1Sending a leave

The landlord must send a leave by act of commissioner of justice (formerly act of judicial officer) at least 6 months prior to lease expiry date.

The leave shall specify the following:

• Reasons why it is given
• Possibility for the tenant to apply to the court before the expiry of a period of 2 years if he wishes to contest the leave or request the payment of an eviction allowance

Where the lease has been tacitly extended, the leave must be issued at least 6 months in advance and for the last day of the calendar quarter (i.e. 31 March; 30 June, 30 September or 31 December).

2Tenant Response

When the tenant has received a leave with an offer to renew from his landlord, he has 3 possibilities:

• Reject renewal offer : the commercial lease ends. In this case, the landlord does not pay the tenant a eviction pay.
• Accept renewal and proposed new rent : it can give its express agreement either by act of commissioner of justice (formerly judicial officer) or by registered letter with acknowledgement of receipt. It can also give its tacit consent, for example by spontaneously paying the rent increase proposed by the landlord.
• Accept the renewal but refuse the new rent : the landlord and the tenant can then decide amicably the amount of the rent. However, if the parties do not reach an agreement, either party may refer the matter to the Departmental Commercial Lease Conciliation Commission (CDC) or the President of the Judicial Tribunal if the Conciliation Commission could not reach an agreement.

3Renewal of commercial lease agreement

Where the parties agree to renew the commercial lease, a new contract is signed at same conditions only those of the lease that has expired.

However, the parties may agree to amend certain clauses of the original contract.

The amount of rent renewed can be calculated in one of the following ways:

• Based on the change in the Commercial Rent Index (CLI) or, if applicable, the Service Rent Index (SLI). It says that the rent is capped at the variation of the ILC or ILAT.
• Depending on the rental value (and therefore uncapped).

Right to renewal of commercial lease

Conditions of the right to renewal of the commercial lease 

To benefit from this right to renewal, the tenant must respect the 3 following conditions :

• Be an owner of the goodwill
• Be registered the Trade and business Register (RCS) for a trader or the National company Register (RNE) for a craftsman. This condition of registration in the RCS must be met on the date of the issuance of the leave or on the date of the tenant's request for renewal.
• Exploit the goodwill effectively on the premises during the 3 years prior to the expiry date of the lease or its renewal. Actual exploitation corresponds to real, regular commercial exploitation in accordance with the provisions of the lease. In other words, the intermittent exploitation of the land, the absence of activity in the premises or too recent activity do not allow the tenant to benefit from the right to renewal.

The absence of any of these conditions causes the tenant to lose his right to renewal.

Right to renewal in the event of assignment of the commercial lease

In the event of an assignment of the commercial lease, the assignee (i.e. the one who repurchases the lease) has a right to the renewal of the lease if the assignment takes place during the First 6 years of the lease.

However, when the assignment of the lease occurs in the last 3 years of the lease commercial, it is necessary to distinguish the following 2 situations:

• Disposal of business  : to benefit from the right to renewal of the lease, the tenant must have operated the business in an effective manner for 3 years. Here, the new purchaser of the business has the possibility to complete its operating life with that of the seller of the business and can therefore benefit from the renewal of the commercial lease.
• Assignment of the sole right to lease : the new purchaser cannot benefit from the right to renewal of the lease. In this case, the new purchaser has an interest in obtaining from the lessor a promise of renewal or an early renewal of the lease prior to the signing of the deed of assignment.

Application for renewal of commercial lease

If the tenant has not received leave from the landlord and wishes to obtain the renewal of the commercial lease, he must apply for renewal of his lease.

This request must comply with the conditions following:

• Be sent by registered letter with AR or by act of commissioner of justice in the 6 months prior to lease expiry.
• Include the statement listed in paragraph 4 of Article L. 145-10 of the French Commercial Code:
  « within 3 months of the notification of the request for renewal, the lessor must, by act of bailiff, inform the applicant if he refuses the renewal, specifying the reasons for this refusal. If the lessor has not made known its intentions within this period, it shall be deemed to have accepted the principle of renewal of the previous lease ».

The application for renewal may contain a rent proposal but it's not an obligation.

The landlord has 2 options:

Continuation of the lease

The commercial lease continues under the same conditions.

Therefore, the parties continue to apply the original lease agreement:

• The lessor complies with all the obligations contained in the contract (for example, to take care of major repairs).
• The tenant continues to pay the rent and charges. The commercial lease rent remains the same during the tacit extension. However, a triennial rent review may be considered.

