Right of option: two occupancy allowances and duality of limitation

The right of option creates two types of occupancy allowances: one statutory, the other common law. The consequences on the prescription of actions for the fixing of these two types of compensation are essential. One is biennial, the other quinquennial.

By a judgment of 16 March 2023, the High Court delivered a particularly interesting judgment, in that it makes it possible to understand the difference between the statutory occupancy allowance and the ordinary occupancy allowance.

It should first be recalled that the right of option is a specific mechanism of the status of commercial leases that allows both the lessor and the lessee, after having initiated the process of renewal of the lease, to evade it.

Article L. 145-57 of the Commercial Code provides that:

Pfor the duration of the proceedings relating to the fixing of the price of the revised or renewed lease, the lessee is required to continue to pay the rents due at the old price or, where applicable, at the price which may, in any event, be fixed provisionally by the court seised, except for an account to be made between the lessor and the lessee, after final fixing of the price of the rent.

Within a period of one month following the service of the final decision, the parties draw up a new lease under the conditions laid down in court, unless the lessee waives the renewal or the lessor refuses it, at the expense of the party who has expressed his disagreement to bear all the costs. Failing by the lessor to have sent within this period for the signature of the lessee the draft lease in accordance with the aforementioned decision or, in the absence of agreement within the month of this sending, the order or judgment fixing the price or the conditions of the new lease is worth lease ».

Consequently, if this right of option is exercised by the lessor, he must pay his lessee an eviction indemnity.

If it is the tenant who exercises this right of option, he must return the premises.

But what if the tenant does not return the premises following the service of his right of option?

The judgment of the Court of Cassation delivered on 16 March 2023 answers this question, highlighting the consequences arising from the exercise of this right, while specifying the applicable statute of limitations.

After recalling that under the terms of Article L. 145-60 of the Commercial Code, “All actions exercised under this chapter are prescribed by two years”, it ruled as follows:

« It follows from these texts that the occupancy allowance, due by a tenant for the period preceding the exercise of his right of option, has its origin in the application of Article L. 145-57 of the Commercial Code and the action for payment of this indemnity is, as such, subject to the biennial prescription enacted by Article L. 145-60 of this Code (3rd Civil Chamber, 5 February 2003, Appeal No. 01-16.882, Civil Bulletin 2003, III, No. 26).

It follows that the lessor is not aware of the facts allowing him to act in payment of this without compensation, which retroactively replaces the rent due on the basis of Article L. 145-57 of the same Code, as from the day on which he is informed of the exercise by the tenant of his right of option, the biennial limitation period only runs from this date.

In addition, when the tenant remains on the premises after the exercise of his right of option, he is liable for an occupancy allowance under ordinary law subject to the five-year limitation period, the period of which runs from the same day “.

Therefore, the action for fixing the statutory occupancy allowance is prescribed by two years from the date of exercise of the right of option, while the action for fixing the statutory occupancy allowance is prescribed by five years.

It should also be remembered that the occupancy allowance under ordinary law is fixed under Article 1240 of the Civil Code and is, in theory, higher than Compensation. of statutory occupation, since this compensation under ordinary law may also allow the lessor to be compensated for the damage suffered by an occupation without right or title of the lessee.

Cass. 3rd Civ., March 16, 2023, No. 21-19707