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Requalifying a rental contract as a commercial lease: what is the limitation period?

Published on June 19, 2023 by Pierre Belhache - 3 mins reading time
Professionals Case law Companies Real estate

The 2-year limitation period for obtaining the requalification of a rental contract as a commercial lease runs from the date of conclusion of the contract whose requalification is requested, and not from the date of conclusion of the initial contract. This was the ruling handed down by the French Supreme Court on May 25.

The facts

This case concerned a company which, in order to house its staff, had signed seven "precarious occupancy agreements" with the commune, the first for 6 months from November 15, 2009 and the last for one year from November 1, 2014. In October 2015, the commune had sent the company a draft "seasonal rental lease" stipulating a seven-month term, at the end of which the lessee would have to vacate the premises. The lessee, who had remained in possession of the premises since the effective date of the first agreement, refused the proposal and took the commune to court, claiming the existence of a commercial lease. In his view, the formalities required by the law on commercial leases had not been respected.

Initially, the court declared this request for requalification inadmissible and ordered the eviction of the occupier. In 2022, the Court of Appeal upheld this decision in its entirety, pointing out that the starting point for the limitation period for an action to reclassify a rental contract as a commercial lease is the date of conclusion of the initial agreement. Consequently, the Court of Appeal held that the company's action was time-barred.

Changes in the starting point of the limitation period

The dispute was brought before the French Supreme Court, which ruledin favor of the company in a decision dated May 25, 2023. The court ruled that the limitation period for requesting the requalification of a rental contract as a commercial lease is 2 years from the date of signature of the contract for which requalification is requested. In this case, the period starts on November 1, 2014, the date on which the last so-called precarious occupation agreement was signed.

The Cour de cassation concludes that the action brought by the company on May 26, 2016 is not time-barred. As such, it overturns the March 15, 2022 ruling of the Court of Appeal in its entirety, a decision of great importance for holders of incorrectly qualified contracts.

Tenants wishing to have their contract reclassified as a commercial lease must take their case to court within 2 years of signing the contract, failing which the action will be extinguished.