Commercial tenancy lawyer in Paris: rent, renewal and eviction.

The minimum term of a commercial lease is nine years, in accordance with Article L. 145-4 of the Commercial Code. The tenant has a right to terminate every three years, that is, at the end of each three-year period, except where a valid contractual waiver applies to leases of more than nine years, leases of premises built for a single use, leases of premises used exclusively as offices or leases of storage premises within the meaning of Article 231 ter of the General Tax Code. Unless a special clause provides otherwise, the landlord has no equivalent right: the landlord can give notice to quit only at the expiry of the lease, apart from the limited cases provided for by Article L. 145-4 (in particular construction, reconstruction or raising of the building). This asymmetry protects the tenant's investment in its business. The lease may be concluded for a longer term, for example twelve or fifteen years, but not for a shorter one, unless a short-term commercial lease governed by Article L. 145-5 of the Commercial Code is used.

No. A commercial lease does not renew automatically. Under Article L. 145-9 of the Commercial Code, the lease ends only by notice to quit given six months in advance or by a request for renewal. If neither party takes the initiative, the lease continues by tacit extension beyond the agreed term. During this tacit extension, the landlord may give notice to quit at any time, at least six months in advance and for the last day of a calendar quarter, which creates uncertainty for the tenant. Practice advises the tenant to serve a request for renewal by extrajudicial instrument in the six months before expiry, in order to fix the position and trigger the renewal procedure. The landlord's notice to quit, like the tenant's request for renewal, must be served by extrajudicial instrument and state certain mandatory particulars on pain of nullity.

Eviction compensation equals the loss caused by the failure to renew, in accordance with Article L. 145-14 of the Commercial Code. It comprises a principal indemnity and ancillary indemnities. The principal indemnity is set either at the market value of the business (where the eviction causes the loss of the business) or at the value of the lease right (where the tenant can transfer its activity to equivalent premises). The Court of Cassation, in a leading judgment of 13 October 2021 (No. 20-19.340) published in the Bulletin, held that the value of the lease right is a distinct component of the business that must be valued independently of the outcome of the transfer. The ancillary indemnities cover removal and relocation costs, temporary commercial loss, stock losses and transfer duties. The valuation is made by an expert. Practice distinguishes several methods: turnover value, the rent differential method and the comparative method.

The landlord may refuse renewal without eviction compensation in several cases exhaustively listed by law. The serious and legitimate ground provided for in Article L. 145-17 of the Commercial Code requires prior formal notice to stop conduct contrary to the terms of the lease (unauthorised change of use, persistent non-payment, damage). A dilapidated or unsanitary building that must be demolished gives rise to a regulated right of refusal. Recovery of the premises for personal occupation, by the landlord or the landlord's spouse, ascendants or descendants, is strictly regulated and accompanied by a priority right for the tenant. Failure to actually operate the business for more than three years may justify refusal without compensation, unless the tenant provides justification. Each ground requires rigorous proof. The notice to quit must, on pain of nullity, state the ground relied on.

Uncapping is the exception to the rule that the renewed rent is capped. The cap, derived from Article L. 145-34 of the Commercial Code, limits the increase of the renewed rent to the change in the applicable quarterly index (ILC for shops, ILAT for offices and tertiary activities). Uncapping allows the rent to be set at the full rental value, with no cap. It is available where the landlord shows a significant change in one of the elements listed in Article L. 145-33: characteristics of the premises, permitted use of the premises, respective obligations of the parties, local factors of commerciality, prices commonly charged in the neighbourhood. The change must be significant, that is, substantial and lasting, and have a direct impact on the rental value. Uncapping often represents a financial stake of several tens of thousands of euros a year for the landlord.

The local factors of commerciality are the characteristics of the neighbourhood that influence the commercial attractiveness of the premises. They include in particular demographic change, consumers' purchasing power, the arrival or departure of attractive brands, urban transformations (pedestrianisation, new transport stations, urban development works), changes in the retail offering, and the creation of public or private facilities. A significant change in the local factors of commerciality opens the way to uncapping to the rental value, provided that it has a favourable influence on the tenant's commercial activity. Proof rests on market studies, INSEE data, before-and-after photographic comparisons and testimony from other traders in the neighbourhood. The litigation is mainly numerical and factual: the court often entrusts an expert with assessing the change.

The three-yearly review, provided for in Article L. 145-38 of the Commercial Code, allows the rent to be readjusted at the end of each three-year period, according to the change in the applicable quarterly index since the last contractual or judicial setting of the rent. The request may be made by the landlord or the tenant. The new rent may not exceed the cap resulting from the change in the index, unless there is a significant change in the local factors of commerciality or in the characteristics of the premises. The review requires a request sent by registered letter with acknowledgment of receipt or by extrajudicial instrument, stating the rent requested. Failing agreement, the competent court is the commercial rent judge of the judicial court. The procedure is preceded by an amicable negotiation phase, often fruitful where the positions are reasonable.

An irregular indexation clause is penalised by treating the disputed stipulation as "unwritten". The Court of Cassation, in a judgment of 29 November 2018 (No. 17-23.058) published in the Bulletin and in the Report, held that only the stipulations that create the distortion prohibited by Article L. 112-1 of the Monetary and Financial Code are deemed unwritten. A court of appeal infringes that provision if it deems an entire clause unwritten where the clause provides for a period of index variation longer than the interval between revisions only for a first adjustment, when the following reference periods have the same length. The penalty is therefore proportionate to the irregularity found. The litigation is critical for leases with contractual indexation: partial nullity may result in an overpayment of rent repayable to the tenant, sometimes over several years.

