Disagreement over the amount of rent for a renewed lease

This case concerns a dispute between Mr [K] [V] and Mrs [T] [M], wife [V], lessors, and SARL Boucherie Normande, lessee, over the renewal of a commercial lease. The initial lease, signed on July 8, 2010, covered commercial and residential premises located at [Location 1], for an annual rent of 23,449.68 euros. In 2019, the lessee requested renewal of the lease on the same terms, but the lessors proposed an increase in the rent to 37,790 euros, which led to a disagreement.

Provisional fixing of the rent and a legal appraisal

The landlords then referred the matter to the rent judge of the Lisieux judicial court, who provisionally set the rent at 30,000 euros excluding charges, and ordered a legal appraisal. On June 10, 2022, the judge set the annual rent at 26,882.80 euros, rejected the lessors’ request for an expert appraisal and ordered them to reimburse the excess rent received since July 1, 2019, as well as to pay 4,000 euros in procedural indemnities to the lessee.

Request for further expert appraisal rejected

The lessors lodged an appeal, requesting additional expert appraisal to analyze changes in the lessee’s sales and an increase in rent to 41,162 euros. After examining the arguments and the expert reports, the Caen Court of Appeal upheld the lower court’s judgment. It rejected the request for further expert appraisal, deeming that the accounting documents produced made it possible to rule on the dispute.

Rejection of the request to de-cap the rent

The court also upheld the annual rent of 26,882.80 euros, basing its decision on the characteristics of the premises, the use to which the premises were put, the obligations of the parties, local commercial factors and prices in the vicinity. It ruled that there had been no significant change in local market factors to justify an increase in the rent.

Lastly, the court ordered the lessors to pay the costs of the appeal and 3,000 euros to the lessee under article 700 of the French Code of Civil Procedure, rejecting their claim for procedural damages.

CA Caen, 15-02-2024, n° 22/01824

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Nexity Studea Montpellier – Lease Renewal and Eviction Compensation

On October 19, 2021, the Montpellier Court of Appeal ruled on a dispute between Mr. and Mrs. A and Nexity Studea regarding the non-renewal of a commercial lease. The case, which had been ongoing for several years, highlighted key legal principles in French commercial lease law, particularly concerning eviction compensation and the statute of limitations.

Background of the Case

Mr. and Mrs. A purchased an apartment in 1997, which they rented to SARL Campus Habitat under a commercial lease. Over time, Nexity Studea took over Campus Habitat’s rights, effectively becoming the new tenant. The lease was structured as a commercial lease, meaning that the tenant had certain protections under French law, including the right to renewal or compensation if the lease was terminated without just cause.

In 2006, Mr. and Mrs. A initially refused to renew the lease but reversed their decision after being informed about the financial and tax consequences. A decade later, in 2015, they once again refused renewal and offered eviction compensation to Nexity Studea, setting the stage for legal proceedings.

Legal Issues and Court Decisions

Refusal to Renew the Lease & Eviction Compensation

Under French commercial lease law (Article L 145-14 of the French Commercial Code), if a landlord refuses to renew a commercial lease, they must pay the tenant an eviction indemnity. This indemnity compensates the tenant for financial losses due to eviction, including lost business value and commercial disruption.

When Mr. and Mrs. A refused renewal in 2015, they acknowledged their obligation to provide eviction compensation. Nexity Studea estimated the indemnity at €22,888, calculated based on the average revenue generated over the last three years. The dispute, however, escalated as the landlords contested both the calculation method and the validity of the claim.

First Ruling: Montpellier Regional Court (2018)

In 2018, the Montpellier Regional Court ruled against Mr. and Mrs. A, dismissing their claims based on the statute of limitations. The court determined that their legal action was time-barred, as they had been aware of the lease’s commercial nature since 1997. As a result, the court upheld Nexity Studea’s claim and ordered Mr. and Mrs. A to pay the eviction indemnity of €22,888. Additionally, they were ordered to pay a further €1,500 under Article 700 of the French Code of Civil Procedure, along with all legal costs.

