Commercial Leases/Business Goodwill

Ordinance No 2016-131 of 1 October 2016 established the pre-contractual duty of information  in the new Article 1112-1 of the Civil Code, which requires, in its paragraph 1, “the party who knows information whose importance is decisive for the consent of the other” to “inform the other party as soon as the latter legitimately does not know this information or trusts their co-contractor.” If this d …

Duty to inform

Ordinance No 2016-131 of 1 October 2016 established the pre-contractual duty of information  in the new Article 1112-1 of the Civil Code, which requires, in its paragraph 1, “the party who knows information whose importance is decisive for the consent of the other” to “inform the other party as soon as the latter legitimately does not know this information or trusts their co-contractor.” If this duty of information is of public order , it applies equally to the landlord and the tenant. Although it cannot concern the estimation of rent , the decisive information must necessarily have a direct link with the content of the lease or the quality of the parties . It is up to the party claiming to be the creditor of information to demonstrate that the other party has failed in its obligation, with the burden on the latter to prove that it has fulfilled it , with proof of its existence and execution being admissible by any means. Finally, Article 1112-1, paragraph 6, provides that the party who has failed in its duty of information incurs liability, and the contract may be annulled, concurrently, “under the conditions provided for in Articles 1130 et seq.”

Under its duty to inform the lessee, the lessor must attach various informational documents to the commercial lease agreement. Some relate to the condition of the structure of the leased building, as well as the surrounding natural and technological risks. Others concern the inventory of fixtures or the summary tables of charges, taxes, and levies, as well as completed and planned works.

The technical diagnostic file that must be annexed to the commercial lease contract includes various elements:

The lead exposure risk report, which identifies coatings containing lead , is only mandatory for premises used for residential or mixed purposes  when they were built before 1 January 1949 .

Article L. 1334-12-1 of the Public Health Code provides that owners of buildings, whose building permit was issued before 1 July 1997 , must “establish a diagnosis of the state of conservation of asbestos in identified materials and products” and implement “the necessary measures to control and reduce exposure.” Owners must thus create and maintain a file entitled “asbestos technical file,” including information and documents such as the report on the identification of materials and products from lists A and B containing asbestos, which is made available to the occupants of the building when it includes work premises . However, no legal provision requires the lessor, when concluding a commercial lease, to provide the lessee with an “asbestos technical file” . Nevertheless, if such a document does not necessarily have to be included in the lease annexes, the late establishment of the asbestos diagnosis by the lessor constitutes a breach of their obligation of safety and delivery of the leased premises .

The energy performance diagnosis, which is a document including notably the amount of energy actually consumed or estimated for a building , is mandatory for any enclosed and covered building or part of a building equipped with a heating or hot water system, except for certain categories listed in Article R. 126-15 of the Construction and Housing Code. In the context of a lease concerning all or part of a building, Article L. 126-29 of the same code provides that an energy performance diagnosis, whose validity period is set at ten years , must be “attached to the rental contract at the time of its conclusion, except for rural lease contracts and seasonal rental contracts.” However, if such a diagnosis must be annexed to the commercial lease and made available to the lessee , the latter cannot rely on the accompanying recommendations against the lessor, as they are only of informative value . It should be noted that since 1 July 2012, the date of entry into force of the decree of 18 April 2012 , a specific energy performance diagnosis is applicable to shopping centers subject to rental.

Under the terms of Article L. 125-5, I of the Environmental Code, “tenants of real estate located in areas covered by a technological risk prevention plan or a foreseeable natural risk prevention plan, prescribed or approved, in seismic zones or in radon potential zones defined by regulation, are informed by the lessor of the existence of these risks.” Also, a statement of natural and technological risks, established less than six months before the date of conclusion of the commercial lease , must be provided by the lessor and attached to the contract . If the establishment of a risk statement is mandatory even when the building, subject of the lease, is located outside a risk zone , the lessees cannot, however, rely on the provisions of the law of 12 July 2010 , which requires the lessor to attach a statement of natural and technological risks to commercial leases mentioned in Articles L. 145-1 and L. 145-2 of the Commercial Code, before its entry into force . In the absence of a risk statement attached to the lease, Article L. 125-5, V of the Environmental Code provides that “the tenant may seek the termination of the contract or request a reduction in the price from the judge,” provided that they demonstrate the existence of damage . It has been ruled that the statement of natural and technological risks delivered late by the lessor, during summary proceedings eighteen months after the signing of the commercial lease, cannot constitute a waiver by the lessee to rely on the irregularity committed at the conclusion of the lease .

