Commercial leases are normally granted for the minimum term of nine years, and are subject to the mandatory commercial leases regime laid down in the French Commercial Code. The aim of this legislation is to grant security of tenure (propriété commerciale) to tenants so that they may ensure the continuation of their business undertakings and the retention of their clientele.
Short-term leases (or overriding leases) have a duration of up to three years. The tenant waives the protection of the mandatory regime applicable to commercial leases. Any renewal of the lease must be on the terms of a normal commercial lease.
Professional leases have a minimum duration of six years and are exclusively for professional activities (to the exclusion of commercial, craft, industrial and agricultural activities). The tenant can terminate the lease at any time with six months' notice.
The minimum obligatory term for a commercial lease is nine years. The tenant has the right to terminate the lease at the end of each triennial period by giving notice (either by bailiff or by registered letter with acknowledgement of receipt). The parties are free to negotiate a notice period longer than six months.
In certain cases, the tenant may waive its right to terminate the lease at the end of the relevant three-year periods. The parties are free to provide for whatever termination options/mechanisms that they wish (e.g., the parties may agree that there will be a financial penalty for exercising a right to terminate the lease at the end of a three-year period, to be paid by the tenant to the landlord). The cases in which the tenant may waive its triennial termination right are the following:
There is no maximum obligatory term for a commercial lease and the parties may agree to a lease of more than nine years. However, any lease of more than twelve years must be entered into before a notary and should be recorded with the locally competent mortgage office (Service de la Publicité Foncière). This involves the payment of a fee amounting to approximately 0.70% of the total rent and service charges due for the entire period of the lease (within the limit of 20 years).
Short-term leases can be granted for a maximum term of three years. Several short-term leases can be granted consecutively provided that in aggregate their duration does not exceed three years.
In such cases, the statutory commercial lease regime does not apply. During this period, the tenant expressly waives the protection of the mandatory commercial lease regime. Upon expiry of the agreed term, the lease terminates automatically without the need for notice (unless otherwise agreed by the parties). However, if upon expiry, the tenant remains and is left in possession of the premises without the landlord’s opposition at the latest within one month thereafter, a lease subject to the statutory commercial lease regime comes into existence with effect from the day following the contractual term.
Last modified 17 Mar 2026
The minimum obligatory term for a commercial lease is nine years. The tenant has the right to terminate the lease at the end of each triennial period by giving notice (by bailiff or by registered letter with acknowledgement of receipt). The parties are free to negotiate a notice period longer than six months.
Short-term leases can be granted for a maximum term of three years (several short-term leases can be granted consecutively provided that in aggregate their duration does not exceed three years), but in this case the legislation relating to commercial leases does not apply.
In certain cases, the tenant may waive its right to terminate the lease at the end of the relevant three-year periods. The parties are free to provide for whatever termination options/mechanisms that they wish (eg the parties may agree that there will be a financial penalty for exercising a right to terminate the lease at the end of a three-year period, to be paid by the tenant to the landlord). The cases in which the tenant may waive its triennial termination right are the following:
There is no maximum obligatory term for a commercial lease and the parties may agree to a lease of more than nine years. However, any lease of more than twelve years must be entered into before a notary and should be recorded with the locally competent mortgage office (Service de la Publicité Foncière). This involves the payment of a fee amounting to approximately 0.715% of the total rent and service charges due for the entire period of the lease (within the limit of 20 years).
Last modified 17 Mar 2026
In France, residential leases are primarily governed by the Law of 6 July 1989, a public policy framework that establishes mandatory rules for rental agreements concerning primary residences. Standard lease terms are set at three years when the landlord is a natural person, or six years when the landlord is a legal entity, with a security deposit typically limited to one month's rent. This protective regime imposes strict obligations on both landlords and tenants, regulates contract drafting and termination procedures, and safeguards tenants against unfair clauses.
Office, industrial and warehouse premises are usually let under the commercial leases regime, with rent freely negotiated; upon renewal, in the absence of agreement between the parties, the rent is determined by reference to the market rental value in accordance with statutory criteria, subject to index-linked cap rules.
Professional premises (let to lawyers, doctors etc) are usually let under professional leases with a duration of six years. The lease can be terminated by the tenant at any time by giving six months' notice.
Lettings of retail space and hotels are governed by the commercial leases regime.
Last modified 17 Mar 2026
With certain exceptions specified by law, the tenant has a right to renew the lease for a nine-year term – this does not apply to short-term leases that are granted for a term of up to three years.
If the tenant wishes to renew the lease and has not already received a notice from the landlord refusing a renewal, it may apply for the lease to be renewed. This application must be made within the six-month period preceding the expiry of the lease or at any time during the lease extension. The landlord must respond to this application within three months. If the landlord does not respond within three months, then the lease is renewed automatically, for a nine-year term.
