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🔎 Tourist residences: an important victory for landlords – The Court of Cassation reiterates the limits of “single” use

Landlords of tourist residences have just obtained an essential clarification.

In a ruling dated October 16, 2025, the Court of Cassation reiterated that co-owners remain completely free to use their lot, provided that they do not interfere with the intended use of the building.

👉 In other words: co-ownership regulations cannot impose, by simple interpretation, that all units—including those outside the 70% mandatory rental perimeter—be rented out by the sole operator.

In this case, a co-ownership association and the operator had prohibited two landlords from renting out their properties independently on a seasonal basis, on the grounds that it was essential to go through the residence manager.

The Court of Cassation overturned this decision:

✔ The rules merely reproduced the requirements of the Tourism Code but did not clearly prohibit other co-owners from freely managing their units.

✔ The judge cannot distort a regulation to impose a constraint that is not included in it.

✔ When more than 70% of the units are rented through the operator, the other co-owners can rent themselves, without disregarding the “tourist residence” designation.

This decision highlights a fundamental point:

💡 Landlords never lose their right of ownership.

They retain the right to dispose of their apartment, unless there is a clear, specific, and legally compliant restriction—which is far from being the case in many residences.

In a context where some operators or property managers attempt to impose “exclusive” rental obligations without a solid legal basis, this ruling constitutes a major legal weapon for landlords who wish to regain control over the management of their property.

It sends a strong signal at a time when the issue of the freedoms of owners in tourist residences is once again at the center of debate.

#touristresidences #landlords #co-ownership #case law #commercial leases #real estate law #owners #rental values #lawyer

This ruling by the Court of Cassation, handed down by the Third Civil Chamber on October 16, 2025, concerns a dispute between Mr. and Mrs. [W], owners of a unit in a tourist residence, and the co-owners’ association of that residence, the Association of Owner-Operators (APEXVO), and the Operating Company (SEVOR). The latter had sued Mr. and Mrs. [W] to prohibit them from renting their property on a seasonal basis without going through SEVOR, the sole operator of the residence.

Facts and procedure

The residence in question is a real estate complex divided into 68 lots, the commercial management of which is entrusted to SEVOR. APEXVO was formed to enable the commercial operation of this residence. Mr. and Mrs. [W], owners of lot no. 64, did not join APEXVO and occasionally rented out their property. The co-owners’ association, APEXVO, and SEVOR then brought an action to prohibit any seasonal rental activity of their property without resorting to SEVOR.

Appeal court decision

In its ruling of January 25, 2024, the Rennes Court of Appeal ruled in favor of the co-owners’ association and SEVOR. It found that the co-ownership regulations required a single operator to manage the entire tourist residence, thereby prohibiting Mr. and Mrs. [W] from renting out their property without going through SEVOR.

Grounds for cassation

Mr. and Mrs. [W] appealed to the Court of Cassation, citing in particular the violation of Articles 8 and 9 of Law No. 65-557 of July 10, 1965, and Articles D. 321-1 and D. 321-2 of the Tourism Code. They argued that the co-ownership regulations, by merely reproducing the legal provisions, did not prohibit the direct rental of lots not used as part of the tourist residence. They also criticized the Court of Appeal for misinterpreting the co-ownership regulations.

Decision of the Court of Cassation

The Court of Cassation partially overturned the Court of Appeal’s ruling. It ruled that Article 1-1 of the co-ownership regulations, which reproduces the provisions of Article D. 321-2 of the Tourism Code, requires a single operator for the premises belonging to the tourist residence, i.e., at least 70% of the premises, but does not prohibit the direct management of the remaining units. Furthermore, Article 4 of the regulations provides that apartments not operated as part of the tourist residence may be occupied on a residential basis. The Court of Appeal therefore misinterpreted the clear terms of the regulations by prohibiting Mr. and Mrs. [W] from renting their property directly.

The Court of Cassation also overturned the rejection of Mr. and Mrs. [W]’s claim for compensation, which was linked to the rental ban. It referred the case back to the Angers Court of Appeal for a new hearing.

Scope of the ruling

This ruling clarifies the interpretation of the provisions relating to tourist residences in the context of co-ownership. It reiterates that co-owners are free to dispose of their private areas, provided that they do not undermine the purpose of the building. It also emphasizes the importance for the judge not to distort the documents submitted for his or her consideration.

Consequences

The Court orders the co-owners’ association, APEXVO, and SEVOR to pay the costs and to pay Mr. and Mrs. [W] €3,000 under Article 700 of the Code of Civil Procedure. The case is referred back to the Angers Court of Appeal for a new examination of the points that were overturned.

