Total eviction compensation of €15,549
Nexity Studea the tenant operating the student residence in the parisian suburb Clichy was asking for eviction damages after the refusal of the renewal of the lease by the owner. This claim is based on on French code of commerce, even if the owner was never informed in the contract.
The first step is to ask the court to appoint an expert to calculate the evictions costs for the owner. After the expertal report, it is often possible to reach an agreement with the tenant.
Concerning an apartment in the Nexity Studea Clichy residence, the court apointed expert’s report proposes the following amounts for eviction compensation and ancillary compensation:
“The main compensation is set at €12,673 (twelve thousand six hundred and seventy-three euros).
The ancillary compensation is set at €2,878 (two thousand eight hundred and seventy-eight euros)
For a total of €15,549 (Fifteen thousand five hundred and forty-nine euros)”.
Nexity Studea’s qualification as a student residence
The residence is a student residence and not a service or tourist residence, as Nexity Studea claims.
A student residence has very few fixed costs, and is more akin to a property management business than a hotel. Leases are annual, and very few staff are dedicated to the residence, and almost none are full-time. Nexity employees work on several residences at the same time.
The operator’s name is Nexity Studea, studea referring to the English verb “to study”.
Nexity Studea operates a student residence, which it is expected to rent to students.
This qualification is important, hence Nexity‘s attempt to pass off a student residence as a tourist residence.
Jurisprudence/Case Law has established the methods and prejudices to be ruled out in matters of eviction compensation for a student residence, and still qualifies Nexity Studea residences as student residences.
The turnover method in student residences like Nexity Studea
Following the case law, the expert applies the turnover method, but at coefficients much lower than the coefficient 4 requested by NEXITY, which applies to hotels and not student residences.
The Versailles Court of Appeal upheld the judgment of the Nanterre Court, which applied a coefficient of 1.75 to average annual sales in NEXITY STUDEA student residences:
“The commercial lease covers an apartment and a parking lot in a student residence with 110 lots. The sales method should be applied, as for a property manager, with a coefficient of 1.75 applied to average annual sales.
(Versailles Court of Appeal, 12th Chamber, May 29, 2018, 17/02845, JurisData number: 2018-009760, summary)
The Versailles Court of Appeal has upheld the judgment of the Nanterre Regional Court, which applies a coefficient of 2 to average annual sales over three years, before applying the median with EBITDA, in the NEXITY STUDEA student residence in Issy-Les-Moulineaux :
“Calculating the capitalization by the average sales over the same three years of the three disputed lots, the expert concluded to an average sales excluding VAT of 7,823 euros, to which he assigned a coefficient of 2,
In view of the specific nature of serviced residences and the lack of precedent enabling a method of proven relevance to be adopted, the median retained by the expert between restated EBITDA and average sales will be validated by the court.
(CA Versailles, 20-06-2017, n° 12/05809)
The Paris Court of Appeal confirmed the experts’ choice of a coefficient of 1.75 for average annual sales in student residences: “Concerning the valuation of the main eviction indemnity, the method used for furnished hotels is not appropriate. In a student residence, the majority of sales are generated by rents, the payroll is very small and the studios are rented to students on a year-round basis. The average of two methods should be used, as was done by the legal experts: the sales method, assessed as for a property manager, with the application of a coefficient of 1.75 to average annual sales”.
Paris Court of Appeal, Pôle 5, Chamber 3, May 2, 2018, No. 16/04691, JurisData number: 2018-007308
On the same date, the Paris Court of Appeal issued another ruling along the same lines.
(Cour d’appel de Paris, Pôle 5, chambre 3, 2 mai 2018, 16/10156, numéro JurisData : 2018-007141)
In this case, the location of the student residence Nexity Studea in Clichy-la-Garenne cannot lead to a coefficient of average sales higher than 1.75.
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