Unless the refusal to renew is based on specific grounds, the landlord must pay compensation (indemnité d'éviction) to the tenant. The grounds upon which the landlord can refuse to renew and avoid paying compensation are:
Last modified 17 Mar 2026
Legal proceedings for the recovery of premises by the landlord usually take a year or more. They may require the assistance of a bailiff and, in some cases, law enforcement.
Eviction proceedings for commercial premises can be initiated at any time of the year. However, for residential premises, evictions cannot be carried out during the winter moratorium period (trève hivernale), which runs from 1 November 1 to 31 March. This period is defined by law to protect tenants from being evicted during the colder months.
Last modified 17 Mar 2026
A landlord may force a tenant to leave prior to the date originally agreed under certain conditions:
End of the three-year period: The landlord can force a tenant to leave at the end of each three-year period, but will have to pay compensation (indemnité d’éviction).
Specific grounds for Termination: The landlord under commercial leases may terminate the lease based on certain limited grounds, such as:
If the tenant defaults on the rent, the landlord can initiate legal proceedings to force the tenant to vacate the building. Associated legal proceedings can take around six months or more.
In addition, if the lease contains a termination clause, the landlord may terminate the lease prior to the date agreed should the tenant fails to comply with the terms and conditions of the lease. The implementation of the automatic termination clause requires a formal notice to address the breach to be served to the tenant by a bailiff (commandement). Should the tenant fails to address the breach within one month, the landlord is entitled to initiate proceedings to obtain court acknowledgment of the termination of the lease.
Last modified 17 Mar 2026
Yes, a lease can be terminated by a third party, such as the government or a municipal authority, through a compulsory purchase order (expropriation).
The length of the procedure can vary, but it generally involves several stages, including notification, negotiation and legal proceedings, which can take several months or even more than a year.
Where a compulsory purchase order takes effect, the lease is automatically terminated, and the tenant is entitled to compensation which is usually paid by the purchaser (government or municipal authority).
Last modified 17 Mar 2026
A common form of financial security is a security deposit for an agreed amount, usually equal to one rent instalment excluding VAT, but sometimes more, is common. Rents paid in advance, in whatever form and even as a guarantee, bear interest for the account of the tenant at a rate specified by the Bank of France where they exceed the value of two instalments of rent. Therefore, if a rent is payable quarterly and in advance, the landlord will ask for a deposit amounting to one instalment (three months) excluding VAT as the payment in advance corresponds to one instalment. According to article L.145-40 of the French Civil Code, any sum paid in excess (including the VAT) would incur interest at the rate specified by the Bank of France. However, any claim relating to the payment of such interest is subject to a two-year limitation period.
Cash security deposits are increasingly being replaced by bank guarantees and/or corporate guarantees (which overall guaranteed amount is not framed by the aforesaid article L.145-40 of the French Civil Code).
Payment of rent and service charges is also often secured by guarantees given by a parent company, another affiliate or a third party.
Last modified 17 Mar 2026
Leases usually specify the permitted use, which is narrowly defined, and any changes require the landlord's consent and/or administrative permissions.
Last modified 17 Mar 2026
Any works must have the prior consent of the landlord if they impact the structure of the property (walls,
Last modified 17 Mar 2026
The assignment of the leasehold right may be framed and/or prohibited by the lease’ stipulations and has to be distinguished from the assignment of the business which includes the leasehold right.
Leases normally stipulate that any transfer of the lease by the tenant to a third party is strictly prohibited or requires the landlord's prior written consent.
However, this requirement does not apply where the transfer of the lease is linked to the sale of the tenant's business (fonds de commerce). Unless otherwise provided, the tenant will remain jointly liable with the assignee and any subsequent assignees for a 3-year period from the assignment.
By law, sub-letting is not permitted, except if otherwise agreed. However, sub-letting is usually permitted in commercial leases, subject to the prior consent of the landlord. Subletting authorization are typically granted for parent companies and/or third-party companies having an equivalent financial healthiness. Even when sub-letting is allowed by the landlord, the tenant shall call the landlord to the signing of any sublease to make it valid.
Last modified 17 Mar 2026
Rent can be revised every three years at the request of either party, even if a formal rent review is not provided for in the lease.
However, the parties may agree on an automatic indexation of the rent – often stipulated on a yearly basis. The most frequently used indexes are the Tertiary Activities Rent Index (indice des loyers des activités tertiaires – ILAT), the Construction Costs Index (indice du coût de la construction – ICC) and the Commercial Rents Index (indice des loyers commerciaux – ILC), all published by the National Institute of Statistics and Economic Studies (INSEE). In any case, the index chosen by the parties must have some connection with the activity carried on by one of the parties or with the purpose of the lease.