In conclusion, this ruling highlights the limits of the restrictions imposed by co-ownership regulations in the context of a tourist residence and reaffirms the rights of co-owners to freely dispose of their property, in accordance with the intended use of the building.

Court of Cassation, 3rd Civil Chamber, October 16, 2025, No. 24-14.303

The Caen Court of Appeal has handed down two rulings on this issue.

Legal analysis: Classification of a hotel establishment and setting the rent in a commercial lease

In its ruling of October 9, 2025 (No. 20/01869), the Caen Court of Appeal handed down an important decision concerning the classification of a hotel establishment and the setting of rent under a commercial lease. This ruling highlights several key points of commercial law and commercial lease law. Here is a detailed analysis of this decision.

Background to the case

The case concerns a commercial lease for two lots located in a hotel residence. The lessors and the lessee disagreed on the classification of the establishment: hotel or tourist residence. This distinction is crucial, as it influences the terms and conditions for setting the rent.

Classification of the establishment: hotel or tourist residence?

The Court of Appeals ruled in favor of classifying it as a hotel. Several factors were taken into account to justify this decision:

1. Declared activity: The Kbis extract for the tenant company mentions hotel activity, which confirms the operator’s intention.
2. Characteristics of the rooms: The rooms have neither a kitchen nor a kitchenette, which makes them unsuitable for the independent stays typical of tourist residences.
3. Absence of specific tax advantages: The lessors did not demonstrate that they benefited from tax advantages specific to investments in a tourist residence.

The establishment is therefore classified as a hotel, not a tourist residence, which has direct implications for the calculation of rent.

Rent setting: traditional hotel method

The Court confirmed that the rent should be set at the rental value, due to the single-purpose nature of the premises. These are therefore exempt from the cap rule. The hotel, rated 4 stars, is located in a seaside resort, close to the beach, which also influences the rental value.

Method of calculating rent

The appointed expert applied the classic hotel method to determine the rent. This method is based on several criteria:

• Rates charged by the operator: Prices vary according to the season and the view offered (view of the port, view of the sea, or no specific view).
• Occupancy rate: Set at 61%, this rate reflects the actual use of the rooms.
• Percentage of revenue: Estimated at 17%, this percentage is applied to the theoretical annual revenue.
• Discount deduction: A discount rate of 15% was taken into account.

Exclusion of breakfast revenue

The Court ruled that breakfast revenue should not be added to the theoretical annual revenue for the calculation of rent. This decision is in line with the traditional hotel method.

Deduction for hotel renovations: denied

The lessee requested a deduction for hotel renovations, but this request was denied. The Court emphasized that the lessee had not complied with the notification requirement set forth in Article L. 311-2 of the Tourism Code. In the absence of this prior notification to the lessors, the allowance could not be granted. ​

Amount of rent set by the Court

At the end of its analysis, the Court set the annual rent at €5,247 for the two lots. ​ This amount includes the maintenance of the rent supplement provided for in the lease, which grants the lessors the right to two short stays during the high season. ​

Conclusion

This ruling by the Caen Court of Appeal illustrates the importance of the legal classification of premises in the context of commercial leases. The distinction between a hotel and a tourist residence can have significant consequences on tax advantages and the terms and conditions for setting rent. In addition, it reminds lessees of the importance of complying with legal obligations, particularly with regard to notification of works, in order to benefit from any tax allowances.

Professionals in the hotel sector and investors must therefore be mindful of these legal aspects in order to avoid disputes and optimize their investments.

The document presents a decision by the Caen Court of Appeal, 2nd Civil Chamber, handed down on October 9, 2025 (No. 20/01872). It concerns a dispute relating to a commercial lease for two lots located in a hotel residence. The classification of the establishment is at the heart of the debate: it is determined that the building must be considered a hotel and not a tourist residence. This conclusion is based on several factors: the Kbis extract of the tenant company mentions a hotel activity, the rooms have neither a kitchen nor a kitchenette, and they do not allow for independent stays as in a tourist residence.

In addition, the lessors did not prove that they benefited from tax advantages specific to investments in tourist residences. The rent is set at the rental value, as the premises are single-purpose and are not subject to the cap rule. The hotel, rated 4 stars, is located in a seaside resort, close to the beach.

The expert used the classic hotel method to determine the rent, based on the rates applied by the operator, which vary according to the season and the view offered (view of the port, view of the sea, or no specific view). Breakfast revenue was not included in the calculation of the theoretical annual revenue. The parameters taken into account include an occupancy rate of 61%, a percentage of revenue of 17%, and a discount rate of 15%.

The lessee is not eligible for a tax deduction for hotel renovations, as he did not inform the lessors of his renovation plans, as required by Article L. 311-2 of the Tourism Code.