Appeal: Montpellier Court of Appeal (2021)

Dissatisfied with the ruling, Mr. and Mrs. A appealed the decision, arguing that:

1. The lease should be reclassified – They contended that the agreement was not a true commercial lease but a property management contract.

2. The claim was not time-barred – They argued that the statute of limitations should have started at a later date.

3. The eviction indemnity calculation was incorrect – They claimed Nexity Studea’s method was flawed, as it did not reflect actual revenue and business conditions.

The Court of Appeal, however, upheld the 2018 ruling, reaffirming that the claim was indeed time-barred. The judges highlighted that:

Mr. and Mrs. A had been fully aware of the commercial nature of the lease since 1997.

They had received written notification in 2006 outlining the financial obligations related to lease non-renewal and eviction indemnity.

Even if the statute of limitations began in 2006, the five-year period would have expired by 2011, long before their legal action in 2016.

Regarding the eviction compensation calculation, the court confirmed that Nexity Studea used a standard approach, multiplying the average sales over three years by an industry-accepted coefficient. Additionally, compensation for commercial disruption was included, calculated at three months’ worth of lost profits. The final amount of €22,888 was deemed valid.

Key Legal Takeaways

1. Statute of Limitations for Lease Disputes

In France, actions related to commercial leases must be filed within two years (Article L 145-60 of the French Commercial Code). Claims for contract nullity or reclassification must be brought within five years (Article 1304 of the French Civil Code). This case highlights the importance of acting promptly in lease disputes.

2. Legal Recognition of Commercial Leases

Even if landlords later contest the nature of a lease, courts will consider original agreements and documented evidence. If a lease is labeled as commercial, landlords cannot easily argue otherwise after benefiting from its tax advantages and rental income.

3. Calculation of Eviction Compensation

French law protects commercial tenants by ensuring they receive fair compensation if a lease is not renewed. Courts will favor standard calculation methods, including:

Average sales over the last three years, multiplied by an industry factor.

Commercial disruption indemnity, typically three months’ profit.

Landlords attempting to challenge these calculations must present strong counter-evidence, such as alternative financial records or expert reports.

Final Judgment & Financial Consequences

The Court of Appeal rejected Mr. and Mrs. A’s request to annul the previous ruling, confirming that they must:

Pay Nexity Studea €22,888 in eviction compensation.

Cover an additional €1,500 in legal fees under Article 700.

Bear all legal costs for both trials.

This decision underscores the importance of understanding French commercial lease law, especially for property owners involved in lease agreements with large real estate firms.

Conclusion

The Nexity Studea Montpellier case provides a clear example of how French courts enforce commercial lease agreements. It demonstrates that:

Lease contracts must be carefully reviewed before signing.

Legal actions must be filed within the statute of limitations.

Landlords must respect eviction indemnity obligations if they refuse lease renewal.

For landlords and investors in French rental properties, this case serves as a warning: understanding lease terms and legal timelines is crucial to avoiding costly litigation. If you are involved in a similar dispute, seeking legal counsel early can help prevent financial losses and ensure compliance with French commercial lease regulations.

Need Legal Advice on French Leases?

If you have questions about commercial lease renewals, eviction compensation, or property disputes in France, our legal team is here to help. Contact us for expert guidance on navigating complex lease agreements and protecting your property rights.

Court of Appeal, Montpellier, 5th civil chamber, October 19, 2021 – n° 18/02112

JUDGMENT :

* *

FACTS, PROCEDURE, CLAIMS AND PLEAS OF THE PARTIES:

On October 30, 1997, Jean Pierre M. and his wife purchased from SCI Les Jardins du Consulat a studio apartment in a building complex [… property complex […] as part of a tax-exempt sale in future state of completion.

