Beware of uncapping in the event of a change of lease destination

The solution provided by the High Court in its judgment dated 15 February 2023 makes it possible to recall the essential principles of the fixing of the rent of the renewed lease, while providing some clarifications.

In terms of setting the rent of the renewed lease for shops, we know the rules laid down by Articles L. 145-33 and L. 145-34 of the Commercial Code.

The rent of the renewed lease must be set at the rental value.

This rental value is determined judicially in the light of five criteria, namely:

1 The characteristics of the premises in question;
2 Purposes of the premises
3 The respective obligations of the parties;
4 Local factors of commerciality;
5 Prices commonly charged in the neighborhood;

Rent de-capping, that is, when the rental value is greater than the rent resulting from the variation of the indices, can only be obtained if the lessor can demonstrate, during the expired lease, a significant modification of the characteristics of the premises in question, or of the destination of the premises, or of the respective obligations of the parties, or of the local commerciality factors.

For the record, Article L. 145-51 of the Commercial Code provides that:

« When the lessee who has applied to benefit from his retirement rights or who has been admitted to the benefit of a disability pension granted by the disability-death insurance scheme for the craft professions or the industrial and commercial professions, has notified his owner and the creditors registered on the business of his intention to assign his lease, specifying the nature of the activities whose exercise is envisaged as well as the proposed price, the lessor has, within two months, a priority for redemption under the conditions set out in the notification. In the absence of use of this right by the lessor, his agreement shall be deemed to have been acquired if, within the same period of two months, he has not brought the matter before the court.

The nature of the activities whose exercise is envisaged must be compatible with the destination, the characteristics and the situation of the building.

The provisions of this article shall apply to the sole shareholder of a single-member limited liability company, or to the majority manager for at least two years of a limited liability company, when the latter is the holder of the lease “.

In case of implementation of this despecialization during the life of the commercial lease, there is therefore a modification of the destination of the premises.

However, unlike the modification of the characteristics of the premises in question, the respective obligations of the parties, or even local factors of commerciality, which must be of a noteworthy nature, it appears that the modification of the obligations of the parties constitutes in itself a “significant” change in the destination of the premises, without the need to demonstrate any favourable impact.

It is in this sense that the Court of Cassation has ruled on several occasions (Cass. 3e civ., January 18, 2012, No. 11-10.072; Cass. 3e civ., January 22, 2013, No. 11-25.030; Cass. 3e civ., April 11, 2019, No. 18-13668).

In its decision of 15 February 2023, the High Court recalled this principle, ruling as follows:

« The Court of Appeal rightly stated that the transfer of the right to the lease, under the conditions of Article L. 145-51 of the Commercial Code, entailing despite a despecialization, the maintenance of the rent until the end of the lease, did not deprive the lessors of the right to invoke, in support of their request to fix the rent of the renewed lease, on management TIR CO of destination occurred during the expired lease.

It rightly noted that it could not be deduced from the non-exercise by the lessors of their priority right of redemption or the absence of legal opposition to the despecialization, their waiver to request, at the time of the renewal of the lease, the de-capping of the rent “.

The clarifications provided relating to the absence of exercise by the lessors, their priority right of redemption or their absence of opposition to despecialization, do not make it possible to renounce to request, at the time of the renewal of the lease, the de-capping of the rent, do not therefore appear surprising.

Ultimately, it is appropriate, when changing the destination, whatever the form, to find an agreement with the lessor to avoid the de-capping of the rent.

Finally, it should be remembered that in the event of an unauthorized change of destination, the lessor would have two alternatives, to try to terminate the lease for this reason or to de-cap the rent.

Cass. 3rd Civil Chamber, February 15, 2023, No. 21-25.849

Nicolas Pchibich

Associate Lawyer