Non-renewed lease: a tenant awaiting eviction compensation can remain on the premises

A tenant whose lease is not renewed is not required to vacate the premises if he has not received his eviction indemnity. He cannot be considered as an occupant without right or title, according to the Cour de cassation.

Dismissal with refusal to renew

In this case, a sports association owning commercial premises leased to a professional had given him notice to quit with a refusal to renew and an offer of eviction compensation. The association then summoned the tenant to pay an eviction indemnity and vacate the premises. The tenant then counterclaimed for cancellation of the notice and compensation for damages.

Initially, the Court of Appeal found against the lessor association, but limited the merchant's compensation to losses suffered before the lease expired. In fact, it considered that the tenant could not claim the rights associated with the lease. Dissatisfied with this verdict, the tenant appealed to the French Supreme Court.

Cour de cassation rules in favor of the tenant

In this case, the Cour de cassation ruled in favor of the tenant merchant, stating that as long as he was awaiting an eviction indemnity, he could remain on the premises under the conditions and clauses defined in the expired lease contract.

In this decision, the court recalls that, in principle, eviction compensation must be paid by the owner of premises leased to a retailer. The purpose of this sum is to compensate the owner for the loss suffered as a result of the failure to renew the lease, provided that this refusal is not justified by a serious and legitimate reason. Payment into a business account is subject to certain rules. In particular, the tenant must be registered in the Trade and Companies Register (RCS).


What you need to know about eviction compensation

A lessor who refuses to renew a commercial lease must pay the lessee an eviction indemnity.

Several factors are taken into account when assessing eviction compensation:

  • the market value of the business, determined in accordance with industry practice,
  • moving and relocation expenses,
  • transfer fees and duties payable for a business of the same value.

More precisely, eviction compensation is made up of a principal indemnity (replacement indemnity or displacement indemnity) and sometimes accessory indemnities. This indemnity can be set amicably between the parties or by a professional expert. If no agreement can be reached, you can ask the court to set the amount. This step must be taken as soon as possible after the loss has occurred, i.e. on the date of the tenant's departure or, if the tenant remains on the premises, on the date of the judge's decision setting the compensation.

In this ruling of May 16, 2024, the French Supreme Court (Cour de cassation) reiterates that a retailer may remain on the premises after termination of the lease, provided he has not received his eviction indemnity.