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Leaseback accommodation: the Court of Cassation confirms that the three-year non-termination clause does not apply to renewed leases

A landmark ruling for holiday accommodation

In a judgment published in the Bulletin on 7 September 2023, the Third Civil Chamber of the Court of Cassation provided a key clarification regarding the rules governing commercial leases for holiday accommodation. The High Court ruled that the three-year prohibition on termination provided for in Article L. 145-7-1 of the Commercial Code does not apply to renewed leases.

This decision is of direct interest to owners of holiday residences as well as operators such as Pierre & Vacances, Adagio, Belambra and Appart’City, whose contractual relationships are frequently based on long-term commercial leases.

The facts: a notice of termination issued by Pierre & Vacances

The case concerned a couple of landlords who had let a property located in a holiday residence to the company Pierre & Vacances Maeva Tourisme Exploitation, whose rights were subsequently acquired by PV Résidences & Resorts France, which later became PV Holding.

The lease in question was not an initial lease but a renewed lease signed on 21 September 2010 for a term of eleven years.

On 24 March 2015, the operator served a notice of termination taking effect at the end of the second three-year period. The landlords contested this notice, arguing that Article L. 145-7-1 of the Commercial Code prohibited any three-year termination in holiday residences. They then sought the annulment of the notice of termination and payment of rent until the contractual end of the lease.

After their appeal was dismissed by the Paris Court of Appeal, the owners lodged an appeal to the Court of Cassation.

The legal question put to the Court of Cassation

The dispute concerned the interpretation of Article L. 145-7-1 of the Commercial Code.

This provision, introduced by the Act of 22 July 2009, stipulates that commercial leases entered into between landlords and operators of classified tourist residences must have a minimum term of nine years “without the possibility of termination at the end of a three-year period”.

The landlords argued that this prohibition applied to both initial leases and renewed leases. In their view, the provision made no distinction between these two categories of contracts and should therefore be applied generally.

Conversely, PV Holding argued that this derogatory rule applied only to initial leases and that renewed leases remained subject to the general law regime provided for in Article L. 145-12 of the Commercial Code.

The reasoning of the Court of Cassation

The Court begins by noting that Article L. 145-7-1 constitutes a derogation from the principle laid down by Article L. 145-4 of the Commercial Code, which normally grants the tenant the right to terminate the lease at the end of each three-year period.

It then notes that the legislature introduced this exception in order to guarantee the economic stability of tourist accommodation during the initial period of operation. Parliamentary proceedings demonstrate that the objective was to ensure the continuity of tourist operations for an initial minimum period of nine years.

The Court then examines the specific regime governing renewed leases. It points out that Article L. 145-12 of the Commercial Code provides that, unless otherwise agreed, a renewed lease is concluded for nine years and remains subject to the provisions of Article L. 145-4 relating to three-yearly termination.

Consequently, in the absence of any express provision extending the prohibition on termination to renewed leases, the Court considers that the mechanism of Article L. 145-7-1 ceases to apply after the first renewal.

Validation of the notice of termination served by the operator

Applying this reasoning to the present case, the Court finds that the disputed contract did indeed constitute a renewed lease.

It therefore upholds the Court of Appeal’s finding that the operator regained the right to terminate the lease at the end of a three-year period in accordance with the general law on commercial leases. The notice of termination issued by Pierre & Vacances was therefore deemed perfectly valid.

The landlords’ claims for payment of rent until the contractual end of the lease are consequently dismissed.

The issue of compensation for continued occupation

The owners also argued that the operator remained liable for sums due after the effective date of the notice of termination.

The Court of Cassation points out, however, that after the end of the lease, the occupant is no longer liable for rent but, where applicable, for compensation for continued occupation. Yet the landlords had only claimed payment of rent and had not made a separate claim for compensation for continued occupation.

The Court of Appeal was therefore not required to substitute one claim for another of its own motion. The Court of Cassation also upheld this reasoning.

Practical implications of the judgment

This judgment now constitutes a landmark decision regarding tourist residences. The Court of Cassation clearly states that the protection provided by Article L. 145-7-1 of the Commercial Code applies solely to the initial term of the lease and does not survive renewal.

For landlords, the consequence is significant: unless otherwise provided for in the contract, an operator holding a renewed lease regains the right to terminate the lease every three years, as provided for in Article L. 145-4 of the Commercial Code. This solution opens up more possibilities for operators wishing to reorganise their rental portfolio and reduces the contractual stability previously enjoyed by landlords following the renewal of the lease.

CGH holiday residence ‘Les Cimes Blanches’: eviction compensation set at €42,373 following refusal to renew the lease.

A new eviction dispute at a CGH holiday residence

In a judgment of 22 May 2026, the Albertville District Court set the eviction compensation payable by the owners to Compagnie de Gestion Hôtelière (CGH) following a refusal to renew a commercial lease for a flat located in the ‘Les Cimes Blanches’ holiday residence in La Rosière. This decision is of particular interest in that it details the methods for assessing the loss suffered by a tourist residence operator in the event of a partial loss of its business assets.

The dispute concerned an apartment, a cellar and a parking space let under a commercial lease to CGH from 28 June 2007 for a term of eleven years. In 2015, the properties were acquired by new owners who, on 22 December 2017, served notice of termination with a refusal to renew but with an offer to pay compensation for eviction.

As no agreement could be reached on the amount of this compensation, CGH brought the matter before the court to have the loss assessed by the court. A judicial expert’s report was ordered before the court made a final ruling on the assessment of the compensation.

The principle of the right to eviction compensation was no longer in dispute

The question of the very right to compensation had already been settled by a previous judgment handed down on 5 March 2023.

The court had then rejected the landlords’ arguments that CGH should be denied any compensation due to alleged breaches of its contractual obligations. As this issue had been definitively settled, the debate centred solely on the amount of compensation due to the operator.

