Commercial Leases/Business Goodwill

Under the terms of Article L. 145-14, para. 2, of the Commercial Code, the eviction indemnity includes “normal moving and relocation expenses.” These expenses refer to the essential adaptation costs for fitting out premises to the activity conducted, excluding the equipment necessary for the activity, which is an integral part of the business . However, full compensation does not imply that the in …

Relocation expense indemnity

Under the terms of Article L. 145-14, para. 2, of the Commercial Code, the eviction indemnity includes “normal moving and relocation expenses.” These expenses refer to the essential adaptation costs for fitting out premises to the activity conducted, excluding the equipment necessary for the activity, which is an integral part of the business . However, full compensation does not imply that the indemnity for relocation expenses corresponds to all the expenses incurred by the lessee; this indemnity must be limited to the normal relocation expenses under operating conditions similar to those in the premises from which they were evicted . The trial court judges must assess the amount of compensable damage they ascertain, even if the lessee provides no proof of expenses borne by them .

The lessor is only obligated to reimburse the necessary costs for fitting out premises equivalent to those vacated, taking into account the actual area of the former premises and their characteristics, as well as the technical constraints of a new installation . Neither improvements nor purely convenient arrangements are the lessor's responsibility . The lessee cannot claim reimbursement for relocation costs unless it is first established that there were specific arrangements in the premises subject to eviction that could be reinstalled in replacement premises . Similarly, compensation is excluded in cases of obsolescence of the fittings, the dilapidation of installations abandoned in the premises subject to eviction, especially when, by the lessee's own admission, they would have had to undertake fitting works to bring the premises up to the visual identity standards of their new concept, absent eviction . However, the Court of Cassation recently ruled that an accession clause without compensation stipulated in favor of the lessor does not prevent the evicted lessee from being compensated for relocation costs to new premises with similar fittings and equipment to those they were forced to leave .

The lessor must compensate the lessee, evicted from a non-transferable business, for relocation costs if and only if the lessee relocates . To be exempt, the lessor is required to prove non-relocation . However, in a recent case, the Paris Court of Appeal shifted the burden of proof of relocation onto the lessee. Indeed, it upheld the trial judges' decision to order, considering the amounts already received by the lessee and the time elapsed since leaving the premises without justifying any search for premises or a serious relocation project, the deposit of reemployment and relocation compensation with the Caisse des dépôts et consignations, and conditioned their payment on the lessee providing proof of actual relocation within six months from the notification of the decision .

The compensation for relocation expenses is due whether there is a transfer of activity or loss of the business. Indeed, the Court of Cassation considers that the evicted lessee should not bear the costs of an expensive relocation in proportion to the degree of depreciation of the investments they are forced to abandon. Therefore, relocation expenses must be taken into account to assess the damage suffered both in the case of replacing the business and in its relocation . However, if compensation for relocation expenses can be granted even in the event of loss of the business, it is on the condition of justifying the need to incur all or part of the requested amounts .

Finally, the payment of a relocation allowance assumes that the tenant, at the date of assessment of the eviction indemnity, has not ceased all activity and has relocated to new premises .

CA Paris, 26 September 2018, LawLex202300012028JBJ.

CA Nîmes, 12 May 2011, LawLex202300012027JBJ, which holds that when part of the expenses constitutes investments made with a view to expanding the nursery's capacity and improving user reception, compensation is limited to the minimum work required to enable the tenant to operate under conditions similar to those offered in the former premises; CA Riom, 20 March 2024, LawLex202400002614JBJ.

CA Paris, 7 June 2017, LawLex202300012034JBJ.

Cass. 3e civ., 21 March 2007, LawLex202300012037JBJ.

CA Paris, 27 November 2013, LawLex202300012838JBJ.

Cass. 3e civ., 2 July 2013, LawLex202300012038JBJ, which quashes the appeal decision that holds, to condemn the lessor to pay a certain sum as eviction compensation, that the lessee may claim, as ancillary compensation, a moving indemnity since he necessarily had to move, provided an estimate, and that the subsequent judicial liquidation is irrelevant, whereas at the date of assessment of the eviction compensation, the lessee had ceased all activity and had not resumed a business.

Cass. 3e civ., 17 September 2013, LawLex202200004439JBJ, which quashes the judgment that holds that the lessee does not dispute that fitting-out work was financed for a certain amount by a third-party company, that he does not produce any proof of expenses left to his charge corresponding to the difference between this amount and that retained by the expert, and that, even if the transfer of the business took place, no invoice justifying the expenses actually incurred in this respect is provided.

CA Paris, 26 September 2018, LawLex202300012028JBJ, which specifies that in assessing the damage suffered by the evicted lessee, the costs necessary for their relocation must be considered, but in proportion to the degree of depreciation of the investments made.

Cass. 3e civ., 18 May 1994, LawLex202300012036JBJ.

CA Aix-en-Provence, 2 October 2014, LawLex202300012029JBJ.

Cass. 3e civ., 13 September 2018, LawLex202200006099JBJ.

Cass. 3e civ., 18 December 2012, LawLex202300012356JBJ, according to which the lessor is required to compensate the evicted lessee of a non-transferable business for relocation expenses and transfer duties to be incurred for the acquisition of a business of the same value, unless it is established that the lessee will not relocate to another business.

Cass. 3e civ., 12 January 2017, LawLex202200006098JBJ, which overturns the ruling that, to reject the claim for relocation expenses, holds that in the absence of the tenant demonstrating what such expenses they might incur, their claim is not substantiated by merely producing a transformation estimate; 11 July 2019, LawLex202200006097JBJ, which specifies that the trial court judges cannot reject the tenant's claim for payment of an indemnity for relocation expenses without investigating whether the landlord provides proof of non-relocation.

Commercial Leases/Business Goodwill

281. Relocation expense indemnity

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Les notions juridiques connexes

281. Relocation expense indemnity

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise