The French commercial lease (bail commercial) is not, strictly speaking, a type of contract: it is a mandatory statutory regime, codified in Articles L. 145-1 to L. 145-60 of the Commercial Code, which applies automatically once certain conditions are met. Its function is to protect the operator of a business (fonds de commerce) against loss of their premises – and therefore, in practice, against loss of their customer base. This is what French law calls propriete commerciale (commercial property right). The parties may draft their contract as they see fit, but once they fall within the scope of the statute, certain rules override their agreement and any contrary clause is deemed unwritten (Article L. 145-15 of the Commercial Code).
This guide addresses business owners, property investors, and international practitioners handling a one-off matter in France. We focus less on canonical definitions than on practical traps: the strict scope of application, the uncapping mechanism for rent, recoverable charges since the Pinel Act, the validity of termination clauses in light of 2025-2026 case law, and the interplay with insolvency proceedings.
The statute: a tenant’s right, not a type of contract
Article L. 145-1 of the Commercial Code sets three cumulative conditions for the statute to apply. First, there must be a built premises: bare land, a market pitch, or an advertising board cannot, in principle, be subject to a commercial lease. Second, the premises must house the effective operation of a commercial, industrial or artisanal business (fonds de commerce): the mere holding of commercial premises by a trader is insufficient. Third, the tenant must be registered with the Trade and Companies Register (RCS) or the Trades Register at the date of the notice to quit or the renewal request. This third condition excludes associations, liberal professions (who fall under the professional lease regime), and unregistered operators.
The statute is mandatory (d’ordre public). The parties cannot derogate from it by contract, except in the cases specifically provided by law. A clause excluding the tenant’s triennial break right, denying the right of renewal, or capping the eviction indemnity is void. The sanctions vary – nullity, clause deemed unwritten, reclassification of the contract – but the logic is the same: the commercial property right is not negotiable.
Commercial lease, derogatory lease, professional lease: key distinctions
Three neighbouring regimes must be carefully distinguished. The statutory commercial lease (bail commercial), which is the subject of this guide, requires the conditions of Article L. 145-1 and is subject to the mandatory statute. The derogatory lease (bail derogatoire), under Article L. 145-5, allows the parties to opt out of the statute for a maximum of three years, provided there is a single contract or succession of contracts for the same premises. Beyond three years, or upon tacit continuation, the lease automatically falls within the statute. The professional lease (bail professionnel), governed by Article 57 A of the Act of 23 December 1986, is reserved for liberal professions: it has a minimum term of six years but confers neither right of renewal nor eviction indemnity.
Particular vigilance is required regarding the derogatory lease. Landlords are sometimes tempted to chain short leases to avoid the statute. The 3rd Civil Chamber monitors this: once the cumulative duration exceeds three years or the tenant remains in the premises upon expiry without objection, a new lease subject to the statute arises. The consequences are radical – term extended to nine years, right of renewal, eviction indemnity.
Duration, triennial break, notice to quit
Article L. 145-4 of the Commercial Code sets the minimum duration of the commercial lease at nine years. The parties may stipulate a longer term (twelve years, eighteen years for certain indexed leases) but never shorter. The “3-6-9” formula, a term of art, reflects the central mechanism of the statute: the tenant may terminate at the end of each three-year period (at the end of the third and sixth years), while the landlord remains bound for the full term, save for exceptional cases.
This asymmetry is not a detail: it is the cornerstone of commercial property protection. The tenant whose business declines or who wishes to relocate can exit every three years; the landlord can only recover their property at term and subject to an indemnity. Limited exceptions are provided in Article L. 145-4: the owner may give notice at the end of a three-year period if they invoke construction or reconstruction of the building, or if they intend to exercise their right of recovery for residential occupation – but these cases are strictly regulated and subject to payment of an eviction indemnity.
Form of notice
For a long time, notice had to be served by bailiff (now called commissaire de justice). The Act of 18 November 2016 and the Ordinance of 24 October 2019 relaxed this rule: the tenant may now terminate by registered letter with acknowledgement of receipt at the end of each three-year period (Article L. 145-9). However, notice from the landlord and any notice refusing renewal, which triggers the right to an eviction indemnity, must still be served by commissaire de justice, on pain of nullity.
The required notice period is six months before the expiry date. Late notice is not void, but will only take effect at the next three-year expiry – which can represent three additional years of rent. The rigour of the formal requirements is consistent in case law: notice that fails to state the required grounds (refusal of renewal with offer of eviction indemnity, for example) may be reclassified and produce effects unintended by its author.
Rent: fixing, indexation, triennial review
The initial rent is freely set. Commercial leases are not subject to any ceiling at inception: a landlord may let their premises at any market rent, and the tenant may freely negotiate the amount. The statute does not intervene at this stage. It is during the lease, and above all at renewal, that disputes crystallise.
