Tenants obligations at the end of a French commercial lease
Please note that the information herein is of a general nature and you should not act or refrain from acting on it without professional advice on the specific facts of your case. No liability is accepted by the author or Sykes Anderson Perry Limited in respect of this article. French commercial property law is a complex subject and the above is a basic outline only and is intended only as a general guide. Nothing herein constitutes financial advice.
Tenants signing a commercial lease often do not think through their liabilities at the end of the lease. This article sets out the end of lease liabilities of a tenant taking a commercial lease in France.
The tenant is obliged to vacate the premises as well as any ancillary premises such as a garage or storeroom. This means the premises must be completely empty by the last day of the lease with no one in occupation. All stock and belongings of the tenant must be removed. If this is not done the tenant must pay the landlord an indemnité d’occupation.
It is essential that the keys are returned by the tenant to the landlord either at his home or at his registered office. It does not matter that the landlord refuses to accept the keys provided they have been duly presented to him. It is possible to amend this by agreement with the landlord in say the lease.
As in English leases dilapidations can be a big liability for tenants and are often overlooked at the beginning of the lease. Since 20 June 2014 it has been compulsory to obtain a Schedule of Conditions état des lieux when entering into a lease. The état des lieux is evidential only and other evidence of the condition of the premises can be produced.
Article 1730 of the Civil Code requires the tenant to return the premises at the end of the lease in the state he received it normal wear and tear and Act of God excepted. It is possible to change this contractually in the lease. This should be carefully considered by the tenant at the outset.
A tenant who does not do the dilapidations is contractually liable to the landlord for the cost of the repairs. However the landlord must always show he has suffered a loss which will generally be the case. If however the landlord immediately relets to a new tenant who completely refits the premises at no loss to the landlord the landlord cannot claim dilapidations.
If the tenant has improved the premises then in the absence of any contractual provisions in the lease Article 555 of the Civil Code applies. If the landlord simply authorised the tenant’s works and said nothing else, Article 555 will apply. The landlord then has the free choice whether to keep the improvements or require the tenant to remove them. He has to inform the tenant before the end of the lease.
If the landlord decides to keep the improvements he must pay the tenant either a sum equal to the increase in value of the property as a result of the improvements or the costs of the works at the date the landlord pays the tenant.
Rent deposit – dépôt de garantie
The rent deposit cannot be used to pay the last few months’ rent. It can only be repaid after the tenant has vacated the premises. There is no legal time limit for repaying the deposit and a clause should be put in the rent deposit agreement. This document should be checked carefully.
Businesses negotiating commercial leases in France should take great care and try to ensure all eventualities are covered in the lease agreement. They should avoid being pushed into signing commercial leases on the basis that the default provisions in the Civil Code are adequate protection.
Sykes Anderson Perry can advise comprehensively on French commercial leases and rent deposit agreements. You will deal with English solicitors in London and be advised entirely in English with all advice confirmed in writing.
Solicitor-Advocate and Chartered Tax Adviser