When the building, subject to the commercial lease, has suffered damage that resulted in the payment of compensation pursuant to Article L. 125-2 of the Environmental Code or Article L. 128-2 of the Insurance Code, the landlord of the building is required to inform the tenant in writing of any damage that occurred during the period when they were the owner of the building or of which they were themselves informed . In the absence of this information, the tenant may request the termination of the lease or a reduction in rent in accordance with Article L. 125-5, V mentioned above.

When a plot of land, located in an area subject to soil information, is the subject of a commercial lease, the lessor is required to inform the lessee in writing and to provide them with the information made public by the State . Failing this, and if pollution is found to render the land unsuitable for the contractual purpose, within two years from the discovery of the pollution, the lessee has the option to request the termination of the lease or to obtain a rent reduction .

Finally, Article L. 125-9 of the Environmental Code requires an environmental appendix for leases concluded or renewed concerning premises of more than two thousand square meters for office or commercial use.

Under the terms of Article L. 145-40-1, para. 1, of the Commercial Code , “when the tenant takes possession of the premises in the event of the conclusion of a lease, assignment of the leasehold right, assignment or gratuitous transfer of the business, and upon the return of the premises, an inventory of fixtures is drawn up jointly and amicably by the landlord and the tenant or by a third party appointed by them.” This inventory of fixtures, which records a factual situation  until proven otherwise , is annexed to the commercial lease or, failing that, kept by each party . If no inventory of fixtures can be drawn up in accordance with the aforementioned rules, para. 2 of Article L. 145-40-1 provides that it will be “established by a bailiff, at the initiative of the most diligent party, with costs shared equally between the landlord and the tenant.” The text is of public order since any clauses, stipulations, and arrangements that have the effect of circumventing it are deemed unwritten, regardless of their form . Finally, para. 3 states that “the landlord, who has not made all efforts to carry out the inventory of fixtures, cannot invoke the presumption of Article 1731 of the Civil Code” according to which, in the absence of an inventory of fixtures, the tenant is presumed to have received the rented premises in good repair, and is obliged to return them in the same condition, unless proven otherwise.

4) The summary table of charges, taxes, and levies

Originating from Law No 2014-626 of 18 June 2014 , Article L. 145-40-2, para. 1, of the Commercial Code states that “any lease agreement includes a precise and exhaustive inventory of the categories of charges, taxes, levies, and fees related to this lease, indicating their allocation between the lessor and the lessee.” This inventory results in an annual summary statement , which includes the settlement and adjustment of charge accounts, prepared by the lessor and communicated to the lessee no later than 30 September of the year following the one for which it is prepared . Throughout the lease, the lessor is required to inform the lessee of any new charges, taxes, levies, and fees .

In the case of a building under joint ownership, Article L. 145-40-2, para. 3, specifies that the lease contract must indicate the distribution of charges among the different tenants occupying the entire property, in proportion to the area used by each. The amount of taxes, duties, and fees thus charged to the lessee must strictly correspond to the premises occupied by each tenant and the share of common areas necessary for the operation of the leased property . Para. 3 adds that during the term of the lease, “the lessor is required to inform the tenants of any element likely to modify the distribution of charges among tenants.” The annual summary statement, mentioned in para. 1, must be prepared and communicated to the lessee, in the case of a building under joint ownership, “within three months from the rendering of the co-ownership charges for the annual period” .

In all cases, the lessor is required to provide the lessee, upon request, with any document that justifies the amount of charges, taxes, levies, and fees charged to them , under penalty of being liable for the reimbursement of the advance payments on charges made by the tenant .

Finally, Article L. 145-40-2 of the Commercial Code is of public policy because clauses, stipulations, and arrangements that have the effect of circumventing it, regardless of their form, are deemed unwritten .