Indexation and the escalation clause
Almost all commercial leases include an indexation clause (clause d’echelle mobile), which automatically adjusts the rent according to an index. Two indices are currently used: the ILC (Indice des Loyers Commerciaux) for commercial and artisanal activities, and the ILAT (Indice des Loyers des Activites Tertiaires) for offices and tertiary activities. The INSEE construction cost index (ICC), historically used, has virtually disappeared from new contracts due to its volatile surges.
The indexation clause must satisfy a strict requirement: the period of variation of the index must correspond to the period of variation of the rent. A clause applying an annual index to a monthly rent, or using a different variation period, is deemed unwritten in its entirety. The 3rd Civil Chamber confirmed this in a decision of 23 January 2025 (No. 23-18.643).
Triennial review
Independently of contractual indexation, Article L. 145-37 opens to each party a review action every three years. The review aims to adjust the rent to the actual rental value. It is capped: the new rent cannot exceed the variation of the ILC or ILAT index since the last fixing, unless a material change in local commercial factors (Article L. 145-38) causing a variation of more than 10% in rental value can be demonstrated.
The escalation clause and the 25% threshold
Article L. 145-39 provides a specific mechanism when the lease contains an escalation clause: if the operation of the clause produces a variation in rent of more than a quarter compared to the initial rent or last judicially fixed rent, either party may ask the court to fix the rent at the rental value – without cap. This is a safety mechanism against index surges, but it works in both directions: upward and downward.
Renewal and uncapping
The right of renewal is, together with the eviction indemnity, the heart of the commercial property right. At the expiry of the lease (not at the end of a three-year period), the tenant is entitled to a new nine-year lease on the same terms, save as regards rent. This right is not automatic: it is exercised either by a renewal request from the tenant (Article L. 145-10), or by a renewal offer from the landlord, or, if nothing is done, by tacit continuation.
The landlord then has a choice: accept the renewal (proposing a rent), refuse renewal and pay an eviction indemnity, or – more rarely – invoke a legitimate ground for refusal without indemnity (notably serious breach by the tenant of their obligations, Article L. 145-17).
The capping mechanism
When the lease is renewed, the renewal rent is, in principle, capped: it cannot exceed the variation of the reference index since the last fixing (Article L. 145-34). This general rule protects the tenant against a sudden increase at the point where their commercial property right opens a new nine-year cycle.
This rule has several exceptions, which are the real zones of litigation. Uncapping (deplafonnement) is permitted where there has been, during the expired lease, a notable change in one of the following elements: characteristics of the premises, permitted use, respective obligations of the parties, or local commercial factors (Article L. 145-33). If such a change is demonstrated, the rent is fixed at the rental value, without cap.
Smoothing of the uncapped increase
Where uncapping is established, the final paragraph of Article L. 145-34 provides a protective mechanism: the increase resulting from uncapping is spread in annual steps of 10%. This is a valuable shock absorber for a tenant whose rent could otherwise double or triple.
Refusal of renewal and eviction indemnity
The landlord who refuses renewal without legitimate cause must pay the tenant an eviction indemnity (indemnite d’eviction), whose purpose, under Article L. 145-14, is to compensate “the loss caused by the failure to renew”. This indemnity, equal to the value of the business, is the economic counterpart of the commercial property right.
Calculation
The eviction indemnity comprises two main components. First, the value of the business (fonds de commerce) or, if the business can be relocated without loss of customers, the value of the lease right (droit au bail). The business value is assessed at the date of actual eviction, using standard valuation methods (turnover, EBITDA, sectoral comparisons). Second, ancillary indemnities: relocation costs, removal costs, temporary loss of trading, staff redundancy costs where applicable, double rent during the transition, and sometimes commercial disruption.
Right to remain in the premises
Until the eviction indemnity has been actually paid, the tenant has the right to remain in the premises on the terms of the expired lease (Article L. 145-28). During this period, they continue to pay an “occupation indemnity” which in practice is fixed by the court at an amount close to the renewal rent. This right to remain is essential: it guarantees the tenant’s continued use of the premises until the indemnity is effectively received and prevents the landlord from forcing departure before payment.
Assignment, sub-letting, change of use
The statute treats three operations that affect the continuity of the business distinctly: assignment of the lease, sub-letting, and change of permitted use (despecialisation).
Assignment of the lease attached to the business
Article L. 145-16 of the Commercial Code lays down a strong rule: clauses prohibiting the tenant from assigning their lease to the purchaser of their business are deemed unwritten. This rule protects the value of the business: without freedom to assign, the business is unsaleable. The tenant may therefore, in principle, assign their lease as part of a business sale without needing the landlord’s consent. In practice, leases often contain a consent clause that the tenant must follow – but the landlord can only refuse on legitimate grounds relating to the solvency or respectability of the assignee.
The isolated assignment of the lease right, however – one not accompanying a business sale – may validly be prohibited or made subject to the landlord’s consent.