Consequently, the annual rent for a room is set at €2,202, with the rent supplement provided for in the lease being maintained, which grants the lessors the right to two short stays during the high season. In summary, the Caen Court of Appeal confirmed that the establishment in question is a hotel and not a tourist residence, which has implications for the setting of the rent.

The amount of rent was determined using the traditional hotel method, without including certain elements such as breakfast revenue or a deduction for unreported work. The annual rent for a room is set at €2,202, with a rent supplement for landlords.

Do not hesitate to contact us to ask us your questions via the contact form at the bottom of the homepage.

Articles L. 321-2 of the Tourism Code and R. 123-193 of the Commercial Code stipulate that the operating account that the operator of a classified tourist residence must keep for each residence and communicate to owners who request it, must only show operating expenses and income and is not to be confused with the income statement, of which it is only one component. In considering that the accounting information provided by the tenant at the landlord’s request was insufficient and ordering her to provide the operating accounts for the tourist residence, subject to a penalty payment, the judgment, after noting that the documents provided included commercial data, fixed expenses, variable expenses, EBITDAR and EBITDA rates, found that they were incomplete in that they did not include financial income and expenses, exceptional income and results, and depreciation and amortisation, and that they did not show the calculation of the result. In so ruling, when financial income and expenses and extraordinary income and results are not items in the operating account but in the income statement, the Court of Appeal violated the above-mentioned text.

Court of Cassation, Commercial, Financial and Economic Chamber,

21/05/2025, No. ECLI:FR:CCASS:2025:CO00282, No. 24-12.695

Obligation to disclose the operating account for tourist residences: clarification from the Court of Cassation (Com., 21 May 2025, No. 24-12.695)

In a ruling dated 21 May 2025, the Commercial Chamber of the Court of Cassation provided important clarification regarding the scope of the obligation incumbent on operators of classified tourist residences when a lessor requests disclosure of the residence’s operating account.

This ruling is particularly useful in disputes between landlords and operators concerning the economic transparency of the operation, particularly during rent renegotiations, proceedings to determine the rental value in court, or in the context of an action to verify the accounts.

1. The legal framework: a mandatory but limited operating account

Article L. 321-2 of the Tourism Code requires the operator of a classified tourist residence to keep a separate operating account for each residence and to disclose it to owners who request it.

Article R. 123-193 of the Commercial Code specifies the definition of accounting documents.

The Court points out that:

➤ The operating account is not the income statement.

It is only one component, limited to operating expenses and income allocated solely to the residence concerned.

These texts therefore do not require the disclosure of exceptional results, financial expenses and income, or depreciation allowances, which fall under the operator’s overall income statement, not the residence.

2. The error of the Court of Appeal: confusion between the operating account and the income statement

In this case, the lessor had obtained documents including:

• commercial data,
• fixed expenses,
• variable expenses,
• EBITDAR and EBITDA rates.

However, the Court of Appeal considered these elements to be insufficient on the grounds that the following were missing:

• financial income and expenses,
• exceptional results,
• depreciation and amortisation,
• and the calculation of the final result.

It therefore ordered, under penalty, the disclosure of new accounts.

The Court of Cassation rejected this reasoning.

👉 The information requested by the Court of Appeal relates to the overall income statement, not the operating account of the residence.

By requiring information that exceeded the legal definition of the operating account, the Court of Appeal violated Articles L. 321-2 and R. 123-193.

3. Practical implications of the ruling for landlords of tourist residences

This ruling confirms that landlords can request disclosure of the operating account, but it also sets limits.

✔ What the operator must disclose:

• the residence’s operating income (rent, accommodation revenue, ancillary services allocated to the residence);
• the operating expenses attributable to the residence (variable expenses, fixed expenses, internal costs allocated to local operations) .

✘ What the lessor cannot require in this context:

• financial expenses and income,
• extraordinary income and expenses,
• depreciation allowances,
• consolidated net income of the operating company.

These items are external to the actual operation of the residence and fall under the operator’s general accounting.

4. A strategic tool for lessors (to be used with precision)

Even when limited to operating data, this account remains a powerful tool for:

• monitoring the proper management of the residence;
• verifying the consistency of rents paid;
• detecting any under-reporting of income;
• supporting a request for a judicial review or determination of the rental value;
• supporting liability action against the operator in the event of mismanagement.

However, it is essential, in requests for disclosure, to refer specifically to the legal concept of an operating account, in order to prevent the operator from hiding behind a restrictive interpretation or a court from considering the request excessive.

5. Conclusion

The ruling of 21 May 2025 provides welcome clarification:

the operator must provide a complete operating account, but this document should not be confused with the income statement or the overall financial statements.

This is an important clarification for landlords, particularly in a context where operators frequently cite ‘operating losses’ to justify rent reductions or refuse revaluations.

