Commercial Leases/Business Goodwill

The lessee, who has applied for retirement benefits or has been granted a disability pension, is required, in accordance with Article L. 145-51, para. 1, of the Commercial Code, to notify the lessor, as well as the creditors on the business assets, of their intention to assign the lease, specifying the proposed price and the nature of the activities envisaged. Article 27 of Law No 2015-990 of 6 August 2015, which amended Article L. 145-49 and replaced the service by notification with a registered letter with acknowledgment of receipt, does not apply to Article L. 145-51. Thus, the service of the lease assignment to the lessor and the creditors registered on the business assets, based on Article L. 145-51, must be carried out by extrajudicial act . The service of the intention to assign the lease delivered, by act of a judicial officer, to the lessor's agent, is null and void when it is not established that the latter was aware of it within a timeframe allowing them to exercise their rights . Furthermore, no text provides that the despecialization notified to the lessor must be previously stipulated in a preliminary agreement, the content of which does not have to be communicated to them, the proposed agreement between the assigning lessee and the potential assignee being unrelated to them .

Article L. 145-51, para. 1, of the Commercial Code specifies that upon receipt of the notification, the landlord has a two-month period to exercise a right of first refusal under the conditions set in the extrajudicial act. Failing to exercise this right, consent is deemed given if, within the same period, the landlord has not brought the matter before the Judicial Court . However, the fact that the landlord did not oppose the transfer within the legal period nor exercised the right of preemption does not mean that the landlord authorized the completion of renovation work by the transferee, which was established as a condition precedent in the transfer deed . Furthermore, the circumstance that negotiations took place between the landlord and the prospective transferee regarding the rent price, with the landlord attempting to obtain a higher rent and an entry fee, during the period between the tenant's notification of intent to transfer the lease and the landlord's exercise of the right of first refusal, does not constitute a waiver by the landlord of the legal right . The landlord may only exercise the right of first refusal on the lease under the conditions set in the notification, without distinguishing according to these conditions. Thus, the landlord cannot claim compensation against the tenant between the proposed sale price of the lease right, which was accepted, and the landlord's claim resulting from the cost of repairs to the leased premises, when the condition concerning taking the premises as is was included among the conditions in the notification act .

The lessor, who opposes the change of activity, must refer the matter to the Judicial Court within two months from the notification of the lease transfer. Referring the matter to the court is the only procedural form accepted; a notice invoking the termination clause cannot substitute for it and be considered as a refusal to grant the despecialization . The lessor, who refuses the change of activity, cannot oppose the tenant with reasons other than those related to the compatibility of the proposed business with the destination, characteristics, and situation of the building . Although Article L. 145-51 is of public order, the tenant's right it enshrines does not allow for overriding the conventional rules governing the building housing the leased premises, particularly the specifications . Therefore, if a clause in the co-ownership regulations arranges and restricts the destination of the commercial premises dependent on the building by excluding activities that could compete with existing businesses within the co-ownership, the new activities contemplated within the framework of the lease right transfer that would directly compete with one of these businesses are incompatible with the destination of the building . Conversely, when a non-compete clause applies to an entire shopping center, a lessor cannot oppose the transfer of the lease right accompanied by a despecialization of the leased premises when it is not demonstrated that the proposed activity competes with existing businesses within the center .

Finally, if the landlord must justify a serious and legitimate reason to oppose the proposed transfer, this opposition must in no way constitute an abuse of rights , which would be sanctioned by damages if it results in harm to the tenant , which can be analyzed as a loss of opportunity to see the transfer succeed . Thus, the landlord's attitude of denying the legitimate right of the tenant by threatening, through a lawyer, both the tenant and the transferee with legal action in case of reiteration of the transfer promise, constitutes bad faith and engages their liability . Abuse of rights is characterized when the landlord's refusal is linked not to the future activity of the transferee but to financial demands that are unwarranted , or when the owner has worked to thwart the transfer . Conversely, the landlord's refusal is not considered faulty when it merely exercises its right to contest on legal grounds and in a non-abusive manner .

CA Colmar, 29 January 2007, LawLex202300009323JBJ.

CA Paris, 24 January 2018, LawLex202300009324JBJ.

CA Paris, 21 April 2000, No 1999/07274, JurisData: 2000-114076: in this case, the building already housed a business of “delicatessen catering with take-away meals,” and the assignee of the lease rights was considering activities of “take-away sales, fast food, sandwich shop.”

Cass. 3e civ., 13 May 2015, LawLex202200000624JBJ, CA Montpellier, 30 May 2017, LawLex202200003796JBJ, previously cited.

CA Montpellier, 3 September 2013, LawLex202300009360JBJ, previously cited.

CA Bordeaux, 16 November 2011, LawLex202300009361JBJ.

Cass. 3e civ., 1 April 2008, LawLex202300009321JBJ.

CA Paris, 27 June 2018, LawLex202300009322JBJ.

CA Bordeaux, 16 November 2011, LawLex202300009361JBJ, prec.: in this case, the lessor ultimately conditioned their authorization on the current lessee paying a sum of money and renegotiating the lease terms with an increase in the monthly rent, whereas the despecialization related to the contemplated transfer does not allow for a modification of the lease price pursuant to Article L. 145-51 of the Commercial Code.

Paris, 13 September 2006, LawLex202300009362JBJ. LawLex202300009321JBJ: in this case, the lessor raised objections regarding the impossibility of obtaining the necessary authorizations for the work to be considered for the exercise of the new activity in view of the clauses of the co-ownership regulations, while the impossibility of obtaining these authorizations was not verified and the lessor was the majority co-owner of the building, thus leaving every probability that the transfer could have succeeded if the lessor had acted in good faith.

Cass. 3e civ., 16 January 2002, LawLex202200000626JBJ.

Cass. 3e civ., 19 November 2015, LawLex202200000621JBJ.

Cass. 3e civ., 21 May 2014, LawLex202300009357JBJ.

CA Paris, 13 January 2017, LawLex202300009358JBJ.

Cass. 3e civ., 30 November 1994, LawLex202300009325JBJ.

Cass. 3e civ., 5 March 2008, LawLex202200000625JBJ.

Cass. 3e civ., 23 November 2011, LawLex202200000623JBJ, prec.

CA Montpellier, 3 September 2013, LawLex202300009360JBJ, which specifies that indeed, Article L. 145-51 states that the nature of the activities intended to be carried out must be compatible with the destination and characteristics of the real estate complex where the premises are located.

174. Procedure