The decision of the Grenoble Court of Appeal, Commercial Division, dated November 23, 2023, concerns a dispute between SARL Grange d’Arvieux Résidence and the co-owners of a tourist residence. The dispute concerns the termination of the leases and the refusal to renew the commercial leases, notably due to rent arrears over several years.
A subsidiary of Mona Lisa
The residence, initially operated by Transmontagne Résidences, was taken over in 2007 by a subsidiary of Mona Lisa. The leases included a fixed rent supplemented by a variable portion calculated on the basis of sales generated by the operation of the units. In 2015, the lessors demanded payment of unpaid rent for the years 2007 to 2014 and refused to renew the leases, citing these arrears. The lessee then went to court to contest these formal notices and request renewal of the leases.
Leases terminated ipso jure
In May 2021, the Gap judicial court ruled that the leases had been terminated by operation of law with effect from January 25, 2016, due to the operating company’s breaches. The court ordered theeviction of the company and ordered it to pay the rents owed to the co-owners, as well as an occupancy indemnity for the period following termination of the leases. The company appealed against this decision.
The operator claims that the notices of termination are null and void
Grange d’Arvieux is contesting the lower court’s decisions, arguing that the landlords’ notices of termination were issued in bad faith to avoid paying an eviction indemnity.
It also contends that some of the rent arrears claimed are time-barred. She also contests the payment orders and argues that the resolutory clause has been invoked in an abusive manner.
She is asking the court to declare the dismissals issued null and void, to renew the leases under the same initial conditions or, failing that, to appoint an expert to determine the rental value of the property in order to set the rents for the renewed leases.
Landlords seek confirmation of termination
The co-owners claim that the operating company has failed to meet its obligations, particularly with regard to the payment of rent and the provision of compliant insurance certificates.
They are seeking confirmation of the termination of the leases and payment of the rent arrears, plus statutory interest.
Confirmation of the termination of the leases
The Court of Appeal ruled in favor of the landlords, except in the case of certain overdue rents, which were deemed time-barred for this reason:
“Overturns the judgement insofar as it states that there is no reason to impose a penalty in the present situation’;
Confirms the other provisions of the judgment submitted to the court;
ruling again;
Declares the voluntary intervention of [YU] [EC] admissible’;
attaches a daily penalty of 100 euros to the obligation imposed on [Address 121] to vacate the premises, in the event of failure to vacate the leased premises within two months of notification of the present judgment’;
Limits the duration of this astreinte to three months’;
adding thereto’;
Declares the lessors’ claims for payment of rent accrued prior to September 13, 2011 to be time-barred;
Orders the company [Adresse 121] to pay each of the respondent lessors the sum of 500 euros pursuant to article 700 of the French Code of Civil Procedure, as well as the costs of serving the summonses and refusals to renew, with distraction in favor of Maître Botrel, a lawyer at the Gap bar;
Condemn the company [Address 121] to pay Gan Assurances the sum of 3,000 euros pursuant to article 700 of the French Code of Civil Procedure and the costs’;”.
Conclusion
This ruling illustrates the difficulties frequently encountered in the management of commercial leases for tourist residences, in particular the issues linked to resolutory clauses and the reciprocal obligations of the parties. The Court’s final decision will have a significant impact on how operators of tourist residences negotiate and execute their contractual commitments to co-owners.
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