Judicial termination of a commercial lease for a holiday residence: the health crisis does not justify non-payment of rent.
A tourist accommodation business facing significant unpaid rent
In a judgment of 26 May 2026, the Montpellier Court of Appeal upheld the judicial termination of a commercial lease entered into in a tourist accommodation complex and reiterated that the Covid-19 health crisis does not entitle the tenant to unilaterally suspend rent payments.
The case pitted Mr and Mrs [U], owners of several units in a tourist residence that subsequently became a residential complex, against the company Les Bains de Lamalou, the operator of the premises. The commercial lease had been entered into on 29 January 2014 for an initial annual rent of €5,343 excluding VAT, payable quarterly.
Following several years of unpaid rent, the landlords made repeated attempts at amicable resolution. An initial formal notice was sent in August 2021 for an amount of €11,665, followed by a second in January 2022 and then a demand for payment in February 2022. None of these steps resulted in the debt being settled.
In light of this situation, the landlords took legal action against the operating company in March 2022 to seek termination of the lease, payment of the outstanding rent, eviction of the occupant and payment of compensation for occupation.
A judicial termination ordered at first instance
The breaches attributed to the tenant
By judgment of 6 May 2024, the court ordered the judicial termination of the commercial lease on the grounds of breaches considered to be serious and repeated.
The judges identified two main breaches:
- non-payment of rent;
- failure to provide proof of insurance for the leased premises.
The court ordered Les Bains de Lamalou to pay €13,880.05, corresponding to unpaid rent between March 2017 and March 2023.
The company’s eviction was also ordered, accompanied by a monthly occupancy indemnity of €772.97 (excluding VAT) until the premises are effectively vacated.
The operator’s appeal
Les Bains de Lamalou challenged this decision before the Court of Appeal.
It argued primarily that the judgment was insufficiently reasoned and should be set aside. In the alternative, it sought to have the judgment overturned, contending that the alleged breaches were not sufficiently serious to justify termination of the lease.
It also sought a twelve-month payment extension to settle its rent arrears.
The rejection of the application to set aside the judgment
Reasons deemed sufficient
The operator criticised the court for having adopted its opponents’ arguments without addressing its own defences.
The court swiftly dismissed this complaint.
It noted that the duty to state reasons does not require judges to respond to every argument put forward by the parties, but only to those that are decisive to the dispute. As the original judges had met this requirement, the application for annulment was dismissed.
The health crisis does not exempt tenants from paying rent
The argument put forward by the tenant
The company Les Bains de Lamalou acknowledged that it had not paid certain rent instalments between the third quarter of 2020 and the first quarter of 2021. It considered, however, that the exceptional circumstances of the pandemic justified a more flexible interpretation of its contractual obligations.
It also contested that the lack of insurance could constitute a breach serious enough to warrant termination of the lease.
The court’s position
The judges noted that the payment of rent constitutes one of the tenant’s essential obligations within the meaning of Article 1728 of the Civil Code.
They endorsed the lower court’s reasoning that the health crisis could lead the parties to seek contractual adjustments in good faith, but did not permit the tenant to decide unilaterally to suspend rent payments or to disregard their contractual review.
The court further emphasised that the landlords had never agreed to waive rent for periods of closure linked to the pandemic.
The refusal to grant payment extensions
A financial situation insufficiently demonstrated
The company Les Bains de Lamalou sought a twelve-month extension to repay its rent arrears.
The court noted that Article 1343-5 of the Civil Code does indeed allow the judge to grant extensions where these appear compatible with the debtor’s financial situation and the creditor’s interests.
However, the operator produced no documents demonstrating its actual ability to settle the debt within the requested timeframe. Worse still, the evidence submitted revealed the emergence of new arrears during 2024.
The court therefore considered that it would be unrealistic to believe that the debt could be settled within twelve months.
Full confirmation of the judgment
The Montpellier Court of Appeal fully confirmed the first-instance decision. It upheld the judicial termination of the commercial lease, the eviction of the tenant, the order to pay the outstanding rent and the compensation for occupation.
It also rejects the request for payment extensions and orders Les Bains de Lamalou to pay the costs of the appeal as well as €3,000 pursuant to Article 700 of the Code of Civil Procedure.
Scope of the judgment
This decision is in line with the now established case law that the health crisis has not removed the tenant’s fundamental obligation to pay commercial rent. It also confirms that persistent non-payment, combined with other breaches of contract such as a lack of insurance for the premises, constitutes sufficiently serious misconduct to justify the judicial termination of a commercial lease.
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