Sub-letting: in principle prohibited
Unlike assignment, sub-letting is in principle prohibited unless expressly authorised by the contract or by the landlord’s express consent (Article L. 145-31). The rule is the inverse of that governing assignment: the landlord has the right to refuse, and their refusal need not be reasoned.
Change of permitted use
During the lease, the tenant remains bound by the permitted use (destination des lieux) stipulated in the contract. But economic evolution sometimes requires a change of activity. The statute provides two mechanisms. Partial change of use (Article L. 145-47) allows the tenant to add activities that are related to or complement the contractual activity, on simple notification to the landlord, without consent. Full change of use (Article L. 145-48) allows the tenant to change activity entirely, but requires a more onerous procedure – reasoned notification, landlord’s pre-emption right, right for the landlord to revise the rent in compensation.
Charges, works, inventory of condition: what the Pinel Act changed
The Act No. 2014-626 of 18 June 2014, known as the Pinel Act, profoundly reformed the regime of charges and works in commercial leases. Before 2014, contractual practice gave landlords wide latitude to pass on most charges, taxes, and even structural repairs to tenants. The Pinel Act ended this drift.
Precise and exhaustive inventory of charges
Article L. 145-40-2 requires the landlord to include in the contract a precise and exhaustive inventory of categories of charges, taxes, and levies connected to the lease, together with their allocation between landlord and tenant. Any charge not mentioned cannot be recovered. A Decree of 3 November 2014 (codified as Article R. 145-35) specifies which charges may under no circumstances be imposed on the tenant: major structural repairs within the meaning of Article 606 of the Civil Code, property management fees, the landlord’s income taxes, and remedial works attributable to the landlord.
The landlord must also provide the tenant annually with a statement of charges, showing the settlement and adjustment of accounts (Article R. 145-36). This statement must be sent before 30 September of the year following the accounting period.
Works
The allocation of works follows the same logic: routine maintenance falls on the tenant, structural repairs on the landlord. Any clause contrary to this legal allocation is, since 2014, struck down.
Entry and exit inventory of condition
Article L. 145-40-1 requires the preparation of a contradictory inventory of condition at entry and at exit. Failing this, the landlord cannot invoke the presumption of good condition under Article 1731 of the Civil Code – they must prove each instance of deterioration.
The termination clause and payment disputes
The termination clause (clause resolutoire) is the clause by which the parties agree that the lease shall be terminated by operation of law in the event of a breach by the tenant – typically, failure to pay rent. It is expressly authorised by Article L. 145-41, which rigorously regulates its conditions of operation.
The one-month period after formal demand
Article L. 145-41 provides that any termination clause takes effect only one month after a formal demand to pay (commandement de payer) that has remained unheeded. This period is mandatory: the landlord cannot reduce it by contract.
The 3rd Civil Chamber, in two decisions of 6 November 2025 (Nos. 23-21.334 and 23-21.454), definitively settled a question that troubled practice: a termination clause stipulating a period shorter than one month is deemed unwritten in its entirety, and not merely unwritten in the part contradicting the law. Concretely: a landlord relying on a fifteen-day or three-week clause – common in leases from the 1990s and 2000s – loses all contractual effectiveness and must revert to the statutory regime.
Judicial suspension and payment deferrals
The court may, at the tenant’s request, suspend the effects of the termination clause and grant time to pay (Article L. 145-41 paragraph 2 and Article 1343-5 of the Civil Code). The 3rd Civil Chamber expressly recalled in a decision of 6 February 2025 (No. 23-18.360) that this power extends to any type of breach, not only non-payment of rent.
The defence of non-performance
In a decision of 5 March 2026 (No. 24-15.820), the 3rd Civil Chamber held that when the tenant, sued for termination, raises an exception of non-performance – for example because the landlord has breached their obligation to deliver or maintain the premises – the court must verify its merits, regardless of whether the tenant sought payment deferrals within one month of the formal demand. This is a new protection for tenants in litigation: they no longer have to choose between seeking deferrals and arguing reciprocal non-performance.
Jurisdiction and procedure
Disputes over the commercial lease are subject to a precise allocation. The judge of commercial rents (juge des loyers commerciaux) of the tribunal judiciaire (Article R. 145-23 of the Commercial Code) has jurisdiction solely over disputes relating to rent fixing on review or renewal. Everything else – termination, eviction, eviction indemnity, reclassification, validity of the termination clause, recoverable charges – falls within the tribunal judiciaire sitting in collegiate formation.
For both landlord and tenant, the commercial lease is a terrain where anticipation matters as much as courtroom defence. Rigorous drafting at signing, attentive monitoring of three-year deadlines, and vigilance over inventories of condition and recoverable charges prevent most disputes. When they arise, the firm advises and litigates on both landlord and tenant sides before the judge of commercial rents and the tribunal judiciaire in Marseille – and beyond, throughout France where the nature of the case requires. Discover our commercial law practice for an initial discussion of your situation.