5) The summary and forecast table of works

When concluding the commercial lease contract, and then every three years, Article L. 145-40-2, para. 2, of the Commercial Code requires the lessor to provide the lessee with, on the one hand, “a forecast statement of the work he plans to carry out in the following three years, accompanied by a provisional budget” and, on the other hand, “a summary statement of the work he has carried out in the previous three years, specifying their cost.” Article R. 145-37 of the same code  adds that this information is communicated to the tenant within two months from each triennial due date and that, at the tenant's request, the lessor must provide any document justifying the amount of this work.

In a real estate complex, the commercial lease must specify the cost of the work among the different occupants of the building based on the area occupied by each .

Article L. 145-40-2 of the Commercial Code, which is of public order , does not provide any sanction against the lessor in the event of non-communication to the lessee of this summary and forecast of works.

Order No 2016-131 of 10 February 2016 on the reform of contract law, the general regime, and proof of obligations, Art. 2.

Art. 1112-1, para. 5, Civil Code, which provides that “the parties may neither limit nor exclude this duty.”

Cass. 3e civ., 17 May 2018, LawLex202200006035JBJ.

CA Paris, 28 March 2018, LawLex202200004060JBJ, préc.

Article L. 126-26 of the Construction and Housing Code.

Order, 18 April 2012, regarding the energy performance diagnosis for existing shopping centers offered for sale or rent in metropolitan France, JORF 0101, 28 April 2012.

Art. R. 125-26, para. 3, Environmental Code.

Art. L. 125-5, II, para. 2, Environmental Code.

CA Paris, 2 October 2013, LawLex202100003950JBJ.

Act No 2010-788 of 12 July 2010 on the national commitment to the environment, Art. 1, II.

CA Chambéry, 15 October 2013, LawLex202100003949JBJ.

CA Paris, 9 January 2013, LawLex202100004053JBJ, regarding the omission of the asbestos technical file and the statement of natural and technological risks in the lease annexes.

CA Paris, 2 October 2013, LawLex202100003950JBJ, op. cit.

Article L. 125-5, IV, Environmental Code.

Art. L. 125-7, para. 1, Environmental Code.

Art. L. 125-7, para. 2, Environmental Code.

Created by Article 13, I, of Law No 2014-626 of 18 June 2014 on crafts, trade, and very small enterprises. – It should be noted that Article 13, II, specifies that “for leases concluded before the entry into force of this law, Article L. 145-40-1 of the Commercial Code, in its wording resulting from this law, applies to any return of premises provided that an inventory of fixtures was drawn up at the time of taking possession.”

Cass. 3e civ., 25 February 2004, LawLex202100004629JBJ.

Cass. 3e civ., 23 May 2002, No 00-13.144.

Art. L. 145-40-1, para. 1, Commercial Code.

Act No 2014-626 of 18 June 2014 on craftsmanship, commerce, and very small enterprises, Art. 13, I, JO 140 of 19 June 2014.

Art. L. 145-40-2, para. 1, Commercial Code

Art. R. 145-36 Commercial Code, created by Article 6 of Decree No 2014-1317 of 3 November 2014 relating to commercial leases. – It should be noted that Article 8, para. 2, of the same decree makes this provision applicable to contracts concluded or renewed from the publication of the decree.

Art. L. 145-40-2, para. 1, Commercial Code.

Art. L. 145-40-2, para. 3, Commercial Code.

Cass. 3e civ., 5 November 2014, LawLex202200006036JBJ, according to which the absence of regularization of charges under the conditions provided in the commercial lease renders the quarterly calls for advance payments on charges without cause. – Also see Cass. civ. 3e, 9 June 2015, LawLex202200006037JBJ, in this case, the lessor did not provide any justification for water charges or garbage collection taxes.

Created by Article 6 of Decree No 2014-1317 of 3 November 2014 relating to commercial leases. – Note that Article 8, para. 2, of the same decree makes this provision applicable to contracts concluded or renewed from the publication of the decree.

CA Paris, 28 March 2018, LawLex202200004060JBJ.

Commercial Leases/Business Goodwill

94. Duty to inform

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94. Duty to inform

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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