For landlords, the strategy becomes twofold:

• demand precisely what the law requires,
• use this data to restore an economic balance that is too often unfavourable.

Do not hesitate to contact us to ask us your questions via the contact form at the bottom of the homepage.

What are the challenges for landlords?

The end of a commercial lease in a tourist residence is often a turning point for owners. When dialogue with the operator becomes complex or a disagreement arises over the terms of renewal, the courts may be called upon to determine the rights of each party. This is precisely the situation encountered at the L’Orée des Cimes tourist residence, located in Vallandry in the Northern Alps, where a judicial appraisal was ordered concerning eviction compensation and occupancy compensation.

This article reviews the issues at stake in this case, the implications for landlords, and the importance of specialized legal support.

1.Context: a British landlord wants to recover his apartment

In this case, a British landlord, who owns an apartment in the 4-star L’Orée des Cimes residence, wants to regain possession of his property at the end of the commercial lease agreement with the operator CGH.

As is often the case in tourist residences, the commercial lease is at the heart of the legal and economic balance: fixed term, regulated rents, maintenance obligations, and, above all, the consequences of the end of the lease.

When the landlord refuses to renew the lease, the status of commercial leases provides that the operator may be entitled to eviction compensation, except in cases where there are legal exceptions.

Conversely, when the operator remains in the premises after the lease has expired, they may be liable for occupancy compensation.

In this context, the court ordered an independent judicial appraisal in order to objectively assess the potential amounts owed by each of the parties.

2. Eviction compensation in tourist residences: a major issue for owners

Eviction compensation is often the most sensitive issue for tourist residence landlords. It is intended to compensate the operator for the loss suffered when the commercial lease is not renewed.

In practice, the amount depends on a number of criteria:

• the value of the business operated by the manager;
• the impact of the loss of business;
• the state of the local real estate market;
• the rental potential of the apartment.

In tourist residences, this compensation may be contested when the operator cannot prove that they have a genuine business, or when the operating conditions do not allow them to establish their own clientele.

This is often the crux of the dispute: can the operator really claim financial loss?

A legal appraisal provides neutral information to help the judge make a decision.

3. Occupancy compensation: a tool to protect the lessor

Conversely, occupancy compensation is intended to compensate the lessor for the operator’s use of the property after the end of the lease.

It represents, in a way, the “rent” owed for this period of unauthorized occupancy.

The amount is not the same as the contractual rent, but rather the actual rental value, which is sometimes significantly higher.

This is a crucial issue for landlords, particularly when the operator extends the occupation in order to continue operating while awaiting a court decision.

In this case, the court-appointed expert will therefore have to:

• determine the rental value of the property,
• assess the monthly amount owed in this respect,
• establish the exact period of occupancy.

These factors will have a direct financial impact on the owner.

4.Why landlords must anticipate the end of leases in tourist residences

The situation in Vallandry illustrates the difficulties faced by many landlords in tourist residences:

the length of commercial leases, unbalanced power relations, vague contractual obligations, and a lack of economic transparency on the part of certain operators.

Anticipating the end of a lease allows you to:

• define a clear legal strategy,
• secure the non-renewal process,
• limit the risk of unjustified eviction compensation,
• regulate the post-lease period,
• prepare for a possible return of the property.

Specialized support also helps identify the most relevant arguments for contesting or limiting eviction compensation, particularly when the operator does not have an independent business—a recurring issue in managed residences.

5.The importance of a lawyer specializing in tourist residences

This case demonstrates the technical nature of this type of litigation.

Commercial lease rules, combined with the specificities of tourist residences, create a complex legal environment where every word of the lease can have significant financial consequences.

A lawyer who is familiar with these issues can:

• structure the lease exit strategy,
• provide support during the pre-litigation phase,
• oversee legal expert assessments,
• defend the lessor’s rights in court,
• and optimize the chances of recovering the apartment under favorable conditions.

Conclusion

The legal expert assessment currently underway at L’Orée des Cimes in Vallandry is emblematic of the resurgence of litigation in tourist residences.

Landlords, whether French or foreign, have powerful rights to regain control of their property and challenge compensation that is sometimes disproportionate.

A proactive strategy, backed by specialized legal expertise, is now essential to secure the lease termination and protect the value of the property.

Do not hesitate to contact us to ask us your questions via the contact form at the bottom of the homepage.

On 30 June 2025, the Paris Court of First Instance issued a judgment concerning rent arrears owed by PV Holding and PV-CP City in respect of the Adagio Paris Tour Eiffel residence, formerly known as Adagio Paris Côté Seine. The plaintiffs are claiming €12,871.91 and €16,679.60 for unpaid rent, with late payment interest calculated at the statutory rate. The periods concerned include payment interruptions from 15 March to 22 June 2020 and from 30 October 2020 to 9 June 2021.