If the rent review pursuant to an indexation clause results in an increase or decrease of 25% or more compared with the rent originally fixed or the rent as determined at the last rent review, either party can request that the rent be reviewed so as to be fixed by reference to the market rental value (valeur locative) or cadastral rental value.
Last modified 17 Mar 2026
During the course of the lease, rent can be revised every three years at the request of either party, even if a formal rent review (eg indexation clause) is not provided for in the lease.
The parties may also agree on an automatic indexation of the rent – often stipulated on a yearly basis. The most frequently used indexes are the Tertiary Activities Rent Index (indice des loyers des activités tertiaires – ILAT), the Construction Costs Index (indice du coût de la construction – ICC) and the Commercial Rents Index (indice des loyers commerciaux – ILC), all published by the National Institute of Statistics and Economic Studies (INSEE).
Upon the expiry of the lease contractual term, the renewal rent (rent applicable following the expiry of a lease (initial) contractual term) shall, theoretically, correspond to the (current) rental value of the leased premises. However, the difference between the initial (contractual) rent and the renewal rent shall be capped up to the variation of (a) the ILAT or of (b) the ILC (depending on which index is applicable to the lease / rent) leading to a capping rule.
However, the aforesaid capping rule shall not apply in certain cases, allowing adjustment to market rental value (eg significant changes in local commercial conditions, lease exceeding 9 years, exclusive office use, express lease provision etc).
To protect the tenant, any increase cannot exceed 10% per year until the adjusted rent is reached (lissage). Please note that this rule is only applicable if the rent is uncapped because (i) a party is able to evidence a material change in the local commercial factors or (ii) the lease has been granted for an initial contractual term exceeding 9 years. This rule shall not replace the rent variation due to the rent indexation.
Last modified 17 Mar 2026
The landlord can elect to subject the rents to VAT at the 20% rate. Should the landlord do not elect and should the asset be completed for more than 15 years, CRL (Contribution sur les Revenus Locatifs – Contribution from Rental Revenues) amounting to 2.5% of the rent will be automatically applicable.
VAT can be recovered (totally or partially) by the tenant in the ordinary course of its business and if its activity is subject to VAT. CRL is not recoverable but is a tax-deductible expense.
Last modified 17 Mar 2026
There are several options available to the landlord depending upon the specific circumstances and what the landlord wants to achieve.
Please note that prior to any procedure or implementation of a rental guarantee, it is recommended to send a formal notice to the tenant requesting compliance with his contractual requirements and to try to find an amicable solution.
Once the lease is terminated, the landlord should have a debt recovery plan, as some collection methods may no longer be available after the lease ends.
In principle, the opening of safeguard, receivership or liquidation proceedings does not affect the commercial lease. The lease remains in force, even if the distressed tenant has not paid rent due prior to the opening of the proceedings.
Under French law, the opening of either of those proceedings cannot result in the automatic termination of an ongoing contract (ongoing commercial lease) notwithstanding any contractual clause providing for termination. Furthermore, it triggers an automatic stay of individual enforcement actions related to claims that arose prior to the opening judgment: creditors (landlords) can no longer take legal action to recover their prior claims or terminate the lease on this basis.
With respect to rent arrears accrued prior to the opening of the proceedings, landlords must file a proof of claim within two (2) months from the publication of the opening judgment in the Bodacc (French legal bulletin). This time limit is extended to four (4) months from the date the judgment opening the proceedings for landlords that are not French residents. The proof of claim must include the sums owed to the landlord and mention the landlord’s privilege.
Indeed, notwithstanding other possible guarantees granted by the tenant, the landlord has a legal privilege only for the last two (2) years of rent preceding the opening judgement. This privilege grants priority of payment for rent arrears, ranking 14th in the liquidation creditors’ waterfall, but only up to a limit of six (6) months of rent; the remaining eighteen (18) months rank 16th, ahead of unsecured claims.
During safeguard or receivership proceedings, the judicial trustee – or, in the absence of such an appointment, the debtor, subject to the prior consent of the judicial creditors’ representative – has the discretion to either continue (if the company has the funds to pay future rents) or terminate the lease. Please note that the opening of judicial liquidation proceedings does not automatically entail the termination of the lease, and the powers normally vested in the judicial trustee are then exercised by the judicial liquidator.
If the judicial trustee decides to terminate the commercial lease, termination becomes effective upon receipt by the landlord of the decision to terminate the lease. In such a case, the landlord may file a proof of claim for damages resulting from the lease termination.
If the lease is terminated, the landlord also has a privilege for the current year, covering all obligations related to the performance of the lease and any damages the court may award.