At the same time, they granted SARL CAMPUS HABITAT a lease on the apartment with effect from November 1, 1997, with a view to renting it out to students.

In the course of the lease, SA NEXITY STUDEA took over the rights of SARL CAMPUS HABITAT.

On March 20, 2006, Mr and Mrs M. notified the lessee of the non-renewal of the commercial lease on the expiry date of October 31, 2006.

NEXITY drew their attention in writing to the tax consequences of non-renewal.

initially deducted and to the payment of an eviction indemnity, the M. couple agreed to the renewal of the commercial lease by deed dated October 6, 2006.

By bailiff’s deed dated December 11, 2015, Mr and Mrs M. served SA NEXITY STUDEA with a notice of termination refusing to renew the lease and offering to pay an eviction indemnity with effect from

effective June 30, 2016.

By registered letter dated January 28, 2016, NEXITY STUDEA notified the lessors of the estimated eviction indemnity of ‘22,888 and the right to remain in the premises under the terms of the lease.

right to remain in the premises under the conditions and clauses of the expired lease until payment of the compensation.

By deed dated May 25, 2016, Mr and Mrs M. summoned SA NEXITY STUDEA and SCP D.-J.-C.-D.-P. to appear before the Montpellier Regional Court.

on the basis of articles L 145 of the French Commercial Code and 1147 of the French Civil Code, in order to terminate the lease, order the eviction of the lessee, and

to determine whether an eviction indemnity should be paid to the tenant, and to order the notary to indemnify them for the amount of this indemnity.

The ruling handed down on March 13, 2018 by the Montpellier Regional Court states in its operative part:

Declares inadmissible as time-barred the action for termination of the lease brought by the couple M. against SA NEXITY STUDEA;

Declares inadmissible as time-barred the action brought by Mr and Mrs M. against SCP D.-J.-C.-D.-P.;

Orders the M. couple to pay SA NEXITY SUTUDEA the sum of 22,888 euros in eviction compensation;

Dismisses SCP D.-J.-C.-D.-P.’s claim for damages;

Order the M. couple to pay SA NEXITY STUDEA and SCP D.-J.-C.-D.-P. the sum of 1,500 ‘ each, pursuant to article 700 of the French Code of Civil Procedure.

Code of Civil Procedure.

Declares that there is no need for provisional execution;

Dismisses any further or contrary claims;

Order the couple M. to pay the costs.

The judges of the first instance, with regard to the plea of non-receivability based on the statute of limitations, note :

– with regard to the commercial lessee, that as soon as they signed the deed of sale on October 30, 1997, Mr. and Mrs. M. were aware of the addition of a commercial lease to their deed of purchase, and that the deed of sale had not been signed beforehand.

deed of sale, and they were also informed by letter dated March 27, 2006, following their initial decision not to renew the lease, of the consequences for the tax authorities.

consequences with regard to the tax authorities in the event of non-renewal of the lease, and also of their obligation to pay an eviction indemnity.

Even if we were to consider that they were only informed on this date of March 27, 2006 of the damage resulting from the payment of the eviction indemnity, the statute of limitations under

limitation period under article 1304 of the French Civil Code runs until March 27, 2011;

– with regard to the notary, the damage resulting from the payment of an eviction indemnity occurred at the latest as of the letter of March 27, 2006, triggering the limitation period.

The limitation period had not expired when the law of June 17, 2008 came into force, reducing the limitation period from 10 years to 5 years.

a new 5-year period ran until June 19, 2013, but the limitation period had expired on the date of the summons of May 25, 2016.

With regard to the calculation of the eviction indemnity, the court accepted the calculation proposed by NEXITY STUDEA based on average annual sales according to the results of the last three years, with the application of a discount rate.

last three years, with the application of coefficients taking into account the occupancy rate and the addition of a supplementary indemnity for commercial disruption of three months’ profit.

and rejects the request for an expert appraisal submitted by Mr. and Mrs. M..

