Denial of the right to the status of commercial leases

Right to renewal of the commercial lease: when can it be denied?

Leave with an offer of renewal is served.

As the Lessee has not accepted the new rent, the lessor notifies a preliminary memorandum to the commercial rent judge.

Secondly, it notifies a denial of the right to the status of commercial leases for lack of registration, and assigns the Lessee to deny its right to renewal, expulsion and payment of an occupancy allowance.

The commercial rent judge shall stay the decision on the fixing of the price of the renewed rent.

The Court of Appeal declares the action of the Lessor in denial inadmissible, as prescribed, on the grounds that the act of denial occurred after the expiry of the two-year limitation period (Article L 145-60 of the Commercial Code), which would have started to run on the date on which the Lessor acquired the premises.

Before the High Court, the Lessor maintains that it may invoke at any time the lack of registration, and until a decision on the fixing of the eviction indemnity has become final, to deny the Lessee the right to renewal.

The Court of Cassation upheld the Court of Appeal’s decision. It specifies that the lack of registration in the Trade and Companies Register may be invoked by the lessor, even if he was informed of it on the date of the leave, throughout the duration of the procedure in fixing the rent of the renewed lease or in payment of an eviction indemnity.

Commercial leases: consequences of the lessee’s lack of registration

Failure to register does not result in the automatic termination of the commercial lease. It only entails if the Lessee does not regularize its situation within one month of the issuance of a formal notice for the termination clause.

On the contrary, the lack of registration, on the date of the application for renewal or the leave issued by the Lessor, entails the automatic loss of the right to renewal. It is sufficient that the Lessor intends to avail itself of it unless the Parties have waived the registration condition.

What is the deadline by which the Lessor can invoke the lack of registration?

The decision commented on answers this question in line with case law:

– The Lessor may deny the application of the status of commercial leases for lack of registration of the Lessee as long as a decision has not ruled on the renewal, in particular the amount of the rent (CA Paris, 19 Nov. 2008, No. 07/18623).

– Regardless of its knowledge of the lack of registration on the date of the leave, the Lessor may deny the right to renewal during the entire rent fixing procedure (Cass. 3e civ., 19 Nov. 2015, No. 14-22,000).

In other words, the plea based on the statute of limitations cannot be opposed by the Lessee if it is not registered. Indeed, registration is the essential condition of the right to renewal.

Court of Cassation, Civil Chamber 3, 20 April 2023, 22-12.937