The formal demand invoking the termination clause, served by a bailiff (commissaire de justice), must strictly comply with the requirements of Article L. 145-41 of the Commercial Code. On pain of nullity, it must mention the one-month period granted to the tenant to comply. It must precisely cite the unperformed obligations (unpaid rent, charges, or any other obligation expressly covered by the termination clause). It must quantify the debt in an itemised way, distinguishing rent, charges and occupation indemnities. Practice also requires a detailed statement annexed. Failure to meet any of these requirements exposes the demand to nullity, which deprives the termination of its effect. The tenant must then be summoned to restart the procedure from the beginning, which costs the landlord several months. Careful drafting of the demand, with an audit of the lease clauses, is therefore essential.

Yes. Article L. 145-41 of the Commercial Code allows the judge, on the basis of Article 1343-5 of the Civil Code, to grant the tenant time to pay by suspending the effects of the termination clause. The suspension applies as long as the termination has not been established or ordered by a court decision with the force of res judicata. The termination clause does not operate if the tenant pays off the debt under the conditions set by the judge. The Court of Cassation, in a judgment of 22 October 2020 (No. 19-19.542) published in the Bulletin, stated a decisive rule: where an urgent-application order that suspended the effects of the termination clause has become final, the landlord can no longer, if the tenant fails to meet the payment deadlines, unilaterally demand performance of the terminated lease. This case law protects the tenant against the landlord going back on the position taken and fixes the procedural sequence between urgent application and proceedings on the merits.

The assignment of the lease to the buyer of the business is protected by Article L. 145-16 of the Commercial Code. Any clause prohibiting that assignment is deemed unwritten. The landlord therefore cannot oppose it or make it subject to discretionary approval. However, the landlord may impose procedural conditions: service of the deed of assignment by a bailiff, the landlord's presence at the signing of the assignment, an audit of the assignee. The lease may also provide for approval of split assignments (assignment of the lease alone, without the business), where contractual freedom regains all its force. Assignment litigation frequently turns on the characterisation of the transaction: is it an assignment of the lease to the buyer of the business (protected) or a stand-alone assignment (subject to approval)? The stake is commercial: enhancing the value of the business on resale.

Often, yes. A clause making the assignor jointly and severally liable for the assignee's obligations is common in commercial leases. It allows the landlord to claim from the assignor the unpaid rent and other charges of the assignor's successor. Law No. 2014-626 of 18 June 2014 introduced Article L. 145-16-2 of the Commercial Code, which limits the duration of this guarantee to three years from the assignment. The Court of Cassation, in a judgment of 11 April 2019 (No. 18-16.121) published in the Bulletin, held that this limitation does not apply immediately to existing contracts: it applies only to leases concluded from 18 June 2014. For earlier leases, the guarantee may extend over the whole remaining term of the lease. Practice requires a careful examination of the date of the lease, the content of the clause and the calculation of the remaining duration of the guarantee.

The tenant has two years to bring the matter before the court to challenge the notice to quit or to claim eviction compensation, in accordance with Article L. 145-9 of the Commercial Code. The period runs from the date for which the notice to quit was given. The notice may be challenged for defects of form: missing mandatory particulars, irregular signature, defective service. It may be challenged for defects of substance: absence of a legitimate ground, falsity of the ground, fraud. The tenant may also accept the termination of the lease but claim eviction compensation. The matter is brought by writ of summons before the judicial court or the commercial chamber, depending on local courts. The expert assessment phase on the value of the business is often the longest. The procedure may last two to three years. An approved settlement is common when the parties' positions come closer.

The court with jurisdiction over commercial lease disputes in Paris is the Paris judicial court, which has chambers specialising in commercial leases. Territorial jurisdiction lies with the court of the place where the property is situated, by derogation from the general rule of the defendant's domicile. For fixing the renewed or reviewed rent, the commercial rent judge has exclusive subject-matter jurisdiction under Article R. 145-23 of the Commercial Code. The commercial rent judge rules under a simplified procedure by written submissions and on expert evidence. For other disputes (termination, eviction compensation, validity of clauses, assignment), jurisdiction lies with the commercial leases chamber of the court. In Paris, the judicial court sits at the Parvis du Tribunal de Paris in the 17th arrondissement. Proceedings are started by writ of summons, with mandatory representation by a lawyer.

A full commercial lease procedure lasts between 18 and 36 months depending on complexity. Proceedings to fix the renewed rent before the commercial rent judge typically last between 18 and 24 months, much of it taken up by the court-appointed expert assessment. Eviction compensation proceedings before the judicial court often last between 24 and 36 months, again with a predominant expert assessment phase. Termination clause proceedings can be quicker: a few months in urgent application proceedings to establish that the clause has taken effect, followed by proceedings on the merits if necessary. Settlement is very common: about half of cases are resolved at the amicable stage once the positions are calibrated. The total cost varies with the value of the case (rent or business) and its complexity. A precise answer on timing and cost requires a prior audit of the lease and of the documents exchanged.