Article L145-17 of the French Commercial Code sets out the conditions under which a lessor may refuse to renew a commercial lease without being obliged to pay eviction compensation to the lessee.
I. Refusal to renew without compensation
The lessor may refuse to renew the lease without having to pay compensation in two cases:
1. Serious and legitimate reason :
The reason given must relate to :
– Non-performance of an obligation by the tenant, or
– Cessation of operation of the business without a serious and legitimate reason.
The one-month period following formal notice from the lessor
The lessor can only invoke this ground if the lessee’s infringement has continued or been renewed for more than one month after formal notice to remedy it. This formal notice must meet certain conditions:
– It must be issued by extrajudicial act, meaning a bailiff.
– It must specify the reason given.
– It must reproduce the terms of the corresponding paragraph.
2. Insalubrity or danger :
The lessor may also refuse renewal without compensation if the building must be totally or partially demolished due to its insalubrious state, as recognized by the administrative authority, or if it can no longer be occupied without danger due to its condition.
II. Tenant’s right of priority
In the event of reconstruction of the building by the owner or his successor, and if the new building includes commercial premises, the tenant has a priority right to rent in the reconstructed building.
This priority right is subject to the conditions set out in articles L. 145-19 and L. 145-20 of the French Commercial Code.
III. Practical observations
Formal notice :
The formal notice is a key step in enabling the lessor to invoke a serious and legitimate reason. If this formality is not respected, the reason invoked could be declared null and void.
Priority right :
The tenant’s right of priority in the event of reconstruction protects the outgoing tenant, by giving him or her the opportunity to return to the premises.
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