The right to renew a commercial lease is a fundamental aspect of the French commercial lease regime (“statut des baux commerciaux”) and remains a frequent source of litigation — particularly concerning the revision of rent.
Although a commercial lease is typically concluded for a period of nine years, it does not automatically terminate at the end of the contractual term. If neither party takes action, the lease continues by tacit extension. It only ends through formal notice given for termination or renewal.
Accordingly, several key legal questions arise:
- Who is entitled to renew a commercial lease?
- How can the tenant continue occupying the premises after the lease term?
- How is the new rent determined in case of renewal?
Who Is Entitled to Renew a Commercial Lease?
Under French law, the tenant of a commercial lease benefits from a statutory right to renew at the end of the nine-year term. This right is public policy, meaning that any clause attempting to waive or limit it is deemed void and unenforceable.
However, to benefit from this right, the following legal conditions must be met:
- The lease must concern a building or premises;
- The tenant must be registered with the French Trade and Companies Register (RCS) at the date of the request for renewal or at the time the landlord gives notice;
- The tenant must be the owner of the business operated in the premises;
- The business must have been operated for at least three years in the premises in question.
How Can the Tenant Continue Occupying the Premises After the Lease Term?
The tenant may remain in the premises either through renewal or tacit extension of the lease.
Renewal Procedure
Either party may initiate renewal. Within the six months preceding the lease's expiration, the landlord may serve notice with an offer to renew (usually with the aim of increasing rent). Alternatively, within the same timeframe, the tenant may send a formal request for renewal via a bailiff (“huissier”) or registered mail with acknowledgment of receipt (LRAR).
Upon receipt of a renewal request, the landlord has three months to accept or refuse. If the landlord refuses without legitimate grounds, the tenant is typically entitled to a termination indemnity (“indemnité d'éviction”).
Tacit Extension
If neither party acts, the lease continues under identical terms beyond its original term. This tacit extension may be ended:
- By the landlord, with six months' prior notice;
- By the tenant, at any time, by giving notice or requesting renewal.
How Is the Rent Determined Upon Renewal?
As a rule, the renewed rent is capped (“plafonné”).
When the Rent Is Capped
- If the initial lease was signed for exactly nine years, the renewed rent is capped in accordance with legal indices.
- If the lease has been tacitly extended, but the total duration does not exceed 12 years, the rent remains capped.
When the Rent Is Uncapped
- If the original lease exceeds 9 years, the rent on renewal is uncapped (“déplafonné”), and the landlord may propose a higher rent.
- If the lease has been tacitly extended beyond 12 years, the renewed rent is also uncapped.
- Additionally, the rent may be uncapped if local commercial factors (“facteurs locaux de commercialité”) have significantly changed and led to an increase of more than 10% in rental value — for instance, if a new metro station opens directly in front of the premises. In all cases, rent increases are legally limited to 10% per year.
Conclusion
Under French commercial lease law, the tenant generally benefits from a right to renew the lease at a capped rent. However, this process involves strict formalities and can give rise to significant legal consequences.
For both landlords and tenants, it is strongly recommended to consult a qualified lawyer to ensure proper execution of renewal procedures and to safeguard your legal and financial interests.