CGH claimed compensation of €48,162, arguing that the refusal to renew the lease had resulted in a significant financial loss. The landlords, on the other hand, considered that the compensation should not exceed €32,900.

A partial loss of the business, not a total loss

The court began by reiterating the principles of Article L.145-14 of the Commercial Code. Eviction compensation is intended to remedy the loss resulting from the failure to renew the lease and primarily comprises the market value of the business lost by the evicted tenant.

The judges noted that CGH operated a four-star tourist residence comprising 152 apartments. The refusal to renew the lease concerned only one apartment, a cellar and a parking space. The company therefore continued to operate the rest of the residence.

The loss therefore did not correspond to the total loss of the business but to a partial loss thereof. The compensation should therefore be calculated as replacement compensation corresponding to the fraction of the business lost by the operator.

Rejection of several valuation methods proposed by the expert

The court-appointed expert had examined several valuation methods.

The court first rejected the method inspired by a judgment of the Paris Court of Appeal, which involved applying a coefficient to the residence’s gross margin and then applying a rent ratio to the result. The judges considered that this method mixed data relating to the entire residence with data specific to the disputed unit and did not allow for a correct assessment of CGH’s actual loss.

They also rejected the method based on amicable settlements observed in other cases, due to a lack of objective evidence to verify its relevance.

The so-called ‘rent multiples’ method was also rejected. According to the court, this approach is based on the landlord’s income, whereas the eviction compensation is intended to compensate the tenant for their loss. According to the judges, no direct economic link justifies calculating the value of the lost business based on the amount of rent paid to the landlord.

The methods selected: turnover and gross operating surplus

The court ultimately favoured the two methods traditionally used in the valuation of business assets: the turnover method and the gross operating surplus (GOS) method.

With regard to turnover, the expert had used an average of €18,706 excluding VAT, calculated over the financial years 2018, 2019, 2022 and 2023, with the years 2020 and 2021 excluded due to the exceptional disruptions caused by Covid-19. After applying a coefficient of 1.5, the resulting value amounted to €28,059.

Regarding EBITDA, the loss of earnings suffered by CGH had been assessed at €12,597. By applying a multiple of 4.5, the court arrived at a value of €56,687.

Eviction compensation set at €42,373

To arrive at a balanced assessment, the court decided to use the arithmetic mean of the results derived from the two methods deemed relevant.

This average led to the eviction compensation being set at €42,373, a sum to be borne by the owners.

The court, however, refused to award any additional compensation, as CGH had failed to demonstrate any specific relocation costs, any separate commercial disruption, or any other additional loss. Each party bore its own costs and no compensation was awarded under Article 700 of the Code of Civil Procedure.

Scope of the decision

This decision is of particular interest in disputes concerning holiday residences. The Albertville court confirms that the loss of a single flat within an operating residence constitutes a partial loss of the business, giving rise to a right to compensation. Above all, it favours an economic approach based on the turnover and EBITDA specific to the unit in question, whilst rejecting methods based on rent paid to owners or on insufficiently documented transactional practices. This reasoning thus provides a particularly useful framework for analysing future eviction compensation disputes involving operators of tourist residences.

Adagio Residence: Nanterre District Court upholds the decision not to renew the lease without compensation for eviction due to unpaid rent.

Another ruling against Adagio in post-Covid litigation

In a judgment dated 26 May 2026, the Nanterre Commercial Court dismissed the claim for compensation for eviction brought by Adagio following the refusal to renew several commercial leases for apartments located in a holiday residence operated by the company. This ruling illustrates the courts’ increasingly strict stance towards operators who suspended or delayed rent payments during the health crisis.

The dispute concerned several units located in a residence operated by Adagio and previously let to Icade Résidences Services, whose rights are now held by Adagio. The commercial leases had been entered into in 2009 for a term of nine years.

Following significant payment delays from 2020 onwards, several landlords served notices of termination with refusal of renewal without offering compensation for eviction, considering that the tenant’s breaches constituted serious and legitimate grounds within the meaning of Article L.145-17 of the Commercial Code.

Terminations motivated by unpaid rent arising during the health crisis

The landlords accused Adagio of having ceased to pay rent regularly from the first quarter of 2020 onwards.

According to them, the delays had persisted over several financial years despite reminders and formal notices sent to the operator. They argued that these arrears had continued even though no legal provision had suspended the obligation to pay commercial rent during the pandemic.

A formal notice by extrajudicial document was served on 7 July 2021. This notice reproduced the provisions of Article L.145-17 of the Commercial Code and invited Adagio to rectify its situation within the statutory period of one month. As the rent had not been paid in full within this period, the landlords subsequently served notices of termination with refusal of renewal, without compensation for eviction, taking effect on 31 March 2022.

Adagio cited the health crisis and the lack of seriousness of the breaches

In challenging the notices of termination, Adagio argued primarily that the landlords had not demonstrated any serious and legitimate grounds justifying the denial of eviction compensation.

The operator argued that the payment difficulties stemmed from the exceptional consequences of the Covid-19 pandemic, as administrative closures and travel restrictions had severely affected the operations of holiday residences.

The company also cited the initiation of conciliation proceedings aimed at reorganising its relations with the landlords and seeking negotiated solutions. In its view, this approach demonstrated its good faith and ruled out any wrongful conduct.

Adagio finally emphasised that the arrears had subsequently been settled. It considered that the payment delays were therefore not sufficiently serious to justify a refusal to renew the lease without compensation.

Consequently, it sought recognition of its right to eviction compensation and to remain in the premises until such compensation was paid, on the basis of Article L.145-28 of the Commercial Code.

The court upheld the validity of the procedure initiated by the landlord

The court began by examining the formal requirements set out in Article L.145-17 of the Commercial Code.

