyer is purchasing a commercial lease from a bakery owner who had been occupying rent-free for years. The notary warns that transfer taxes might be due if the transaction is considered an assignment of leasehold rights. The buyer is worried about unexpected costs.

Practical application:

According to this case, if the seller was occupying free of charge (not as a tenant), the transfer is not an assignment of leasehold rights. The buyer should request written proof from the seller that no rent was paid and no lease agreement existed. If confirmed, no transfer taxes under Article 725 apply. The buyer should ask the notary to apply this case law to avoid unnecessary tax.

Co-owner in dispute over tax reclassification

In Marseille (13001), a co-owner of a commercial building grants a lease to a new tenant after the previous occupant, a former co-owner, vacated the unit (he had been using it rent-free under an informal arrangement). The tax authority reclassifies the transaction as an assignment of leasehold rights and demands transfer taxes. The co-owner disputes this.

Practical application:

This case law supports the co-owner's position: a lease after free occupancy is not an assignment. The co-owner should formally object to the tax assessment, citing this decision. Provide evidence that the previous occupant paid no rent and had no lease. The co-owner may also seek legal advice to challenge the reclassification and avoid paying the tax.

The Granting of a Lease on a Building or

The situation

What the law says

Key points to remember

Legal information

Source

Keywords

Practical use cases

Landlord leasing after free occupancy

First-time buyer checking tax liability

Co-owner in dispute over tax reclassification

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Maître Zakine, Doctor of Law