Jean Pierre M. and Marie C. wife M. appealed the judgment by a statement filed with the clerk’s office on April 21, 2018 against SA NEXITY STUDEA only.

The closing order was issued on February 24, 2021.

The final pleadings for Jean Pierre M. and Marie C. épouse M. were filed on December 30, 2020.

The final pleadings for SA NEXITY SUTUDEA were filed on July 31, 2018.

The operative part of the pleadings of Jean Pierre M. and Marie C. épouse M. states in its sole claims:

Annul the judgment;

Failing this, overturn the judgment under appeal;

Order the eviction of NEXITY and all its occupants;

Dismiss the respondent’s claims;

In the alternative

Fix the eviction indemnity due at 2,991 euros;

Condemn NEXITY STUDEA to pay the sum of 4,000 ‘ under article 700 of the French Code of Civil Procedure and to pay all costs of first instance and appeal.

and appeal costs.

Mr and Mrs M. claim that the lower courts failed to respond to their request for the contract to be reclassified, which should be understood as their plea in support of their request for nullity.

in support of the application to set aside the judgment.

They argue that the developer promised them a tax advantage and an obligation to enter into a lease without specifying its nature for a certain period of time, and that it would be impossible for them to recover their property.

the impossibility of recovering their property, thereby misleading the purchaser as to the nature of the contract they were signing and creating an imbalance between the parties.

Noting that SA NEXITY SUTUDEA is not registered in the commercial register for each of the lots, thus failing to meet the conditions of article L 145-

1 of the French Commercial Code, that it does not keep separate accounts for each of the lots, and that each of the lots has an independent legal life, they claim that they are in fact bound by a contract of sale.

a property management contract, with the respondent company looking for tenants and the owners cashing in on the rental income without the worries and inconveniences of a management contract.

without the worries and inconveniences of direct rental.

According to Mr and Mrs M., there is no single business and the provisions of article L 145-1 of the French Commercial Code do not apply.

in the event of non-renewal of the agreement.

With regard to the statute of limitations for their action, Mr and Mrs M. put forward no legal or factual arguments, and in any case none that are clearly understandable.

With regard to the eviction indemnity, Mr and Mrs M. argue that NEXITY STUDEA used the hotel method to calculate the amount, which is incompatible with the nature of the dispute.

with the nature of the dispute.

They point out that the accounts for the entire building have not been produced, nor even separate accounts for each lot, showing the reality of the cash receipts.

receipts.

They consider that, on the one hand, the tenant has created evidence for himself and that, on the other hand, the eviction indemnity cannot be calculated by taking into account the sum paid to the owners.

the sum paid to the owners.

Similarly, they consider that it is not possible to verify the market value of the goodwill cited in the table produced by NEXITY.

They also criticize NEXITY’s claim for commercial disturbance, in particular insofar as there is no collective goodwill, and the repossession of the apartment by an owner does not constitute a commercial disturbance.

by an owner is not contrary to the law.

The M. couple then asked that the eviction indemnity be calculated by deducting the sub-rent paid to the lessors, i.e.: 559.08 ‘ (rent paid by the occupant) ‘ 309.83 ‘ (rent paid back to the lessors).

(rent paid to lessors) x 12, i.e. ‘ 2,991 per year.

The operative part of SA NEXITY STUDEA’s pleadings states the following claims only:

To uphold the judgment.

Primarily,

Declare that the action for requalification of the lease is time-barred;

Declare the claims of the M… spouses inadmissible as time-barred;

In the alternative

Dismiss Mr and Mrs M.’s claim for requalification of the lease;

Dismiss their further claims;

In any event,

Set the eviction indemnity at 22,888 euros, to be paid by Mr. and Mrs. M.;

In the alternative

Appoint an expert to determine the amount of the eviction compensation;

In any event,

order Mr and Mrs M. to pay the sum of EUR 3,000 under article 700 of the French Code of Civil Procedure and all costs.