Adagio Paris Tour Eiffel: Unpaid rent during the Covid period

1°) Amounts of unpaid rent

Adagio Paris Tour Eiffel

The amounts owed to the consorts C total €11,274.55, broken down as follows:

• €5,637.28 to Ms N C
• €5,637.55 to Ms V C and Mr C

These sums shall bear interest at the legal rate from 16 April 2021, with capitalisation of interest from the date of the judgment. ​

Adagio Paris Tour Eiffel and Paris Haussmann

The amounts owed to the Bedel family are as follows:

• €28,924.44 for lot 1372-01 (Paris Tour Eiffel residence) ​
• €10,874.68 for lot 1134-01 (Paris Haussmann residence) ​

2°) €16,679.60 in interest at the legal rate from the date of the summons

The judgment orders the tenant company to pay late payment interest:

• Interest at the legal rate from the date of the summons (16 April 2021) on the sum of €16,679.60
• Interest at the legal rate from the date of the judgment for the remainder, with interest capitalised from the date of the judgment.

3°) €1,500 in legal fees for each of the two landlords

The judgment orders the Pierre et Vacances group company to pay a total of €3,000 in legal fees:

‘Orders PV-CP City to pay Ms N C, Ms V C, Mr F C, Mr J B and Ms F B the sum of €1,500 each in accordance with the provisions of Article 700 of the Code of Civil Procedure’.

Obligations of Mr C and Mr B (landlords)

1. Delivery of the rented premises: They must provide the premises in accordance with the lease agreement, allowing them to be used for their intended purpose (holiday residence).
2. Ensure peaceful enjoyment: They must ensure that the tenants can use the premises without disturbance, except in cases of force majeure or administrative restrictions beyond their control.

Obligations of PV-CP City (tenant)

1. Payment of rent: The company must pay the rent due in accordance with the terms of the lease, including interest on arrears in the event of non-payment. ​
2. Use of the premises: It must use the premises in accordance with their contractual purpose (tourist residence). ​
3. Compliance with administrative decisions: In the event of restrictions related to health or other measures, it must comply with them without claiming total exemption from rent, unless there is proof of destruction or partial loss of the premises. ​

Court decisions regarding the respective obligations of the parties

• Consorts C and B have fulfilled their obligations of delivery and peaceful enjoyment.
• The company PV-CP City is required to pay the rent due, without exemption for periods of administrative closure, as these restrictions do not constitute a partial loss of the leased property.

An application in line with the 2022 case law of the Court of Cassation

This judgment applies the now well-established case law on Covid rents established by the Court of Cassation in a series of landmark rulings on 30 June 2022.

It is surprising and regrettable that the companies of the Pierre et Vacances/Adagio group continue to fail to honour their rent payments, despite numerous court rulings on the matter.

We are available to answer your questions and assist you. Please do not hesitate to contact us for further information.

Student residences, like tourist residences, are subject to specific rules regarding commercial leases. When a landlord wishes to resume management of their property or terminate the lease with the operator, they often face significant financial obligations, including the payment of eviction compensation.

Understanding the context of student residences

Student residences are structures where investors purchase accommodation and entrust it to a single operator via a commercial lease. This model offers attractive tax advantages, but it also carries risks, particularly at the end of the lease. Operators of student residences generally offer hotel-like services, such as reception, cleaning and the provision of linen.

The landlord’s obligations at the end of the lease

When the commercial lease expires, the landlord may decide not to renew it. However, this decision generally entails the payment of eviction compensation to the operator. This compensation is intended to compensate the operator for the loss of their business. The amount of this compensation is often equivalent to one or two years’ turnover for the property in question. This calculation takes into account several factors, including the turnover generated by the property and any losses suffered by the operator.

The financial consequences for the landlord

The payment of eviction compensation can represent a considerable financial burden for the landlord. In addition to this compensation, the landlord must also be aware of the tax risks. For example, if the property is no longer operated in accordance with the initial conditions (such as the provision of hotel-related services), the landlord may be required to repay part of the VAT initially recovered.

Steps to be taken

To terminate the lease, the landlord must give notice to the operator by bailiff’s writ at least six months before the expiry of the lease. If the operator disputes the amount of the eviction compensation, an expert assessment may be ordered by the court to assess the loss. During this period, the operator may continue to occupy the premises in return for payment of an occupancy allowance.

Possible alternatives

There are alternatives to direct management by the landlord. For example, co-owners can organise themselves to find a new manager or opt for self-management by setting up a simplified joint-stock company (SAS). This solution allows them to retain the tax benefits while regaining control of the residence.

