Commercial Leases/Business Goodwill

Under Articles 2224 and 2227 of the Civil Code, personal, movable, or immovable actions are time-barred from the day the holder of a right knew or should have known the facts enabling them to exercise it. However, the starting point of this limitation period differs depending on the action taken. Thus, it runs from:
- the date of signing the commercial lease in the event of an action challenging t …

Starting point

Under Articles 2224 and 2227 of the Civil Code, personal, movable, or immovable actions are time-barred from the day the holder of a right knew or should have known the facts enabling them to exercise it. However, the starting point of this limitation period differs depending on the action taken. Thus, it runs from:

- the date of signing the commercial lease in the event of an action challenging the validity of one of the clauses;

- the effective date of the notice when its validity is contested , even if the indicated date is incorrect ;

- the date on which the landlord notifies their refusal to renew for an action for payment of eviction compensation (Article L. 145-10, para. 5, Commercial Code) , even if the notification occurred before the expiration of the commercial lease ;

- the date of conclusion of the contract in the event of an action for reclassification of an agreement as a commercial lease , even if it has been tacitly renewed  or renewed by successive amendments ;

- the date on which the request for the application of the status of commercial leases is made by either party concerning an action for setting the rent of the commercial lease upon the expiration of the derogatory lease by application of Article L. 145-5 of the Commercial Code ;

Furthermore, the limitation period runs from the day the letter containing the request for rent revision is sent for the action for rent revision , from the day the landlord became aware of the violation, which grounds their refusal, when acting to withdraw the offer to renew the lease for a serious and legitimate reason , or from the superiority of the sublease rent compared to that of the main lease for the action to readjust the rent due to the existence of a sublease , or from the day the nullity of the lease is pronounced for the action to return the equivalent value of the enjoyment of the premises due after the annulment .

The action for payment of the occupancy indemnity based on Article L. 145-28, which is subject to the two-year limitation period set by Article L. 145-60 , starts from the effective date of the notice with refusal to renew the lease when the landlord has, in that notice, offered the tenant an eviction indemnity and has not, at any time thereafter, contested the tenant's right to benefit from this indemnity , even in the event of exercising their right of repentance . This two-year period runs, in the event of a dispute related to the right to the eviction indemnity, from the day when this right is definitively established, in principle, for the benefit of the tenant , including when the landlord has exercised their right of repentance , or if they have subsequently contested this right to indemnity before the appellate judges following new alleged breaches by the tenant . In the event of exercising the option right, at the initiative of either the landlord or the tenant, the two-year limitation period only starts from the day the other party is informed . When the tenant remains in the premises after exercising their option right, they become an occupant without right or title and are, therefore, liable for a common law occupancy indemnity subject to a five-year limitation period, which starts from that day .

The starting point for the prescription of the action to set the price of the renewed lease is:

- the effective date of the new lease in the event of termination, issued by the lessor, with an offer of renewal subject to a change in price ;

- the effective date of the new lease in the event of acceptance of the principle of renewal by the lessor, as deemed by Article L. 145-10 of the Commercial Code , even if it occurred before this date  or the effective date of the tenant's renewal request tacitly accepted by the lessor, in the absence of a response to this request within the three-month period, even if the request was not brought to the attention of the purchaser, who acquired the property after it ;

- the date of acceptance, by the landlord, of the principle of renewal when the new lease retroactively took effect before this date .

In matters of work, the five-year limitation period for the action for payment of facade renovation work starts not from the date of the vote on the renovation work by the general meeting of co-owners or the date of the calls for funds by the property manager, but from the date of the statement of account of charges including the total cost of the renovation work . Furthermore, the action for recovery of undue payment can only be usefully initiated from the date when the payment became undue, that is, from the day when the rent reductions granted exceeded the cost of the improvement work undertaken .

Finally, in a case where the lessee paid amounts corresponding to a rent indexation not provided for in the lease, the Court of Cassation held that, due to the effect of prescription, the lessee cannot contest the application of the indexation more than five years before their claim, and that the restitution claim, for the indexation not provided for by the agreement, cannot be calculated on the basis of the initial rent but must be based on the rent paid at the date the prescription period begins .

CA Versailles, 4 July 2024, LawLex202400005174JBJ.

Cass. 3e civ., 23 September 2021, LawLex202100006346JBJ.

Cass. 3e civ., 1 April 1998, LawLex202300012908JBJ: in this case, the lessor had been informed by a letter from the lessee dated 10 October 1991 that the total price of the subleases was higher than the main rent, and he only requested the adjustment of this rent on 9 May 1994, more than two years later. – See also Cass. 3e civ., 9 September 2021, LawLex202100006474JBJ.

Cass. 3e civ., 14 June 2018, LawLex202300003330JBJ.

Cass. 3e civ., 16 March 2023, LawLex202300009123JBJ.

Cass. 3e civ., 10 December 1997, LawLex202300012728JBJ.