SA NEXITY STUDEA first raises the statute of limitations for the requalification action, the requalification having been requested for the first time in writings

September 23, 2017 filed with the tribunal de grande instance, even though Mr. and Mrs. M. signed the lease on April 18, 1997, and could not have been unaware that the lease was in force.

that they could not have been unaware that it was a commercial lease, this capacity being mentioned in very apparent characters.

As the 5-year statute of limitations under article 1304 of the French Civil Code applies, the action of Mr and Mrs M. has been time-barred since April 18, 2002.

NEXITY adds that even supposing it could be considered that Mr and Mrs M. were unaware of the nature of the contract when it was signed in

1997, the letter of March 27, 2006, reminding them of the need to pay eviction compensation in the event of non-renewal, triggered the five-year statute of limitations.

They are therefore barred from bringing an action on March 27, 2011.

NEXITY also points out that at the time of acquiring the property in dispute, the M. and M. signed a lease agreement, and that NEXITY STUDEA never acted as an intermediary on their behalf.

intervened as a rental intermediary, and that it is clear from the very terms of the contract that it is indeed a property rental contract

under which the lessors receive the rent agreed with the lessee, and not the proceeds of the student lease, as they maintain.

Regarding eviction compensation, NEXITY STUDEA replies that its claim is well-founded under article

L 145-14 of the French Commercial Code, and that in its letter of January 28, 2016 NEXITY detailed the calculation method used to determine the amount of the eviction indemnity.

whereas Mr and Mrs M. did not feel it necessary to mention the amount of their offer in their notice.

In its written submissions, to which the court refers for a fuller explanation, NEXITY then reiterates its calculation method and adds that it produces the elements on which it bases its calculation.

on which it relies.

REASONS

The Court notes first of all that the appeal was lodged by Mr and Mrs M. only against SA NEXITY STUDEA, so that the provisions of the judgment relating to their action against SCP NEXITY STUDEA are not applicable.

the provisions of the judgment relating to their action against SCP D.-J.-C.-D.-P. are no longer before the court.

On the request for nullity of the judgment:

Even if the grounds on which this claim is based do not appear to be clearly argued in law and in fact, on reading the appellants’ pleadings we can

that they criticize the judgment under appeal for failing to rule on their claim for nullity of the commercial lease on the grounds of fraud and its requalification.

requalification.

However, it would appear that the first judges were right to answer the question of whether the lessors’ action was time-barred.

by the lessee.

Pursuant to article L 145-60 of the French Commercial Code, actions relating to commercial leases are time-barred after two years from the date on which the action can be brought.

can be brought.

Pursuant to article 1304 of the French Civil Code applicable to the facts of this case, actions for the nullity of an agreement are time-barred after 5 years from the date on which the holder of a right or interest in a right or interest in a right or interest in a right or interest in a right or interest in a right or interest in a right or interest.

the day when the holder of a right knew or should have known the facts enabling him to exercise it.

It is clear from the documents submitted for discussion that the contract entered into on November 27, 1997, with effect from November 1, 1997, between the spouses

M. and SARL CAMPUS HABITAT, the predecessor of SA NEXITY STUDEA, clearly states in its heading:

“Commercial lease of bare real estate for student accommodation in application of the decree of September 30, 1953 and subsequent texts”.

Furthermore, as noted by the first judges, the notarized deed of acquisition of the property dated October 30, 1997 mentions on pages 13 and 14 that the

property and real estate rights which are the subject of the present deed are to be leased bare for a period of nine years to SARL CAMPUS HABITAT under the terms of a commercial

which will be formalized following the deed of purchase.

It is also specified in particular that this acquisition followed by a bare lease under the commercial lease entitles the purchaser to certain tax benefits, which are detailed below.

tax advantages.