The judges noted that the prior formal notice had indeed been served by extrajudicial document, that it specified the alleged breaches and set out the applicable legal provisions. They also noted that it had remained without effect for more than a month.

The court then observed that the notices of termination had been served in accordance with the statutory six-month period, that they clearly set out the grounds invoked and reminded the tenant of the two-year period available to them to contest them or claim compensation for eviction.

The judges thus concluded that the procedure initiated by the landlord was entirely in order.

Non-payment constitutes a serious and legitimate ground for refusing renewal

On the merits of the case, the court took a particularly firm stance.

It noted that repeated failure to pay rent constitutes a breach of a fundamental obligation under the commercial lease. The judges considered it established that Adagio had repeatedly and persistently failed to meet its payment obligations during the 2020 and 2021 financial years.

The court expressly rejects arguments based on the health crisis. It points out that the exceptional measures adopted during the pandemic never suspended the payment of commercial rent nor authorised its unilateral waiver.

The judges also emphasise that the initiation of conciliation proceedings had no suspensive effect on the performance of the contractual obligations arising from the lease. Adagio therefore remained obliged to pay the rent on the scheduled due dates.

Finally, the court reiterates a fundamental principle: the seriousness of the breaches must be assessed as at the date the notice of termination was served. Consequently, the subsequent settlement of arrears has no bearing on the legitimacy of the refusal to renew.

The complete rejection of the claim for eviction compensation

Considering that the payment defaults were repeated, persistent and significant, the court ruled that the landlords had established the existence of a serious and legitimate ground within the meaning of Article L.145-17 of the Commercial Code.

Consequently, Adagio is deprived of any right to eviction compensation. Nor can it rely on the right to remain in the premises provided for in Article L.145-28 of the Commercial Code.

The court therefore dismissed all of its claims against the owner concerned and ordered it to pay the costs as well as €1,500 on the basis of Article 700 of the Code of Civil Procedure.

Scope of the decision

This judgment is part of a now well-established trend in case law concerning operators of holiday accommodation. Several courts consider that rent deductions made during the health crisis may constitute a serious and legitimate ground for refusing renewal where arrears have persisted despite formal notices from the landlord. For landlords, this decision confirms that an operator who has persistently failed to meet their essential payment obligation may be denied any eviction compensation, even if the arrears were settled several years later.

Covid-19 and leaseback rents: Strasbourg District Court orders operator to pay all outstanding rent in full.

A new ruling in favour of holiday home landlords

In a judgment dated 26 May 2026, the Strasbourg Judicial Court ordered SMAS Tourisme to pay property investors the full amount of rent outstanding during the Covid-19 health crisis. This ruling is in line with the case law of the Court of Cassation, which denies operators of holiday residences the right to unilaterally suspend rent payments on the grounds of lockdowns and administrative closures.

The dispute involved Mr and Mrs L., owners of a flat in a residence operated by SMAS Tourisme, and the company itself, which had failed to pay several rent instalments between 2020 and 2021.

The commercial lease had been signed in 2009 and renewed in 2018 for a further nine-year period running until December 2027.

The origin of the dispute: the suspension of rent payments during the pandemic

Following the onset of the health crisis, SMAS Tourisme ceased payment of several quarters’ rent.

By means of a payment order issued on 28 September 2022, the landlords claimed a sum of €4,796.24 corresponding to rent remaining unpaid for several quarters in 2020 and 2021.

The operator justified its position by citing the impact of government measures taken during the pandemic. According to the operator, movement restrictions and administrative closures had made it impossible to run the residence normally and justified a temporary suspension of rent payments.

In the absence of settlement, the landlords brought the matter before the Strasbourg District Court to seek payment of the rent, statutory interest and damages for wrongful resistance.

SMAS Tourisme’s defence strategy

The company’s defence rested primarily on a specific clause in the commercial lease.

Article 5.3 of the contract provided that the tenant could ‘call the rent into question’ in the event of force majeure interrupting the residence’s commercial activity or in the event of circumstances causing a disruption to its operations. This clause specifically covered natural disasters, administrative obstacles or restrictions on the movement of people and goods.

SMAS Tourisme argued that lockdowns and travel bans constituted precisely the events covered by this clause.

According to the operator, tourist activity had been virtually paralysed for several months and the economic losses suffered justified the suspension of rent payments. It also cited several lower court rulings in favour of operators, as well as the exceptional and unforeseeable nature of the pandemic.

Landlords contest any rent exemption

The landlords, on the other hand, argued that rent remained payable despite the health crisis.

They pointed out that the Court of Cassation had already ruled that administrative closures linked to Covid-19 did not constitute a loss of the leased property, nor a breach by the landlord of their obligation to deliver the property, nor a case of force majeure allowing exemption from payment of a monetary debt.

The landlords also argued that the clause invoked by the operator should be interpreted strictly.

In their view, the text did not permit a unilateral suspension of rent but merely opened up the possibility of discussion or renegotiation between the parties.

Finally, they emphasised that the public aid measures granted to operators during the pandemic had helped to alleviate the economic difficulties encountered.

The court refuses to apply the force majeure defence

The court begins by recalling the principles established by the Court of Cassation.

The judges note that the administrative closure measures did not materially affect the leased premises. The flats remained accessible and fit for their intended purpose. Only the economic conditions of operation were disrupted.

The court also emphasised that an obligation to pay a sum of money cannot be suspended merely by invoking force majeure.

Consequently, lockdowns and health restrictions did not allow the tenant to be exempted from paying commercial rent.

The judges expressly refer to the rulings set out by the Court of Cassation in its judgments of 30 June 2022 and 15 June 2023 concerning commercial rent due during periods of administrative closure.

A restrictive interpretation of the lease clause

The court then examined the contractual clause invoked by SMAS Tourisme.

According to the judges, this clause did not allow the tenant to unilaterally suspend payments.