Cass. 3e civ., 12 June 2001, LawLex202300012729JBJ.

Cass. 3e civ., 23 March 2011, LawLex202300012730JBJ; 15 December 2016, LawLex202300012731JBJ: in this case, the lessee's right to eviction compensation had been established by a mixed ruling of 14 March 2013, and the claim for payment of the occupancy indemnity was made on 15 January 2015, allowing the trial court to conclude that the claim was not time-barred.

Cass. 3e civ., 18 January 2018, LawLex202200007052JBJ, which quashes the decision that held, to declare the action for payment of the occupancy indemnity time-barred, that, the lessor having exercised his right of repentance, the two-year limitation period for his action for payment of the occupancy indemnity began to run from the day after the lease expired, whereas the limitation period for the action for payment of the occupancy indemnity, based on Article L. 145-28 of the Commercial Code, cannot begin to run before the day on which the tenant's right to the benefit of an eviction indemnity is definitively established in principle.

Cass. 3e civ., 17 October 2012, LawLex202300011380JBJ, which quashes the judgment that holds, to declare the action for the determination of the occupancy indemnity time-barred, that the landlord is not justified in arguing that the starting point of the limitation period for the action for payment of occupancy indemnities is deferred in the event of a dispute over the right to an eviction indemnity, whereas, on the one hand, the notice of termination with refusal to renew was served with an offer of an eviction indemnity, this right to an eviction indemnity having been contested only before the court in view of the alleged breaches by the lessee in the regular payment of occupancy terms and, on the other hand, and in any event, that Article L. 145-60 of the Commercial Code does not make the two-year limitation period it prescribes conditional on the lessee's right to an eviction indemnity being contested.

Cass. 3e civ., 16 March 2023, LawLex202300009123JBJ, préc.

Cass. 3e civ., 16 March 2023, LawLex202300009123JBJ, op. cit.

CA Versailles, 4 July 2024, LawLex202400005174JBJ, previously cited.

Cass. 3e civ., 2 October 1996, LawLex202400000386JBJ; 8 January 1997, LawLex202400000387JBJ.

CA Bordeaux, 17 June 2024, LawLex202400004626JBJ.

Cass. 3e civ., 30 June 2004, LawLex202300011310JBJ. – Also see Cass. 3e civ., 3 November 2016, LawLex202300014680JBJ.

Cass. 3e civ., 7 September 2017, LawLex202400000388JBJ.

Cass. 3e civ., 29 November 2006, LawLex202200008352JBJ: in this case, the lessor had accepted on 20 April 1999 the renewal of the lease starting from 20 January 1999 by requesting the rent to be set at a higher price and had notified her first brief on 13 March 2001; Bordeaux, 17 June 2024, LawLex202400004626JBJ, supra.

CA Paris, 9 October 2013, LawLex202400000385JBJ.

Cass. 3e civ., 31 May 2007, LawLex202400000384JBJ.

See by analogy, regarding a residential lease, Cass. 3e civ., 6 July 2017, LawLex202400000400JBJ.

Cass. 3e civ., 3 November 2021, LawLex202200002339JBJ.

Cass. 3e civ., 23 November 2011, LawLex202400000310JBJ, who approves the decision of the court of appeal, which, seized of a request for reclassification, pursuant to Article L. 145-2, 1° of the Commercial Code, of the lease established between the parties by deed of 30 April 2003 with effect from 1 April 2003, found that the action had been initiated on 28 January 2006, and correctly deduced that this action was time-barred under Article L. 145-60 of the same code; 29 November 2018, LawLex202300011650JBJ; 7 December 2022, LawLex202300000916JBJ, regarding a request for reclassification of a bare land lease agreement into a commercial lease; 25 January 2023, LawLex202400000311JBJ, regarding a request for reclassification of a management lease contract into a commercial lease; Aix-en-Provence, 13 June 2024, LawLex202400004639JBJ, according to which the limitation period for the action for reclassification of a contract into a commercial lease runs, even in the presence of a succession of distinct contracts derogating from the provisions of the commercial lease status, from the conclusion of the contract whose reclassification is sought.

Cass. com., 11 June 2013, LawLex202400000380JBJ.

Cass. 3e civ., 3 December 2015, LawLex202400000381JBJ; 14 September 2017, LawLex202300011651JBJ.

Cass. 3e civ., 7 July 2016, LawLex202200002051JBJ.

Cass. 3e civ., 7 November 1990, LawLex202400000382JBJ, which quashes the decision that holds, to declare admissible the request for revision of the rent price of a commercial premises, that the starting point of the two-year prescription period is the day of notification of the initial request, the date on which the lessee actually became aware of the content of the letter sent by the lessor by which he expressed his intention to revise the rent price; 13 February 2002, LawLex202300008013JBJ.

Cass. 3e civ., 9 November 2017, LawLex202400000383JBJ.

Commercial Leases/Business Goodwill

352. Starting point

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352. Starting point

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