Consequently, from the time they signed the lease, Mr and Mrs M. were fully aware of the nature of the lease, i.e. a commercial lease.

must be considered as the starting point of the statute of limitations, whether for an action based on the status of commercial leases (L 145-60 of the French Commercial

Code) or an action based on ordinary law (1304 of the French Civil Code), so that when the summons was served before the Tribunal de Grande Instance on May 25

May 2016, the action for nullity of the lease and/or requalification was time-barred.

Furthermore, it is undisputed that, following their refusal to renew the commercial lease notified to the lessee on March 20, 2006, the couple M. were informed on March 27 by letter from SA NETIA.

March 2006 by letter from SA NEXITY STUDEA of the consequences of the non-renewal of the lease with regard to the tax authorities, as well as of the fact that, in their capacity as lessors, they were obliged to pay the tax.

as lessors, they were required to pay the lessee an eviction indemnity.

Consequently, as considered by the judgment under appeal, even supposing that the starting point of the statute of limitations for the action brought by Mr and Mrs M. was March 27

2006, the date on which they were fully informed of their obligation to pay an eviction indemnity in the event of non-renewal of the lease, their action has also been time-barred since

their action has also been time-barred since March 27, 2011, i.e. well before the summons of May 25, 2016.

Consequently, the judgment under appeal cannot be declared null and void, and will be confirmed insofar as it declared inadmissible as time-barred the action for termination of the lease and for

M. against SA NEXITY STUDEA as time-barred.

Setting the eviction compensation

First of all, under article 145-14 of the French Commercial Code, if the lessor is entitled to refuse to renew the lease, it is subject to the condition of

pay the evicted tenant an indemnity equal to the prejudice caused by the failure to renew.

The purpose of the eviction indemnity is to compensate for the damage caused by the refusal to renew the lease.

According to the aforementioned article L 145-14, this indemnity comprises in particular a principal indemnity, i.e. the market value of the business, which is determined

in particular by reference to average sales over the past three years, and not by reference to profits, as the M. and M.

M. and ancillary indemnities.

In accordance with these provisions and industry practice, SA NEXITY STUDEA sent a letter dated January 28, 2016 detailing the calculation method used

calculation method used, i.e. for the main indemnity, reference to average sales over the last three years, i.e. in this case ‘6,708.98, multiplied by

multiplied by a factor of 3.3, bearing in mind that according to industry practice for this type of business, the multiplier factor is around 3.5.

SA NEXITY STUDEA thus justifies a principal indemnity of 22,139.65 euros (6,708.98 x 3.3).

In terms of ancillary compensation, it is accepted practice and case law to take into account the commercial disruption, in order to compensate for the damage

suffered by the tenant as a result of the temporary loss of revenue. This loss is generally compensated on the basis of 3 months’ average gross operating profit

over the last three years, i.e. the profit earned by the retailer from his business.

SA NEXITY STUDEA can prove a monthly profit of ‘249.45, which must be multiplied by 3, giving compensation for commercial disruption of ‘748.36.

According to this calculation method, SA NEXITY STUDEA is seeking an eviction indemnity of 22,888 euros, which the first judges granted.

The appellants make no serious criticism of this calculation method or of the figures given by the lessee, and do not propose any other relevant method.

method.

Consequently, the judgment under appeal will be confirmed insofar as it ordered Mr and Mrs M. to pay SA NEXITY STUDEA the sum of 22,888 euros in eviction compensation.

eviction compensation.

Ancillary claims:

The provisions of the judgment under appeal concerning irreducible expenses and costs will also be confirmed.

In addition, Jean Pierre M. and Marie C. épouse M., who are unsuccessful in their appeal, will be ordered to pay the sum of 1,500 euros under article 700 of the French procedural code, and to bear the costs of the proceedings.

and to bear the costs of the appeal proceedings.