The expression ‘to call the rent into question’ does not imply either exemption from or automatic suspension of the rent. On the contrary, it presupposes negotiation between the parties or, in the absence of agreement, judicial intervention.

Furthermore, the judges considered that the second part of the clause was primarily intended to address malfunctions affecting the building’s common areas and not the general economic consequences of a pandemic.

Consequently, the company could not rely on this provision alone to suspend rent payments.

The operator’s liability

The court ultimately ordered SMAS Tourisme to pay the landlords the sum of €4,796.24 corresponding to the unpaid rent, together with statutory interest from the date of the order to pay issued on 28 September 2022.

However, the claim for damages for unreasonable resistance was dismissed, as the judges found that no specific bad faith on the part of the operator had been demonstrated.

The company was nevertheless ordered to pay the costs, as well as €1,800 pursuant to Article 700 of the Code of Civil Procedure.

Scope of the decision

This decision confirms a now firmly established trend: operators of holiday residences cannot justify unpaid rent linked to the health crisis on the grounds of force majeure, loss of the leased property, or the defence of non-performance. It also illustrates the particularly restrictive interpretation of the contractual clauses invoked to suspend or reduce rent during the pandemic. For landlords of holiday accommodation, this judgment constitutes a new favourable precedent in disputes relating to unpaid rent during the Covid period.

Caen Court of Appeal, 28 May 2026 (Case No. 25/01294): dismissal of the application to set aside a Pierre & Vacances commercial lease on the grounds of fraud.

The facts: an investment in a holiday residence

In 2011, Mr and Mrs [C] purchased an off-plan flat in a holiday residence located in Deauville. This property was let under a commercial lease to the company Pierre & Vacances Résidences & Resorts France on 19 April 2016 for a term expiring on 30 September 2026.

Following difficulties encountered during the health crisis and unpaid rent, the owners brought legal proceedings against the companies PV Holding and PV Exploitation France. They sought, primarily, the annulment of the commercial lease on the grounds of fraud, claiming they had been misled when the contract was concluded.

As the Lisieux Judicial Court dismissed all their claims by judgment of 28 March 2025, they lodged an appeal.

The landlords’ argument: a waiver of eviction compensation presented as misleading

Mr and Mrs [C] based their argument on a letter dated 1 September 2015 sent by Pierre & Vacances Conseil Immobilier. In this letter, the group stated that the operator would waive its right to renew the lease and to claim eviction compensation at the end of the operating period.

According to the lessors, this statement constituted a decisive factor in their consent. They argued that the companies within the Pierre & Vacances group knew that this advance waiver was legally ineffective and that they had thereby created a mistaken belief on their part regarding the economic consequences of the transaction.

They therefore invoked the existence of fraud, within the meaning of the former Article 1116 of the Civil Code, and consequently sought:

• the cancellation of the lease;
• the eviction of the operator;
• payment of occupancy compensation;
• damages;
• coverage of any tax consequences arising from the cancellation of the contract.

The defence of Pierre & Vacances

The companies PV Holding and PV Exploitation France denied any fraudulent conduct.

They argued that the right to renew the commercial lease and the right to eviction compensation were expressly set out in several contractual documents signed by the investors:

• the reservation agreement;
• the commercial lease;
• the authentic deed of purchase.

In their view, the owners could not claim to have been misled when these provisions were set out in black and white in the documents they had signed.

The court’s reasoning: absence of fraud

The Court of Appeal noted that fraud cannot be presumed and must be proven.

It first observed that the reservation agreement signed as early as 2010 clearly stated the lessor’s obligation to pay eviction compensation in the event of a refusal to renew the lease, in accordance with Article L. 145-14 of the Commercial Code.

It then noted that the commercial lease signed in April 2016 also contained a specific and detailed clause providing for the payment of eviction compensation to the tenant in the event of a refusal to renew.

Finally, the authentic deed of sale also referred to this legal mechanism, without repeating the commitment invoked by the landlords.

In the court’s view, these contractual provisions were perfectly explicit and incompatible with the existence of any deception or fraudulent concealment.

The scope of the letter of 1 September 2015 dismissed

The court acknowledges the existence of the letter relied upon by Mr and Mrs [C], but considers that it cannot take precedence over the contractual provisions subsequently signed.

It emphasised that the lease was signed more than eight months after this correspondence and that the investors had ample opportunity to familiarise themselves with the terms of the contract and the notarised deed.

The judges noted that a contracting party, even a layperson, remains obliged to read the documents they sign and that there was no evidence to suggest that Mr and Mrs [C] had been prevented from doing so or coerced into signing.

Consequently, the letter of 1 September 2015 cannot be regarded as reflecting the parties’ common intention nor as evidence of a deliberate intention to deceive the investors.

The decision

The Court of Appeal fully upholds the judgment of the court of first instance.

It dismisses the application for the annulment of the commercial lease as well as all the ancillary claims of the owners.

Mr and Mrs [C] are ordered jointly and severally:

• to pay the costs of the appeal;
• to pay €2,000 pursuant to Article 700 of the Code of Civil Procedure to the companies PV Holding and PV Exploitation France.

Lessons from the judgment

This judgment illustrates the difficulty for an investor in a tourist residence to obtain the cancellation of a commercial lease on the grounds of fraud when the contractual documents clearly and repeatedly refer to the rules governing the status of commercial leases. The court here gives priority to the content of the booking contract, the lease and the authentic deed over an isolated pre-contractual correspondence. It also reaffirms the minimum duty of care incumbent on any signatory, even a non-professional, when entering into a commercial lease that voluntarily falls under the regime governing commercial leases.

Right of withdrawal and termination clause: the Montpellier Court of Appeal protects the tenant following the renewal of the lease

A classic case of dispute in the French leaseback sector

In a judgment of 26 May 2026, the Montpellier Court of Appeal provided significant clarification on the consequences of a landlord exercising their right of withdrawal and on the use of a termination clause following the renewal of a commercial lease.

