Who has to pay the eviction indemnity ?

A) The debtor of eviction damages

The debtor of the eviction indemnity is the party who issued the notice without an offer of renewal. Thus, in the event of sale of the building after the notice has been given, the debtor of the indemnity is the former owner (Cass. 3e civ., April 5, 2011, n° 10-18.241 : JurisData n° 2011-018848; 2011). Unless otherwise agreed in the deed of sale (Cass. 3e civ., Nov. 29, 2005, n° 04-17.723 – Cass. 3e civ., March 5, 2008, n° 06-19.237). In the event of dismemberment of ownership, the owner’s purchaser, upon renewal of the commercial lease, is not necessarily jointly and severally liable with the usufructuary skeleton of the eviction indemnity debtor (Cass. 3e civ., 16 déc. 2019, n° 18-26.182).

B The creditor of the eviction indemnity

The creditor of the eviction indemnity is the lessee or assignee who has acquired the business subsequent to the notice of termination, as the transfer of the business entails the transfer of the eviction indemnity due to the transferor and of the right of the latter to remain on the premises under article L. 145-28 of the French Commercial Code (Cass. 3e civ., April 6, 2005, no. 01-12.719).

C Payment of eviction compensation, a prerequisite for restitution of the premises

The law provides protection for the lessee right up to the last stage of the parties’ relationship. They provide for a protective chronology, authorizing the lessee to hand over the keys to the lessor after payment of the eviction indemnity.

D Payment to the lessee or an escrow

Payment may be made to the evicted lessee or to an escrow. Although payment into the hands of the lessee is the simplest option, it is rare in practice, since guarantees in the hands of the receiver will provide the lessor with guarantees when it comes to obtaining restitution of the premises, which payment into the hands of the lessee does not offer.

Appointment of an escrow account

The escrow may be appointed by mutual agreement of the parties or by a judge.

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