ON THESE GROUNDS:

The Court, ruling in a contradictory judgment, handed down at the clerk’s office;

Dismisses Jean Pierre M. and Marie C. épouse M.’s application for annulment of the judgment referred to;

Confirms in all its provisions the judgment handed down on March 13, 2018 by the Montpellier Regional Court;

Adding,

Condemn Jean Pierre M. and Marie C. épouse M. to pay SA NEXITY STUDEA the sum of 1,500 euros under article 700 of the French Code of Civil Procedure;

Order Jean Pierre M. and Marie C. épouse M. to pay the costs of the appeal proceedings.

The Clerk The Chairman

N.A.

Previous decision

TRIBUNAL DE GRANDE INSTANCE MONTPELLIER MARCH 13, 2018 16/03467

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Nexity Studea Daumesnil furnished sublet for students

Nexity Studea Daumesnil: The ruling handed down by the Paris judicial court on July 11, 2024 concerns a dispute between S.A.S. NEXITY STUDÉA and Mr [F] [M] over a commercial lease. The initial lease, signed in 1997, concerned an apartment intended for furnished subletting to students in the Nexity Studea Daumesnil residence. The lease was renewed in 2006 for nine years. In 2012, Mr [F] [M] bought the apartment and in 2017 served notice on NEXITY STUDÉA, refusing to renew the lease and offering an eviction indemnity.

NEXITY STUDÉA is claiming an eviction indemnity of 48,039 euros.

NEXITY STUDÉA claimed an eviction indemnity of 39,731.60 euros, and then sued Mr [F] [M] for 48,039.87 euros. Mr [F] [M] also sued NEXITY STUDÉA for an occupancy indemnity. The two cases have been joined under number RG 20/04605.

The court rejected Mr [F] [M]’s request for a second expert opinion, considering that the initial expert had correctly carried out his mission. The court also rejected NEXITY STUDÉA’s request to forfeit its right to an eviction indemnity, as Mr. [F] [M] had not provided prior formal notice.

Nexity Studea Daumesnil: eviction compensation

The court set the eviction indemnity at a total of 28,055.57 euros. The lessor won €20,000.

Main compensation

The court awarded a principal indemnity of €19,263.

Ancillary compensation

The judges awarded replacement costs of 3,926.30 euros, commercial disturbance of 636.27 euros, operating disturbance of 3,730 euros, and miscellaneous costs of 500 euros. This sum will bear interest at the legal rate from the date of judgment.

Occupancy indemnity

The occupancy indemnity owed by NEXITY STUDÉA to Mr. [F] [M] has been set at 4,512 euros per year, indexed annually, from July 1, 2018 until the premises are vacated. NEXITY STUDÉA must also pay rental charges and taxes until that date.

The costs of the proceedings will be shared equally between the parties, and neither party has obtained reimbursement of expenses not included in the costs. The provisional execution of the decision has been set aside in view of Mr [F] [M]’s right of repentance.

In summary, the court ruled in favour of NEXITY STUDÉA for the eviction indemnity, while fixing an occupancy indemnity for Mr. [F] [M], and rejected the requests for counter-expertise and forfeiture of rights. 

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On November 26, 2024, the Paris judicial court handed down a ruling concerning a dispute between S.A. NEXITY STUDEA and Mr [T] [G] relating to a commercial lease. The dispute concerns premises located at [Address 5], [Location 10], leased for a student residence. The initial lease, signed in 1998, has been renewed several times, with modifications concerning the rent and its indexation.