Conclusion

Eviction compensation is a major financial issue for landlords of student residences. It is crucial to fully understand the legal obligations and financial consequences before making a decision. Consulting a solicitor specialising in commercial tenancy law can help navigate this complex process and minimise risks.

In brief:

Dispossession of the operator SAINT JEAN DE MONTS: The landlords, exasperated by the bad faith of the operator of the Madame Vacances brand ofEurogroup, changed the locks of their villa. This led to significant convictions.

Cancellation of the clause waiving the eviction indemnity

Summary of the ruling of the Poitiers Court of Appeal of 25 February 2025

The dispute in question is between the limited liability company (SARL) [Location 14] and Mr and Mrs [S], concerning a commercial lease for an Emerald-type villa in a holiday residence. Mr and Mrs [S] acquired this villa in 2002 and leased it to the company [Location 14] for a period of nine years, with a clause waiving the eviction compensation in the event of non-renewal of the commercial lease. In 2013, Mr and Mrs [S] notified their intention to terminate the lease without offering to renew it or pay compensation, which led to legal proceedings.

A subsidiary of EUROGROUP trading under the name MADAME VACANCES

SARL SAINT JEAN DE MONTS is a subsidiary of the company EUROGROUP, a tour operator which, for more than 25 years, has been marketing holidays in seaside or mountain residences and hotels, in particular under the name ‘Madame Vacances’.

Court proceedings

The Sables d’Olonne court initially ruled that the waiver clause was valid, dismissing the [Locality 14] company’s claim for eviction compensation. The Poitiers court of appeal then overturned this decision, declaring the clause unwritten and ordering an expert assessment to evaluate the eviction compensation. The Court of Cassation partially overturned this judgement, referring the case back to the Poitiers Court of Appeal.

Analysis of the waiver clause

The court of appeal examined the validity of the clause waiving the eviction indemnity. Although the 2014 Pinel law rendered this type of clause unwritten, the company [Location 14] argued that the nullity of the clause could still be invoked. The court concluded that the clause was null and void, allowing the company to claim an eviction indemnity.

Assessment of the eviction indemnity

The expert assessment valued the eviction indemnity at 54,400 euros, based on the market value and the losses incurred by the company [Location 14]. The court approved this assessment, ordering Mr and Mrs [S] to pay this sum, as well as an additional indemnity for the period of dispossession of the premises.

Landlords pay dearly for changing the locks

Dispossession of the operator of the tourist residence, the company SAINT JEAN DE MONTS

The company [Locality 14] continued to operate the villa until 2016, when Mr and Mrs [S] repossessed the premises. The court ruled that this repossession was illegal and ordered Mr and Mrs [S] to pay compensation of 77,000 euros for the period of dispossession, as well as monthly compensation of 770 euros until the actual payment of the eviction compensation.

Requests from the lessors Mr and Mrs S

Mr and Mrs [S] requested the reimbursement of various sums, in particular repair and maintenance costs. The court declared several of these requests inadmissible, due to their statute-barred nature or their rejection by previous decisions.

Irrecoverable Expenses and Costs

The court ordered Mr and Mrs [S] to pay 10,000 euros to the company [Location 14] for unrecoverable costs at first instance and on appeal, as well as the costs of the proceedings.

Conclusion

The Poitiers Court of Appeal ruled in favour of the company [Locality 14], confirming the invalidity of the clause waiving the eviction compensation and, above all, compensation for dispossession, ordering Mr and Mrs [S] to pay substantial compensation.

Feel free to ask us any questions you might have via the contact form at the bottom of the page.

Defending the rights of landlords against the operator CGH Residences & Spas

Our firm is currently assisting more than 40 landlords in their disputes against CGH Residences & Spas, the operator of numerous tourist residences in the Alps. These disputes highlight crucial issues related to commercial leases, the non-commercial furnished rental property (LMNP) and commercial furnished rental property (LMP) status and compliance with para-hotel classification.

CGH Residences & Spas: a mountain property portfolio, a dispute that is growing

CGH (Compagnie de Gestion Hôtelière) operates around thirty upmarket tourist residences, particularly in Savoie and Haute-Savoie. Among the most iconic:

• Le Kalinda (Tignes), Les Clarines (Les Menuires), Les Cimes Blanches (La Rosière), Les Chalets de Jouvence (Les Carroz), La Reine des Prés (Samoëns), Le Cristal de l’Alpe (Alpe d’Huez)…

Our firm intervenes to ensure that the rights of the owner-landlords are respected.

The specific legal aspects of the commercial lease in tourist residences

The lease signed with CGH is a commercial lease subject to the provisions of the Commercial Code. However, in practice, many abuses appear:

• Clauses of cancellation or non-renewal;
• Failure to comply with operating obligations (inadequate hotel-related services, poor maintenance);

These breaches can result in a loss of rent, damage to the profitability of the property, or even a challenge to the LMNP or LMP tax regime.

