Property tax and determination of rental value

Rents for renewed or revised leases must correspond to rental value

Article L145-33 of the French Commercial Code:

“ The amount of rent for renewed or revised leases must correspond to the rental value.

Failing agreement, this value is determined on the basis of :

1 The characteristics of the premises in question

2 The purpose of the premises;

3 The respective obligations of the parties;

4 Local commercial factors;

5 Current prices in the vicinity “.

The lessee complains that the rent was set without taking into account the obligations of the parties.

Property tax payable by the tenant

The lessee criticized the judgment in the following terms:

“Besson chaussures complains that the ruling set the capped rent for the renewed lease at the rental value, whereas ”in the absence of an agreement between the parties, the rent for the renewed lease must correspond to the rental value determined, in particular, with regard to the respective obligations of the parties; the obligations normally incumbent on the lessor, which the latter has discharged onto the lessee, constitute a factor reducing the rental value ; in order to determine the rental value and declare that it corresponds to the capped rent of the renewed lease, the court of appeal refused to apply an abatement in consideration of the burden of property tax on the lessee, on the grounds, proper and adopted, that the terms of comparison retained by the expert correspond to leases with property tax payable by the lessee, and that this transfer of charges was commonly practised in the sector ; in so ruling when, unless expressly provided otherwise, the payment of property tax is the responsibility of the lessor, and the obligations normally incumbent on the lessor, which the latter has discharged from the lessee, constitute a factor reducing the rental value, the court of appeal violated articles L. 145-33 and R. 145-8 of the French Commercial Code.

The Court’s response

Visa des articles L. 145-33 et R. 145-8 du code de commerce

The Court of Cassation states:

In view of articles L. 145-33 and R. 145-8 of the French Commercial Code:

4. According to the first of these texts, in the absence of agreement between the parties, the amount of the rent for the renewed lease must correspond to the rental value determined, in particular, with regard to the respective obligations of the parties.

5. According to the second, obligations normally incumbent on the lessor, which the lessor has discharged to the lessee, constitute a factor in reducing the rental value.

6. In order to set the rent for the renewed lease at a certain amount, excluding taxes and charges, the judgment holds, on its own and adopted grounds, that, according to the expert, the fact that the lessee has undertaken to pay property taxes does not justify a reduction for exorbitant charges, since, on the one hand, this transfer of charges is common practice in the sector and, on the other hand, the terms of comparison used by the expert correspond to leases where the lessee is responsible for property taxes. 7. In so ruling, the Court of Appeal violated the aforementioned texts, whereas, unless expressly provided otherwise, the payment of property tax is the responsibility of the lessor, and the obligations normally incumbent on the lessor, which the latter has discharged onto the lessee, constitute a factor reducing the rental value.

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