Studea: Dismissal without eviction indemnity for serious and legitimate reasons

In February 2022, Mr [T] [G] issued a notice to NEXITY STUDEA, refusing to renew the lease without eviction compensation, citing serious and legitimate grounds. NEXITY STUDEA contested this notice, requesting its nullity and the payment of an eviction indemnity. The court examined several points of dispute:

1. Indexation clause and VAT: Mr [T] [G] accused NEXITY STUDEA of not respecting the annual rent indexation clause and of charging him VAT. The court ruled that the rent was stipulated inclusive of all taxes and that NEXITY STUDEA did not have to pay an increase in VAT in addition to the contractual rent.
2. Communication of minutes of general meetings: Mr [T] [G] complained that NEXITY STUDEA had not communicated the minutes of general meetings of co-owners to him. The court noted that the lessor had to give a special mandate to NEXITY STUDEA to represent him at the meetings, which he had not done.
3. Subletting: Mr [T] [G] claimed that NEXITY STUDEA had illegally sublet the property without his consent. The court ruled that subletting was part of the activity authorised by the lease and that NEXITY STUDEA was not required to obtain the lessor’s consent for each subletting.

The court concluded that the reasons given by Mr. [T] [G] for refusing to renew the lease were ill founded. Consequently, it rejected Nexity Studea’s request that the notice be null and void, but recognised his right to eviction compensation.

The court orders a legal appraisal to determine the eviction indemnity

A legal appraisal was ordered to determine the amount of this indemnity and the occupancy indemnity due by Nexity Studea from October 1, 2022.

The court has also proposed mediation in an attempt to resolve the dispute amicably. The parties will meet with a mediator to discuss the terms of the mediation. If they accept, the expertise process will be suspended during the mediation.

Finally, the court set a provision of 6,000 euros for the expert’s fees, to be deposited by Nexity Studea before February 28, 2025. Nexity Studea‘s request for eviction was rejected, and the case was adjourned to a pre-trial hearing on March 19, 2025 to verify payment of the deposit. Costs and claims under article 700 of the French Code of Civil Procedure were reserved.

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In summary: In Arcs 1800, the Chambéry Court of Appeal upheld the lower court’s judgment, declaring the lease assignments unenforceable against Mr. [F], ordering Belambra Clubs to be evicted and ordering the latter to pay costs and additional expenses.

Lease assigned by Pierre et Vacances Maeva Tourisme Exploitation to Temmos Les Arcs and Belambra

On June 18, 2024, the Chambéry Court of Appeal handed down a ruling concerning a dispute between Belambra Clubs and Mr. [E] [F]. The dispute concerns a commercial lease initially granted by Mr. [F] to Pierre et Vacances Maeva Tourisme Exploitation, then transferred to Temmos Les Arcs and finally to Belambra Clubs.

Assignment of lease unenforceable in the absence of service or tacit acceptance

Mr. [F] contests the validity of these assignments, arguing that they were neither served on him nor tacitly accepted, thereby rendering them unenforceable.

The Albertville court ruled that Belambra Clubs’ claims were inadmissible, and ordered Belambra Clubs to pay Mr. [F] 1,500 euros under article 700 of the French Code of Civil Procedure, and to pay the costs. Belambra Clubs has appealed this decision.

The Court of Appeal examined the admissibility of Mr. [F]’s cross-appeal, concluding that his submissions complied with the requirements of article 954 of the French Code of Civil Procedure.

Lease assignments unenforceable due to lack of valid notification and tacit acceptance

The Court also confirmed that the lease assignments were unenforceable against Mr. [F] due to the absence of valid notification and tacit acceptance. Consequently, Belambra Clubs’ application to renew the lease was deemed inadmissible.

Belambra Clubs must vacate apartment no. 652 of the Hôtel du Golf in Les Arcs 1800.

The court also ruled on Mr. [F]’s request for eviction, ordering Belambra Clubs to vacate apartment no. 652 of the Hôtel du Golf in Les Arcs 1800 and return it with all related sets of keys.

No penalty

The request for a fine of 200 euros per day of delay was rejected.

Belambra Clubs ordered to pay the costs of the appeal proceedings and 1,500 euros under article 700 of the French Code of Civil Procedure.

Lastly, the Court ordered Belambra Clubs to pay the costs of the appeal proceedings and 1,500 euros to Mr. [F] under article 700 of the French Code of Civil Procedure.

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