Serious consequences for individual investors

The owners concerned are, for the most part, individuals who have invested in furnished tourist accommodation. They are faced with:

• A depreciation of their assets;
• A request to reduce rents to the detriment of lessors;
• An excessive compensation for eviction of three years’ turnover;
• Attempts at unilateral termination by the operator.

In the face of these risks, a clear and collective legal response is essential.

Our strategy: to regroup, negotiate and act

Our firm has implemented a three-step process:

1. Complete legal analysis of each CGH contract;
2. Group negotiation, when an amicable solution is possible;
3. Targeted legal action, particularly in the case of:
   • Unpaid rent;
   • Breach of contract;
   • Termination of lease and refusal to renew commercial lease.

What we offer

We actively assist landlords in CGH residences.

Are you a landlord in a CGH residence?

Are you experiencing problems with the management of your property?

Contact us for a personalised review of your lease.

Our firm acts exclusively in the interests of landlords: expertise in commercial leases, LMNP/LMP taxation, litigation against operators, defence of tourist classification.

How to Terminate a Leaseback Contract in France: Legal Options for Owners

The French leaseback scheme, also known as “résidence avec services,” offers property investors an opportunity to purchase real estate and lease it back to a management company in exchange for guaranteed rental income. This arrangement provides tax advantages and a relatively hands-off investment experience. However, some property owners find themselves wanting to exit their leaseback agreements due to financial difficulties, disputes over maintenance, declining rental returns, or underperformance of the operator.

Unfortunately, terminating a leaseback contract in France is not always straightforward. These contracts are structured to favor the management company, often including restrictive exit conditions. To legally exit a leaseback agreement, property owners must carefully explore their rights and options, which may include proving a breach of contract, negotiating an exit, or pursuing litigation.

This guide examines the legal pathways available for terminating a leaseback contract in France, offering insights into the risks, procedures, and key considerations for owners looking to regain control of their investment.

1. Understanding Leaseback Contracts and Their Challenges

In a leaseback arrangement, the property owner (lessor) signs a commercial lease with a **management company (lessee), which agrees to operate the property as part of a serviced residence for a fixed duration—typically between 9 and 11 years.

Common Challenges Faced by Owners

While the leaseback system promises stable rental returns, owners often encounter unexpected legal and financial challenges that make them reconsider their investment:

Operator financial difficulties: Some management companies experience cash flow problems, leading to delayed or missed rental payments.

Unfavorable lease renewal terms: When the initial lease period ends, operators may offer lower rental payments, leaving owners financially disadvantaged.

Failure to maintain the property: Many leaseback contracts require the operator to handle maintenance, but some neglect upkeep, reducing the property’s long-term value.

Restrictive exit conditions: Owners may find that their contract includes clauses that severely limit early termination options.

Given these risks, understanding the legal avenues for exiting a leaseback contract is essential for owners seeking to protect their financial interests.

2. Termination for Breach of Contract (Faute du Preneur)

One of the most effective legal grounds for terminating a leaseback contract is proving that the operator has failed to meet their contractual obligations. Under French law, breaches of contract (“faute du preneur”) may justify early termination.

Common Breaches of Leaseback Contracts

Non-payment or late payment of rent: If the operator fails to pay rent consistently, this constitutes a serious breach of contract.

Failure to maintain the property: If the contract requires the operator to handle property maintenance and they fail to do so, the owner may have grounds for termination.

Unauthorized subletting or misuse: If the operator rents the property in a manner not allowed by the contract, this could justify early termination.

Procedure for Termination Due to Breach

1. Formal Notice (Mise en Demeure):

The owner must first send a formal notice (mise en demeure) to the operator, outlining the breach and demanding compliance.

This notice should be sent via registered mail with acknowledgment of receipt.

The operator is typically given a specific period (e.g., 30 to 60 days) to correct the issue.

2. Judicial Resolution (Résolution Judiciaire):

If the operator fails to remedy the breach within the given timeframe, the owner can initiate legal proceedings before the commercial court (tribunal de commerce).

The court can order termination of the lease and, in some cases, award financial compensation to the owner.

3. Clause Résolutoire (Automatic Termination Clause):

Some leaseback contracts contain an automatic termination clause, which allows owners to terminate the lease without court intervention if the operator fails to pay rent for a specific period.

While this is a strong basis for termination, legal proceedings can be time-consuming and costly. Owners should seek legal advice before pursuing litigation.

3. Negotiated Exit (Résiliation Amiable)

Another possible approach is to negotiate an amicable termination with the operator. This option is faster and less costly than legal action but depends on the operator’s willingness to cooperate.