The case concerned Grand Bleu, a company operating tourist accommodation, which had held a commercial lease covering several units in a tourist accommodation complex since 1 January 2007. The lease provided for an annual rent of €10,658.51 excluding VAT, as well as various maintenance obligations.

On 9 May 2017, the lessor, MB Gestion Immobilière de Résidences de Tourisme, had served a notice of termination with a refusal to renew, whilst acknowledging that it was liable to pay compensation for eviction.

The operator then claimed eviction compensation, initially in the amount of €30,000, then €89,475, as part of legal proceedings initiated in 2019.

The landlord’s change of heart: a complete shift in strategy

Withdrawal of the refusal to renew

Whilst the dispute over the eviction compensation was ongoing, the landlord exercised his right of repentance by deed dated 12 May 2020.

In this deed, he expressly withdrew his refusal to renew and consented to the renewal of the lease in accordance with Article L.145-58 of the Commercial Code. He also pointed out that the eviction compensation was no longer applicable.

A few years later, however, the landlord changed his approach and issued a demand for payment invoking the termination clause for an amount of over €9,000, corresponding to rent and service charge arrears dating back several years.

The judgment at first instance

The Perpignan Judicial Court held that the demand for payment was valid, found that the termination clause had been triggered, and ordered the termination of the lease as of 23 January 2023. It also ordered the eviction of the tenant and ordered them to pay compensation for continued occupation.

Grand Bleu appealed against this decision.

The issue of the limitation period for rent

The two-year limitation period set aside

One of the key points of the judgment concerns rent claims dating from before 2019.

The court had held that the landlord’s claims relating to rent for the years 2016 to 2018 were time-barred under the two-year limitation period provided for in Article L.145-60 of the Commercial Code.

The Court of Appeal took a different view.

It noted that the two-year limitation period applies only to claims brought under the provisions governing commercial leases. By contrast, a claim for payment of rent based on the terms of the contract falls under ordinary law and not under Article L.145-60.

The rent claimed was therefore not time-barred. The judgment was overturned on this point.

The decisive effects of the right of withdrawal

A renewal already secured

The court reiterates a fundamental principle: the exercise of the right of withdrawal does not constitute a mere offer of renewal but immediately brings about the renewal of the lease from the date of its notification.

From 12 May 2020, the parties were therefore bound by a new commercial lease resulting directly from the exercise of the right of withdrawal.

The impossibility of reversing this choice

In the judges’ view, the right of withdrawal constitutes an irrevocable decision by the landlord to waive the eviction indemnity and to continue the tenancy relationship.

Consequently, the landlord cannot subsequently use the termination clause of the expired lease to indirectly obtain what he had relinquished by exercising his right of withdrawal.

The court further noted that the order to pay mixed together claims arising before and after the renewal, even though the new lease was legally distinct from the expired lease.

Insufficient evidence of unpaid rent

An inaccurate statement of account

The court also found that the statement of account attached to the order was incomplete and did not take into account several payments made by the tenant.

The landlord himself acknowledged the existence of partial payments without incorporating them correctly into his calculations.

The grounds for the order deemed to have been settled

After examining the documents submitted, the court found that the sums claimed were not sufficiently substantiated and that the grounds for the order had been settled within the required time limit.

As no evidence of a breach by the tenant was provided, the termination clause could not take effect.

The ruling

The Court of Appeal quashed the judgment of the court of first instance in its entirety. It found that the lease had been renewed on 12 May 2020 by virtue of the right of withdrawal, ruled that the termination clause was deemed never to have taken effect, dismissed the landlord’s claims for eviction and payment, and ordered the landlord to pay the costs as well as €3,000 pursuant to Article 700 of the Code of Civil Procedure.

Practical implications of the judgment

This judgment is of particular interest to operators of holiday accommodation. It serves as a reminder that the right of withdrawal results in the immediate and irrevocable renewal of the lease. Once this choice has been made, the landlord can no longer seek to challenge the continuation of the lease by relying on prior breaches of which he was aware at the time the right of withdrawal was exercised.

Judicial termination of a commercial lease for a holiday residence: the health crisis does not justify non-payment of rent.

A tourist accommodation business facing significant unpaid rent

In a judgment of 26 May 2026, the Montpellier Court of Appeal upheld the judicial termination of a commercial lease entered into in a tourist accommodation complex and reiterated that the Covid-19 health crisis does not entitle the tenant to unilaterally suspend rent payments.

The case pitted Mr and Mrs [U], owners of several units in a tourist residence that subsequently became a residential complex, against the company Les Bains de Lamalou, the operator of the premises. The commercial lease had been entered into on 29 January 2014 for an initial annual rent of €5,343 excluding VAT, payable quarterly.

Following several years of unpaid rent, the landlords made repeated attempts at amicable resolution. An initial formal notice was sent in August 2021 for an amount of €11,665, followed by a second in January 2022 and then a demand for payment in February 2022. None of these steps resulted in the debt being settled.

In light of this situation, the landlords took legal action against the operating company in March 2022 to seek termination of the lease, payment of the outstanding rent, eviction of the occupant and payment of compensation for occupation.

A judicial termination ordered at first instance

The breaches attributed to the tenant

By judgment of 6 May 2024, the court ordered the judicial termination of the commercial lease on the grounds of breaches considered to be serious and repeated.

The judges identified two main breaches:

• non-payment of rent;
• failure to provide proof of insurance for the leased premises.

The court ordered Les Bains de Lamalou to pay €13,880.05, corresponding to unpaid rent between March 2017 and March 2023.

The company’s eviction was also ordered, accompanied by a monthly occupancy indemnity of €772.97 (excluding VAT) until the premises are effectively vacated.

