My French leaseback contract is over. What is happening now ?

After the end date of my commercial lease: does renewal impose new terms, or can current lease continue?

Legal status after the expiry date of my commercial lease

After the lease expiry (the “term”), the commercial lease continues by tacit holding over, meaning the parties’ relationship remains governed by the existing contractual terms without any action required from either side, until one party serves notice or formally requests renewal through a bailiff.

Once the end date of the lease has passed (“the term”), the old commercial lease continues to produce its tacit effects, so that relations between the parties continue to be organized.

The effect is said to be “tacit”, because no positive act or diligence is required of either party.

The tacit effect is the situation in which neither party has done anything and the content of the former contract still applies, until one party gives notice or notifies a formal renewal request by a bailiff.

No time limit

There is no time limit to this legal status, which isn’t legally an arrangement or an agreement.

My French Leaseback Contract Has Expired — What Happens Next?

For many investors in tourist residences and serviced accommodation, the expiry date of a French commercial lease often raises immediate concerns: does the lease end automatically, do new terms apply, or does the existing arrangement continue? Understanding the legal position after the contractual term is essential to anticipate your rights, obligations, and strategic options.

Either the owner or the tenant (called lessee in commercial lease law) may terminate the lease at any time, subject to the contractual notice period of 6 months and by the last day of the calendar quarter. The notice period is extended, since the 6 months only run from the end of the current quarter. This can add up to 2.9 months to the 6-month notice period. 

Nevertheless, the premises will only be vacated by the tenant once the eviction indemnity has been paid.

The End Date Does Not Mean Immediate Termination

Under French commercial lease law, the expiry of the contractual term does not automatically bring the lease relationship to an end. Instead, the lease continues through what is known as tacit holding over (“tacite prolongation” or continuation by operation of law).

This means that once the term has passed, the former lease continues to produce legal effects, and the relationship between the owner (bailleur) and the operator (tenant) remains governed by the existing contractual framework. The rent continues to be payable, the allocation of charges remains unchanged, and the operator continues to occupy and operate under the same conditions.

Why Is It Called “Tacit”?

The continuation is described as “tacit” because it occurs automatically, without any positive action required from either party. Neither the owner nor the operator needs to sign a new agreement or send any formal notice for the lease to continue in this way.

In practice, this situation arises simply because both parties continue their relationship without taking steps to terminate or formally renew the lease. The content of the former contract therefore remains applicable by default.

How Long Does Tacit Holding Over Last?

The lease will continue under tacit holding over until one of the parties decides to act. This typically happens in one of the following ways:

• The landlord serves notice (for example, notice of termination or refusal of renewal);
• The tenant requests renewal of the lease;
• The parties enter into negotiations and sign a new lease or amendment;
• Formal proceedings are initiated to determine the terms of renewal or exit.

In France, formal notices relating to commercial leases are usually served through a bailiff (commissaire de justice), ensuring legal certainty and clear timelines.

Does Renewal Automatically Impose New Terms?

No. The mere fact that the contractual term has expired does not mean that new conditions automatically apply. New terms only come into effect if a renewal is formally agreed or determined through the statutory renewal process.

Until then, the existing lease continues to govern the relationship. This is a crucial point for investors who may see communications from operators referring to “renewal offers” or proposing revised economic conditions: such proposals do not replace the existing lease unless properly accepted or legally implemented.

Why This Matters for Leaseback Investors

In leaseback schemes — particularly in tourist residences — the period following lease expiry is often a strategic moment. Owners may need to assess whether to accept a renewal proposal, negotiate improved terms, recover possession of the property, or consider the financial implications of eviction or occupancy indemnities.

Understanding that the lease continues by default provides valuable time to analyse the situation and make informed decisions rather than reacting under perceived urgency.

Takeaway

If your French leaseback contract has reached its end date, the legal relationship does not simply stop. The lease continues by tacit holding over, preserving the existing terms until formal steps are taken. Knowing this framework is key to protecting your position and approaching discussions with clarity and confidence.

Feel free to ask me any question via the contact form at the bottom of the homepage.