Disposal of business and lease

In case of tacit extension of the commercial lease, the tenant can transfer his business. However, the new buyer is exposed to the risk of non-renewal of the commercial lease or an increase in rent.

Indeed, the lessor can decide not to renew the lease by sending a leave 6 months before the desired end date and on the last day of the calendar quarter.

Ending the tacit extension

The lessor or lessee may terminate the tacit extension of the commercial lease. To do so, they must send leave that meets the following conditions:

• By act of commissioner of justice (formerly act of judicial officer)
• At least 6 months before the desired end date and for the last day of the calendar quarter (31 March, 30 June, 30 September or 31 December).

Rent capped at the variation of the ILC or ILAT

The rent cap renewed means that the variation of the rent can not not exceed the variation of theQuarterly Commercial Rent Index (CLI) or theQuarterly tertiary activity rent index (ILAT).

For more information, you can consult our fact sheet on these benchmarks.

The cap rule applies in the following 2 cases:

• During the renewal of the lease 6 months before the expiry of the lease : this renewal is done by a leave given by the landlord 6 months before the expiry date, or by a renewal request made by the tenant 6 months before
• When the lease continues beyond 9 years tacitly (i.e. without leave from the landlord or request for renewal by the tenant) not exceeding 12 years.

To determine the rent due when the lease is renewed at its end, the initial rent should be multiplied by the last known index at the date of renewal, then divided by the index published 9 years earlier.

The parties may decide to exclude the cap on the commercial lease at the time the lease is entered into or renewed.

Rent set at rental value

In some cases, the rent of the renewed lease may be set without respecting the rent cap rule. We are then talking about rent uncapped. The latter is then fixed to the rental value.

The cap is removed either because of the length of the lease or because of the significant change in the rental value.

Uncapping linked to the duration of the lease

When the lease is entered into or renewed for a duration greater than 9 years, the rent of the renewed lease is uncapped and set at the rental value.

The rent is also uncapped when the lease has continued beyond 12 years due to the inaction of the parties. In practice, the landlord did not give leave and the tenant did not request the renewal of the lease.

Uncapping due to significant changes in rental value

Several elements make it possible to determine the rental value of a renewed rent :

• Characteristics of the room: location of the room in the building where it is located, its surface, its volume, the amenities of access for the public. When the landlord adds an additional area or cellar to the rented premises, the rent can be uncapped.
• Destination of the premises: the tenant of a bar-tobacco business obtains during the lease the authorization of the owner to sell "all telephone products". The rent can be uncapped at renewal. Here it is the evolution of commercial activity that allows the uncapping of the rent.
• Respective obligations of the parties. The terms of use of the premises that may be a disadvantage for the tenant: for example, common passage in an entrance. As a result, the rental value will move downwards.
• Local commercial factors
• Significant Improvements to Leased Premises

The modification of only one of these elements may justify the removal of the rent ceiling. This change must be notable, i.e. sufficiently important. It is the judge who assesses the existence of this amendment on a case-by-case basis.

Referral to the Commercial Leases Conciliation Commission

In case of disagreement on the amount of the renewed rent, the landlord or tenant can refer the matter to the Commercial Leases Conciliation Commission (CCBC). It is trying to reach an agreement between the parties. His referral is free of charge.

To refer the matter to the Commercial Leases Conciliation Commission (CCBC) , the next steps :

• Send a registered letter with acknowledgement of receipt
• Mention the contact details of the landlord and the tenant
• Attach the documents relating to the request (lease agreement, statement of expenses, letters, summary of the dispute and expectations of the parties...)

You must contact the conciliation committee of the department in which the activity is carried out. To find out about the relevant CCBC, you can contact the prefecture:

The Commission shall endeavor to reconcile the parties and delivers an opinion within 3 months.

If an agreement on the rent of the renewed lease is reached, it will see the conciliation that must receive application.

If the parties are unable to reach an agreement, the committee issues an opinion showing the main points of disagreement and a reasoned rent proposal. The landlord or tenant can then refer the matter to the president of the court.

Referring the matter to the President of the Judicial Tribunal

The matter may be referred directly to it or where the Conciliation Committee has not reached an agreement. The landlord and tenant must be assisted by a lawyer. One party must send a written submission to the other party by registered letter with AR. The President of the judicial court is seized 1 month after the tenant or the owner receives the first written brief.

During the procedure, the tenant is required to continue paying the rent provided for in the lease.

The President of the judicial tribunal may refer the parties to a settlement hearing (ARA) The ARA interrupts the instance and the other judge try to reach an amicable agreement.