The operator’s appeal

Les Bains de Lamalou challenged this decision before the Court of Appeal.

It argued primarily that the judgment was insufficiently reasoned and should be set aside. In the alternative, it sought to have the judgment overturned, contending that the alleged breaches were not sufficiently serious to justify termination of the lease.

It also sought a twelve-month payment extension to settle its rent arrears.

The rejection of the application to set aside the judgment

Reasons deemed sufficient

The operator criticised the court for having adopted its opponents’ arguments without addressing its own defences.

The court swiftly dismissed this complaint.

It noted that the duty to state reasons does not require judges to respond to every argument put forward by the parties, but only to those that are decisive to the dispute. As the original judges had met this requirement, the application for annulment was dismissed.

The health crisis does not exempt tenants from paying rent

The argument put forward by the tenant

The company Les Bains de Lamalou acknowledged that it had not paid certain rent instalments between the third quarter of 2020 and the first quarter of 2021. It considered, however, that the exceptional circumstances of the pandemic justified a more flexible interpretation of its contractual obligations.

It also contested that the lack of insurance could constitute a breach serious enough to warrant termination of the lease.

The court’s position

The judges noted that the payment of rent constitutes one of the tenant’s essential obligations within the meaning of Article 1728 of the Civil Code.

They endorsed the lower court’s reasoning that the health crisis could lead the parties to seek contractual adjustments in good faith, but did not permit the tenant to decide unilaterally to suspend rent payments or to disregard their contractual review.

The court further emphasised that the landlords had never agreed to waive rent for periods of closure linked to the pandemic.

The refusal to grant payment extensions

A financial situation insufficiently demonstrated

The company Les Bains de Lamalou sought a twelve-month extension to repay its rent arrears.

The court noted that Article 1343-5 of the Civil Code does indeed allow the judge to grant extensions where these appear compatible with the debtor’s financial situation and the creditor’s interests.

However, the operator produced no documents demonstrating its actual ability to settle the debt within the requested timeframe. Worse still, the evidence submitted revealed the emergence of new arrears during 2024.

The court therefore considered that it would be unrealistic to believe that the debt could be settled within twelve months.

Full confirmation of the judgment

The Montpellier Court of Appeal fully confirmed the first-instance decision. It upheld the judicial termination of the commercial lease, the eviction of the tenant, the order to pay the outstanding rent and the compensation for occupation.

It also rejects the request for payment extensions and orders Les Bains de Lamalou to pay the costs of the appeal as well as €3,000 pursuant to Article 700 of the Code of Civil Procedure.

Scope of the judgment

This decision is in line with the now established case law that the health crisis has not removed the tenant’s fundamental obligation to pay commercial rent. It also confirms that persistent non-payment, combined with other breaches of contract such as a lack of insurance for the premises, constitutes sufficiently serious misconduct to justify the judicial termination of a commercial lease.

Property sale agreement: failure to fulfil the loan condition precedent due to fault results in the loss of the deposit

A property purchase subject to the securing of financing

In a judgment of 29 May 2026, the Court of Appeal of Saint-Denis, Réunion, confirmed that a purchaser who fails to demonstrate that they have taken the steps required under the preliminary sale agreement to secure financing may lose the benefit of the loan condition precedent and be ordered to pay the penalty clause.

The case concerned a preliminary sale agreement signed on 10 November 2020 between SCI La Prédecelle Bruis and Messrs [S] relating to a property complex located in Saint-Joseph for a price of €328,000. The sale was concluded subject to the condition precedent of obtaining a bank loan. A deposit of €14,475 had been lodged with the notary.

The preliminary agreement stipulated that the purchasers must provide proof, by 31 January 2021 at the latest, of an agreement in principle from a lending institution or a loan offer. Failing this, the agreement would lapse. However, the deposit was to be refunded only if the purchasers demonstrated that they had taken all necessary steps to secure the financing.

The breakdown of the property project

The cancellation of the sale by the SCI

During the execution of the preliminary agreement, the purchasers made numerous contacts with various financial intermediaries, notably CAFPI, Meilleurtaux, Koytcha Conseil and Crédit Agricole. They were considering several legal arrangements involving various operating and management companies.

Despite these efforts, no agreement in principle nor any loan offer in accordance with the contractual terms was produced within the stipulated timeframes.

Noting the failure to fulfil the condition precedent and the expiry of the contractual deadlines, the SCI notified the buyers on 6 May 2021 of its decision to terminate the sale and claimed the right to the reservation fee.

The purchasers’ legal action

Believing they had taken the necessary steps, the purchasers brought proceedings against the SCI seeking:

• the return of the reservation fee of €14,475;
• reimbursement of costs incurred;
• compensation for loss of opportunity to invest;
• various additional sums in respect of interest and legal costs.

The civil court dismissed their claim in its entirety and ordered them to pay the SCI the sum of €16,400 corresponding to the penalty clause provided for in the preliminary agreement. They then lodged an appeal.

The legal issue

The court had to determine whether the purchasers could benefit from the protection attached to the condition precedent of obtaining a loan, even though no offer of financing had been obtained within the contractual time limits.

More specifically, the question was whether the steps taken were sufficient to establish that the failure of the condition precedent was not attributable to the purchasers.

The court’s analysis

Steps deemed insufficient

The court noted that the purchasers had indeed made several approaches to estate agents and banks before and after signing the preliminary agreement.

However, the judges observed that the applications for financing were not submitted in the purchasers’ own names, even though they were the sole beneficiaries of the preliminary agreement.

The documents produced actually concerned various structures envisaged for the future operation of the property:

• SAS Tourism Invest;
• SAS Lotus Développement;
• companies still under consideration;
• arrangements involving SCI, SARL or SAS.

The court found that no loan offer, nor even any confirmation of a loan application, had been drawn up in the purchasers’ own names in accordance with the terms of the preliminary agreement.

