Reimbursement of the evicted tenant's relocation expenses

There is a body of case law, albeit little developed, according to which the costs of relocation of the tenant, in the context of an eviction, should not necessarily be reimbursed to the evicted lessee. Such a current appears contra legem!

Exclusion indemnity in the commercial lease: should relocation costs be included?

The rules applicable to determining an eviction indemnity may seem particularly difficult to understand.

The courts themselves do not apply the same solutions when they rule on cases that seem similar.

And for good reason, a single text in the Commercial Code gives us the guidelines, the case law enacting step by step the applicable rules.

Article L651-2 of the French Commercial Code provides:

« The lessor may refuse the renewal of the lease. However, the lessor must, with the exceptions provided for in Articles L. 145-17 et seq., pay the evicted tenant a so-called eviction indemnity equal to the damage caused by the lack of renewal.

This compensation includes in particular the market value of the business, determined according to the customs of the profession, possibly increased by the normal costs of moving and resettlement, as well as transfer fees and duties to be paid for a business of the same value, except in the case where the owner proves that the damage is less ».

We will focus here on relocation costs alone.

Resettlement costs: principle of full compensation for damage

French law lays down the principle of full compensation for damage: “all the damage, nothing but the damage”.

In a judgment dated 27 November 2012, the Court of Cassation specified that:

« Whereas having found that it was technically impossible to recover the old facilities and noted that, even if the squash courts of the former establishment were largely depreciated, there was nothing to suggest that they should have been redone in the short term or even in the medium term, the Court of Appeal, without violating the principle of full reparation, exactly deduced that the cost of installing six new courts should be taken into account to assess the damage resulting from the eviction of Prairie Squash Racket’s Club “(Cass. 3rd Civil Chamber, November 27, 2012, No. 11-15.373).

It has also been held that the move, and then the tenant’s accommodation, is a prejudice that the judge must assess even in the absence of supporting documents (3rd Civil Division, 17 September 2013, No. 12-20.584).

As a result of this principle, case law requires the reimbursement to the lessee forced to abandon his facilities, the entirety of the costs that he will have to bear to settle in an equivalent premises, not important that the relocation has not yet intervened for the moment, sinceit happens that the judge rules while the ousted lessee is still in the rented premises.

Some decisions do not award compensation for relocation expenses.

However, it appears that some jurisdictions deprive tenants of the resettlement allowance.

The motivations for these decisions are particularly surprising.

As an illustration, the Paris Court of Appeal ruled in a judgment of December 21, 2023 (RG No. 22/06147), that insofar as the premises did not have characteristics of an identity or a concept specific to the tenant to be found in the new premises, there was no reason to award compensation for relocation costs.

Such a decision may seem surprising sincea baker or restaurateur will necessarily have to make specific arrangements for their activity.

Such a decision is also contrary to the case law of the High Court.

Decisions contrary to the position of the Court of Cassation on Monoprix relocation costs

Indeed, in its famous MONOPRIX judgment of 21 March 2007, it held that:

« But whereas, on the one hand, the Court of Appeal held exactly that the tenant did not have to bear the costs of a costly relocation in proportion to the degree of depreciation of the investments that he abandoned by constraint and that should be taken into account relocation costs to assess the damage suffered by the evicted tenant both in the event of the replacement of the business and in that of his displacement;

Whereas, on the other hand, having noted that the new premises acquired by the company Monoprix to transfer its business had been delivered to it without any development and that it was essential for it to adapt them to its activity, the Court of Appeal deduced that the company Sophia had to bear part of this development work that it has sovereignly fixed ”(Cass. 3rd Civil Chamber, March 21, 2007, No. 06-10780).

The Court of Cassation has reiterated this position on numerous occasions (For illustration: Cass. 3ème civ., 22 June 2022, No. 21-13.153).

The principle laid down by the MONOPRIX judgment is the right to compensation for resettlement costs, whatever they may be, the trial judges nevertheless having sovereign power to make a deduction in view of the dilapidated facilities.

Concept of “identity” or “own concept”

The notion of “identity” or “own concept” is not mentioned at all.

Such a notion thus appears irrelevant, both with regard to the law and case law.

All tenants are therefore entitled to claim compensation for relocation costs, whether or not it is a question of identity or a specific concept.

The same Paris Court of Appeal, contrary to what it ruled in the aforementioned decision of 21 December 2023, retained compensation for resettlement costs in all cases:

« Insofar as the fittings furnishing the business are included in the valuation of the business, it is customary for an allowance to be applied to the costs justified or estimated by the tenant evicted for his relocation in order to take into account the dilapidation of abandoned furniture, it does not matter whether it is a specific piece of furniture or a specific concept “(CA Paris, November 9, 2023, No. 21/20061).

Such a solution must be approved in that it complies with the principles of French law.

Nicolas Pchibich