If the lease is continued, the judicial trustee must fulfil all rent obligations arising after the opening judgment under the lease. If these obligations remain unpaid, the landlord must notify the insolvency bodies (judicial trustee and creditors' representative) within one (1) year after the observation period ends, or risk losing their privilege. In liquidation, the landlord must notify the liquidator within six (6) months of the liquidation judgment or, if applicable, within one (1) year of the sale plan judgment. This claim will rank 6th in the liquidation creditors’ waterfall, after employee claims, judicial costs, and conciliation-privileged creditors. Failure to notify results in the loss of the priority payment right.
With respect to rent arrears accrued after the opening of the proceedings (safeguard, receivership and liquidation proceedings), landlords may apply for termination of the lease due to the non-payment no earlier than three (3) months after the opening judgment. However, if the sums due are paid before the expiration of this period, there is no basis for lease termination (the judge must verify whether the tenant has paid the outstanding sums before the expiration of the three-month period, or before the date on which the judge rules).
To obtain a court-ordered termination of the lease, the landlord may petition either:
Please note that landlords may seek lease termination on the grounds of contractual breaches by the tenant other than payment obligations. In such cases, landlords may take action at any time during safeguard or receivership proceedings, as these actions are neither interrupted nor prohibited. In the event of liquidation proceedings, landlords must initiate such actions within three (3) months of the publication of the liquidation opening judgment in the Bodacc.
Last modified 17 Mar 2026
All commercial leases of more than twelve years must be registered. Such leases must be entered into before a notary and shall be recorded with the locally competent mortgage office (Service de la Publicité Foncière). This involves the payment by the tenant (it being specified that the landlord is however jointly liable for the payment of such fee) of a fee amounting to approximatively 0.70% of the total rent and service charges due for the entire period of the lease (within the limit of 20 years).
The parties may also agree on an entrance fee/key money to be paid by the tenant. These entrance fee/key money (droit d'entrée/pas-de-porte) is, depending on the circumstances, either analysed as: a compensation for commercial advantages granted to the tenant (not relating to the rent) or as a rent supplement, paid in advance.
Last modified 17 Mar 2026
If there is more than one tenant, the expenses are shared according to the terms of the relevant leases.
Typically, the expenses are allocated on a prorate basis determined with regards of the aggregate surface of the building and the rented surface by each tenant.
Last modified 17 Mar 2026
Under the French Civil Code, expenses relating to the maintenance of the premises and major repairs are payable by the landlord.
It is market practice for the landlord to recover all, or a major part, of these expenses from the tenant in the form of service charges. Major/structural works listed under article 606 of the French Civil Code, together with the fees incurred in relation to such works, may not be recharged to the tenant.
An extensive and precise list of works completed during the last three years (with their cost) and to be completed during the coming three years (with an estimated budget) must be drawn up and communicated to the tenant by the landlord on signing the lease. An updated list of works completed during the last three years (with their cost) and to be completed during the coming three years (with an estimated budget) is to be provided every three years by the landlord to the tenant.
Last modified 17 Mar 2026
Under the French Civil Code, the cost of utilities and telecommunications is payable by the landlord, but the tenant will normally be given responsibility for electricity, heating, and gas supplies. If there is more than one tenant, these expenses are shared according to the terms of the relevant leases.
Last modified 17 Mar 2026
The owner of the property must take out an insurance policy to cover risks associated with premises occupied under a commercial lease. The tenant must also insure risks associated with its own activities on the premises.
The insurance policy usually covers inter alia the risk of fire, explosion and theft.
It is common to include an express clause in the lease agreement which provides for the tenant to reimburse the owner for the cost of insuring the premises as part of the service charges.
Last modified 17 Mar 2026
Are there any specific regulations and/or laws which apply to leases of particular categories of real estate, such as residential, industrial, offices, retail or hotels and what is their impact?
In France, residential leases are primarily governed by the Law of 6 July 1989, a public policy framework that establishes mandatory rules for rental agreements concerning primary residences. Standard lease terms are set at three years when the landlord is a natural person, or six years when the landlord is a legal entity, with a security deposit typically limited to one month's rent. This protective regime imposes strict obligations on both landlords and tenants, regulates contract drafting and termination procedures, and safeguards tenants against unfair clauses.
Office, industrial and warehouse premises are usually let under the commercial leases regime, with rent freely negotiated; upon renewal, in the absence of agreement between the parties, the rent is determined by reference to the market rental value in accordance with statutory criteria, subject to index-linked cap rules.
Professional premises (let to lawyers, doctors etc) are usually let under professional leases with a duration of six years. The lease can be terminated by the tenant at any time by giving six months' notice.
Lettings of retail space and hotels are governed by the commercial leases regime.
Last modified 17 Mar 2026