Failure attributable to the beneficiaries

The judges also emphasised that the substitution clause provided for in the preliminary agreement did not exempt the purchasers from clearly informing the seller and the notary of the use of a substitute company.

However, this information had never been formalised.

Furthermore, the bank agreement finally obtained on 17 May 2021 was dated after the expiry of the contractual deadlines and was itself conditional upon a capital contribution of €118,000.

In the court’s view, these factors demonstrate that the condition precedent failed due to the purchasers’ own actions.

Pursuant to Article 1304-3 of the Civil Code, the condition must therefore be deemed to have been fulfilled, which deprives the beneficiaries of the protection normally attached to the loan condition precedent.

Retention of the reservation fee

The court ruled that the reservation fee of €14,475 remains definitively retained by the SCI.

It noted that the preliminary agreement expressly provided that, where the failure of the condition precedent is attributable to the beneficiary, the latter loses their right to the return of the deposit held by the notary.

The purchasers’ claim for restitution is therefore dismissed.

Application of the penalty clause

The preliminary agreement also contained a penalty clause setting the damages payable at a flat rate of 5% of the sale price where the beneficiary fails to fulfil the obligations incumbent upon them.

The court considers that this clause is fully applicable since the purchasers caused the sale to fail through their own failure to fulfil the condition precedent.

The amount of the penalty thus amounts to €16,400, from which the reservation fee already paid is deducted.

Scope of the judgment

This decision illustrates the rigour with which the courts assess the obligations of a purchaser benefiting from a loan condition precedent. Merely demonstrating that steps have been taken with the bank is not sufficient. These steps must also comply with the terms of the preliminary agreement and be carried out in the name of the beneficiaries designated in the deed.

The judgment also reiterates that a purchaser who causes the suspensive condition to fail, whether through negligence or by arranging financing that does not comply with the contractual commitments, risks not only forfeiting their deposit but also being liable for the full payment of the penalty clause provided for in the preliminary sale agreement.

Compensation for eviction from a holiday residence: enforcement of a settlement reached following a notice of termination with a refusal to renew the tenancy.

A dispute arising from the refusal to renew a commercial lease

By judgment of 29 May 2026, the Albertville Judicial Court heard a case between a company operating a holiday residence and British landlords following the termination of a commercial lease with a refusal to renew it.

The tenant company operated a half-chalet within the “Côte Village” holiday residence under a commercial lease entered into on 17 December 2009 and expiring on 30 September 2018. On 12 April 2018, the landlords served a notice of termination with a refusal to renew.

Believing it was entitled to the right to renewal provided for under the Commercial Leases Act, the operator sued the landlords on 18 December 2020 to seek payment of eviction compensation, the appointment of an expert to assess the amount thereof, and recognition of its right to remain on the premises until such compensation was paid.

The case thus fell within the typical framework of disputes between private landlords and operators of tourist accommodation upon the expiry of a commercial lease.

Proceedings interrupted by negotiations

Dismissal of the case

Following the commencement of proceedings, the parties entered into amicable discussions.

These negotiations led the pre-trial judge to issue a dismissal order on 5 May 2022 to allow the parties to continue their talks.

The aim was to reach a settlement agreement bringing the dispute over the eviction compensation to an end.

The conclusion of a settlement

The discussions did indeed lead to the signing of a settlement on 2 December 2021.

Under this agreement, the parties had amicably settled the issue of the eviction compensation owed to the operating company. In return, the tenant had vacated the premises in accordance with the mutual commitments agreed between the parties.

However, despite this agreement, a dispute arose concerning its enforcement, leading the operating company to resume proceedings in February 2024 in order to obtain payment of the outstanding sums.

The parties’ claims

The operating company’s claims

In its final submissions, the operating company asked the court to order the lessors to pay €10,220.90, which it claimed corresponded to the sums still due under the settlement of 2 December 2021.

It also sought:

• interest at the statutory rate from 2 December 2021;
• damages for wrongful resistance;
• compensation under Article 700 of the Code of Civil Procedure.

The landlords’ defences

The landlords primarily raised a plea of nullity of the summons.

They argued that the documents had been served at an incorrect address and indirectly invoked the consequences of the limitation period applicable to commercial leases.

They also filed a counterclaim for €3,120 in respect of alleged rental repairs that were said to have been necessary following the operator’s departure.

Rejection of the plea of nullity

The court’s lack of jurisdiction to hear the plea

The court first noted that, pursuant to Article 789 of the Code of Civil Procedure, procedural pleas fall within the exclusive jurisdiction of the pre-trial judge when brought before him.

However, the landlords had raised this plea before the court even though the proceedings had already been heard under the supervision of the pre-trial judge.

The plea is therefore declared inadmissible.

The absence of a demonstrated cause of action

The judges add that, even if examined on its merits, this plea could not have succeeded.

The defendants appeared in court within the time limits, participated in the proceedings and even negotiated a settlement. No procedural prejudice was therefore demonstrated.

The court thus reiterates that a declaration of nullity on the grounds of a procedural defect cannot be made without proof of a grievance.

Enforcement of the settlement

An obligation that has become uncontested

The central point of the judgment lies in the analysis of the settlement reached between the parties.

The court found that the parties had definitively settled their dispute regarding the eviction compensation. The operating company had fulfilled its obligations by vacating the premises in accordance with the agreement reached.

In these circumstances, the landlords remained bound to fulfil their own payment commitment.

The court considered that this debt had become uncontested by virtue of the settlement alone.

The landlords’ liability

The landlords are ordered to pay the operating company the sum of €10,220.90, together with interest at the statutory rate from 2 December 2021.

This order is no longer based on the right to eviction compensation itself but on the binding nature of the settlement, which definitively established the parties’ rights.

