Commercial Leases/Business Goodwill

Governed by the provisions of Articles L. 251-1 to L. 251-9 of the Construction and Housing Code, the construction lease is a “lease by which the lessee undertakes, as a principal obligation, to erect buildings on the lessor's land and to maintain them in good condition throughout the duration of the lease” . Concluded for a period between eighteen and ninety-nine years without the possibility of tacit renewal , the construction lease grants the lessee a real property right that can be mortgaged, just like the buildings erected on the leased land, seized, transferred, or contributed to a company . At the end of the lease, the lessor becomes the owner of the buildings erected by the lessee unless the parties have agreed otherwise .

The inapplicability of the commercial lease regime to the construction lease  does not prevent the lessee from granting leases subject to the status concerning the premises they have built, which terminate upon the expiration of their own lease . In this case, the commercial lease is revoked by operation of law on the expiration date of the construction lease, and the lessee is entitled neither to renewal nor to the payment of eviction compensation .

The construction lease, despite certain common points, should not be confused with the emphyteutic lease to which certain provisions relating to commercial leases may be applied. Thus, a lease of bare land granted to a commercial company, which may erect any construction for commercial or industrial use but has no obligation to build, constitutes an emphyteutic lease and not a construction lease , as this obligation is inherent to the construction lease and cannot be equated to a mere option . Furthermore, while the presence of a clause imposing restrictions on the tenant's activity is contrary to the existence of an emphyteutic lease , this is not the case for the construction lease in which the parties retain their full contractual freedom on this point .

Cass. 3e civ., 7 April 2004, LawLex202100002972JBJ: except for the provisions referred to in Article L. 251-8 of the Construction and Housing Code, the parties retain their full contractual freedom and may insert a clause imposing restrictions on the tenant's activity.

Art. L. 251-3 Housing and Construction Code.

Art. L. 251-2 Housing and Construction Code.

Fort-de-France, 12 August 2015, LawLex202200001268JBJ; Also see Cass. 3e civ., 11 May 1988, LawLex202200001267JBJ: Article L. 145-41 of the Commercial Code is not applicable to construction leases (as a reminder, the aforementioned Article L. 145-41 is mandatory in matters of commercial leases as referred to by Article L. 145-15 of the same Code).

Fort-de-France, 12 August 2015, LawLex202200001268JBJ, previously cited.

Cass. 3e civ., 14 November 2007, LawLex202100002973JBJ.

Cass. 3e civ., 11 June 1986, LawLex202200001266JBJ.

Cass. 3e civ., 8 September 2016, LawLex202100002985JBJ, according to which a contract that only provides for the option to construct any buildings must be qualified as a long-term lease.

Cass. 3e civ., 13 May 1998, LawLex202100002979JBJ.

52. Construction lease