When, at the end of a commercial lease, the rent proposed by the lessor in his notice with renewal is identical to the initial rent, the mere continuation of payment by the tenant does not constitute tacit agreement to the renewal. This is what the Cour de cassation recalled in a ruling dated September 7, 2022.
In a case decided on September 7, a company leased premises used as a retirement home to an EHPAD for almost 12 years. At the end of the lease, the lessor gave the lessee notice of termination with an offer to renew the lease for a further 9 years, at the same rent as before.
After the notice with offer to renew had been issued, the EHPAD had not made any representations and had regularly paid the rent stipulated in the notice. Three years later, the company stopped paying its rent. The lessor then brought an action to enforce the renewal of the commercial lease and obtain payment of the rent for the remaining 6 years.
Initially, the Court of Appeal agreed with the landlord, finding that the fact that the tenant paid the proposed new rent demonstrated " a tacit agreement on the price between the parties ". It deduced that the tenant had accepted the offer to renew the lease for a fixed term of 9 years.
Payment of rent does not imply tacit agreement
The EHPAD appealed to the French Supreme Court (Cour de Cassation) in the dispute with its landlord, and was ultimately successful. In its decision of September 7, 2022, the Third Civil Chamber of the French Supreme Court (Cour de cassation) ruled that continued payment of rent alone does not establish the tenant's unequivocal willingness to accept renewal of the lease on the terms specified in the offer sent by the lessor.
The French Supreme Court (Cour de cassation) overturned the decision of the Court of Appeal with regard to the sum corresponding to the rent for the remaining 6 years, i.e. 1,296,516 euros. It also dismissed the tenant's claim for damages on the grounds of abuse of process.
Terms and conditions of commercial lease renewal
A landlord may give notice of termination, with or without an offer to renew the lease, by a deed issued by a court commissioner 6 months in advance and due on the last day of the calendar quarter. The notice must specify the grounds on which it is given, and the tenant's right to contest the notice or request payment of an eviction indemnity by bringing the matter before the court within 2 years.
The tenant may also request renewal of the commercial lease, provided it is made by registered letter with acknowledgement of receipt or by deed from a court commissioner.