1 July 2016 bruno

Selling a commercial lease in France

Selling a Commercial Lease in France

You own a French leaseback property ?

Under French law, if the tenant is selling his commercial lease, he has to notify the lessor and ask for the approval of the new tenant. But, the lessor needs a legal justification according to the case law.

In the field of French leaseback property, there are numerous such disputes wich result in a trial. We can help avoid this situation, wich could be costly and time-consuming.

Clause for Approval of the Commercial Lease Buyer

Following the approval clause, the transfer of the commercial lease to the buyer is submitted to the lessor for prior approval. However, the lessor cannot reject the new tenant without a strong reason. The case law is more in the tenant’s favor.

Tacit approval of the commercial lease buyer by the lessor

If the tenant has not carried out the approval formality according to the terms of the commercial lease, he may try to prove that the lessor has accepted tacitly and unequivocally the transfer of the lease (Cass. Com. 4.1.1965). We can advice you on the best legal protection against this occurence.

Examples of insufficient evidence of the unequivocal approval of the lessor

We cannot prove that the buyer has been unequivocally accepted by the lessor even with:

  • evidence that the lessor has received money from the buyer (Cass civ 3, 29/4/1969),
  • an offer to reach a settlement agreement which has come to nothing.

Evidence of the unequivocal approval of the lessor of a French leaseback property

We can establish that the lessor has given his unequivocal approval with:

  • the authorisation given to the buyer to have the gas company install gas fittings

Legality of the clause requiring the express and written authorization for any commercial lease transfer

The clause requiring express and written authorization for any lease transfer is legal. Nevertheless, if the lessor does not give his authorization without legal ground, the tenant can take legal action to obtain the authorization to sell the commercial lease.

Grounds for rejecting the agreement which are accepted by the court

The court recognizes the following reasons:

  • well-known insolvency of the buyer,
  • the activity of the buyer is incompatible with the commercial lease and requires the approval of the lessor in an additional clause which the lessor refuses to give,
  • the transfer of the lease without the business, when the commercial lease makes the transfer of the business mandatory.

What if the lessor refuses to approve the buyer?

A lawyer may ask the lessor – in a letter of formal notice – to clarify his reasons for refusing to approve the potential buyer of the commercial lease of the French leaseback property.

If the lessor persistently refuses to give his approval, a lawyer should be commissioned to initiate legal proceedings before the ‘juge des référés’ (Urgent Applications Judge).

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