Common Negotiation Strategies

Mutual Agreement (Accord Mutuel):

Both parties agree to end the contract early, potentially without financial penalties.

Buyout Option (Indemnité de Résiliation):

The owner offers financial compensation to the operator in exchange for terminating the lease.

Assignment to a New Investor:

Some owners sell their leaseback property to another investor who is willing to continue the lease agreement.

Key Considerations for Negotiation

The operator may demand a financial settlement before agreeing to early termination.

Owners should consult a lawyer specializing in leaseback contracts to negotiate favorable exit terms.

If a new buyer is found, the contract should clearly outline transfer conditions to avoid future legal disputes.

Negotiation is often the best option if the operator is open to discussions. However, if the operator refuses, litigation may be necessary.

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4. Litigation and Legal Challenges

If an owner is unable to terminate the contract through breach of contract claims or negotiation, they may have to pursue litigation.

Legal Actions for Leaseback Contract Termination

Legal Action for Hardship (Imprévision – Article 1195 of the French Civil Code):

If unforeseen economic circumstances significantly impact the financial balance of the contract, the owner can seek judicial revision or termination.

However, courts apply this rule strictly, and owners must provide strong evidence of financial hardship.

Challenging Unfair Contractual Clauses:

Some leaseback contracts contain clauses that excessively favor the operator.

Owners may challenge these clauses under French contract law or consumer protection laws.

Insolvency Proceedings (Redressement Judiciaire):

If the operator is facing financial difficulties, owners can file claims as creditors and, in some cases, seek termination of the contract through judicial proceedings.

While litigation is often a last resort, it may be necessary if the operator refuses to negotiate or breaches contractual obligations.

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5. Conclusion: Choosing the Best Termination Strategy

Exiting a French leaseback contract can be legally complex, but property owners have several options to regain control of their investment:

1. Termination for Breach of Contract: If the operator fails to meet obligations, owners can pursue legal termination through the courts.

2. Negotiation for an Amicable Exit: In many cases, owners can reach a mutual agreement or financial settlement with the operator.

3. Litigation for Contractual or Financial Hardship: If no other solution works, owners may have to pursue legal action in court.

Each case is unique, and owners should consult experienced legal professionals to determine the best exit strategy. While terminating a leaseback contract can be challenging, understanding legal rights and available options allows investors to make informed decisions and protect their financial interests.

Please feel free to ask us any questions.

Adagio Avignon Gare: PV-CP City condemned again

On October 26, 2022, the Nîmes Court of Appeal handed down a ruling confirming the Avignon Magistrates’ Court’s judgment of March 24, 2022 concerning a dispute between the PV-CP City company and several co-owners of the tourist residence located at address 80. PV-CP City, the lessee of the commercial leases, had stopped paying rent from March 2020 due to the Covid-19 pandemic and administrative restrictions. In June 2020, after the restrictions had been lifted, PV-CP City had proposed an amendment to the lessors to partially compensate for the unpaid rents, but only nine landlords had accepted.

Judicial termination of leases and eviction of PV CP CITY

The landlords took PV-CP City to court to obtain judicial termination of the leases, eviction of the company, and payment of unpaid rents and compensation. The Avignon Court of First Instance terminated the leases, ordered PV-CP City’s eviction, and ordered the company to pay unpaid rent, occupancy indemnities and damages for moral prejudice.

PV-CP City appealed, arguing that it was impossible to operate the premises due to sanitary restrictions, and requesting the suspension of rents for the periods concerned. The company also contested the nullity of the “Covid” endorsements on the grounds of fraud, and asked for extended payment terms in view of its financial difficulties.

The Court of Appeal rejected PV-CP City’s arguments, confirming that the sanitary restrictions did not constitute a partial loss of the leased property within the meaning of article 1722 of the French Civil Code, and that the lessors had not breached their obligation to deliver. The Court also rejected the request for payment deadlines, noting that PV-CP City had not justified its financial situation and had already benefited from payment deadlines.

Court confirms judicial termination

The Court confirmed the judicial termination of the leases and the eviction of PV-CP City, as well as the company’s order to pay unpaid rent, occupancy indemnities and damages for moral prejudice. The Court also ordered PV-CP City to pay the costs of the proceedings and an additional sum of 300 euros to each of the lessors under article 700 of the French Code of Civil Procedure.

In conclusion, the Nîmes Court of Appeal upheld the judgment of the Avignon Magistrates’ Court, rejecting PV-CP City ‘s arguments and ordering termination of the commercial leases, eviction of the company, and payment of the sums due to the lessors.

CA Nîmes, 26-10-2022 n° 22/01266 Confirmation

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