The dismissal of the landlords’ claims

Regarding the claimed rental damages, the court notes that no inventory of fixtures was drawn up and that no serious evidence of the alleged damage has been produced.

On the contrary, the only photographs submitted to the court reveal that the premises were in a satisfactory state of repair.

The claim is therefore dismissed.

The court also rejects the claim for damages for wrongful withholding of payment brought by the operating company, finding that the delay in payment is already compensated by statutory interest.

The decision

The Albertville Judicial Court orders the landlords to pay €10,220.90 under the settlement, in addition to statutory interest from 2 December 2021. It also orders them to pay €2,000 pursuant to Article 700 of the Code of Civil Procedure, as well as costs. All counterclaims are dismissed. Provisional enforcement is automatic.

Practical implications

This decision serves as a reminder of the legal effectiveness of settlements reached in disputes concerning eviction compensation in tourist accommodation. Once the agreement has been signed and performed by the tenant, the landlord cannot renege on their commitments without risking a court order based not on the status of commercial leases, but on the binding nature of the settlement.

Nexity Studéa : Lyon District Court overturns a notice of termination refusing to pay any eviction compensation.

A landmark case concerning student accommodation

In a judgment dated 28 May 2026, the Lyon Judicial Court handed down a ruling of particular significance for operators of student accommodation run under commercial leases. The court was hearing a dispute between Nexity Studéa and AB Wealth Real Estate, the owner of a unit in the “La Duchère” student residence in Lyon.

The commercial lease had been concluded on 6 January 2008, taking effect on 1 September 2008, in favour of Lamy Résidences, whose rights were subsequently acquired by Nexity Studéa. The premises in question were an apartment operated as part of the overall student accommodation business.

After acquiring the property at auction in December 2019, AB Wealth Real Estate served Nexity Studéa with a notice of termination without an offer of renewal and without compensation for eviction, effective from 30 June 2021. The landlord considered that the operator had no right to renewal as it was not operating a business in the property in question.

Challenging this analysis, Nexity Studéa brought the matter before the civil court seeking either the nullity of the notice of termination or, in the alternative, payment of eviction compensation.

The landlord’s strategy: denying the existence of a business

A distinction between subletting and the provision of services

AB Wealth Real Estate argued that Nexity Studéa was in fact carrying out two distinct activities.

According to the company, the first activity consisted of the simple subletting of furnished accommodation, an activity which did not in itself constitute a commercial activity protected by the status of commercial leases. The second activity corresponded to hotel-style services provided mainly in the communal areas of the residence.

The landlord considered that these two activities could be separated and that the termination of the lease for a flat did not actually affect the commercial activity carried out in the communal areas.

The alleged lack of a dedicated clientele

AB Wealth Real Estate also argued that Nexity Studéa did not have its own clientele.

According to this argument, the students were simply occupying residential accommodation and the ancillary services were neither systematic nor indispensable. The landlord further asserted that some owners let their flats directly, which would demonstrate the absence of a genuine business attached to each dwelling.

Based on this reasoning, it considered that the termination without renewal and without eviction compensation was entirely justified.

Nexity Studéa’s position

A single and indivisible commercial activity

Nexity Studéa strongly contested this analysis.

The operator argued that its activity could not be split between subletting and the provision of services. In its view, the business assets lay precisely in the overall operation of a student residence, comprising the provision of furnished accommodation and the provision of hotel-style services for students.

The company argued that the activity carried out in each of the rented units formed part of the operation of a single business entity benefiting from the protection afforded by commercial tenancy law.

A claim for the nullity of the notice of termination

Considering the grounds invoked by the landlord to be unfounded, Nexity Studéa sought the nullity of the notice of termination and the continuation of the commercial lease. In the alternative, it sought recognition of its right to compensation for eviction and the appointment of an expert to assess its loss.

The court’s reasoning

Recognition of a business

The court noted that it is settled case law that the activity of subletting accommodation accompanied by the provision of services constitutes a commercial activity falling within the scope of commercial leases.

The judges emphasised that what matters is not whether the services are actually used by each occupant, but that they are offered to the subtenants. The provision of services constitutes an essential element of the commercial activity.

The court therefore finds that Nexity Studéa’s business consists of the subletting of student accommodation combined with a permanent offer of hotel-style services.

The existence of a specific clientele

The judges also reject the argument based on the absence of a clientele.

They consider that the students who choose the accommodation operated by Nexity Studéa constitute the operator’s specific clientele. This clientele is directly linked to the overall offering provided by the company, including services that may be used at any time during the tenancy period.

The court further notes that the landlord has produced no credible evidence to show that the services would be offered to persons outside the subletting network operated by Nexity Studéa.

The invalidity of the notice of termination

Having recognised the existence of a business operated under the disputed lease, the court found that the ground cited in the notice of termination was incorrect. The refusal to pay eviction compensation was based solely on the assertion that no business was being operated on the leased premises. However, this assertion was deemed unfounded.

As Nexity Studéa had chosen to rely on the invalidity of the notice of termination rather than immediately claiming eviction compensation, the court declared the notice of termination issued on 30 December 2020 to be null and void and ruled that the commercial lease should continue.

The decision

The Lyon Judicial Court annulled the notice of termination issued by AB Wealth Real Estate, which offered neither renewal nor compensation for eviction, confirmed the continuation of the commercial lease, dismissed all of the landlord’s claims, and ordered the landlord to pay the costs as well as €1,800 pursuant to Article 700 of the Code of Civil Procedure.

Practical implications of the decision

This judgment forms part of now well-established case law concerning student residences operated by Nexity Studéa. It confirms that an operator who sublets furnished accommodation offering hotel-style services operates a genuine business entity benefiting from the status of commercial leases. The landlord cannot therefore refuse to renew the lease or pay compensation for eviction on the grounds that no commercial activity is carried out in the accommodation in question.