Term or Duration of Lease - A Brief Overview of French Business Law
The foregoing is not intended to be exhaustive and for specific information on questions flowing from the term or duration of French commercial leases and other aspects of French business law, please click here
1. Standard 9-year commercial lease
French business law illustrates that the statutory standard term or duration of a French Commercial Lease is 9-years, but the lease has break points every three-years allowing the tenant alone to bring the lease to an end.
From the Landlord's perspective a fixed 9-year term is often held to give a certain stability to his income portfolio, but in order to avoid an automatic renewal of the existing conditions he must give notice often at least 6 months before end of the 9-year term (but this notice period could be made longer contractually).
French business law shows that it is generally considered prudent for the service of the formal notice for the tenant to quit to be carried out by a Huissier de Justice, i.e. a French process server or bailiff.
From the Tenant's perspective, he has an absolute right to complete the 9-year term and moreover a statutory right to receive a renewal offer for a further 9-year period, albeit more than probably at an increased rental amount.
However, he also has the possibility of bringing his tenancy to an end at the end of each three year period of his lease.
Great care needs though to be taken when the tenant intends to give notice as, if this were not carried out in exact formal manner at the right moment in time, the tenant may find himself obliged to remain in the premises for a further three year period.
Here again, it is considered prudent for the tenant to use the services of a Huissier de Justice, i.e. a French process server or bailiff to make known his formal intention to terminate the lease.
2. Short term lease
The most likely short term lease to be encountered is for 23 months and such an agreement is outside the statutory framework of article L 145-1 et seq of the French Commercial Code.
Great care should be taken to avoid its automatic transformation into a standard 9-year lease, for example by the tenant remaining in the premises for a period over 24 months.
3. Other terms
It is very rare in France to encounter leases which have a term or duration over 9-years, but sometimes leases of a 12-year term are found which are outside the statutory framework and care should be taken before entering such an agreement.
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