Right of option (droit d'option)

The droit d’option (right of option) is a way out offered to both parties at the end of proceedings to fix the renewed rent. The landlord had accepted renewal but hoped for a higher rent; the tenant had asked for renewal but finds the rent heavier than expected. Once the rent has been finally fixed by the judge, each party has one month to change its mind: the landlord by refusing renewal, at the cost of paying eviction compensation, the tenant by giving up renewal, at the cost of leaving the premises.

Exercising the option has a radical effect on the accounts between the parties. Since the lease is ultimately not renewed, the rent fixed disappears and the occupation since the expiry of the lease is paid for by an occupation indemnity.

Where the rule comes from

Article L. 145-57, second paragraph, of the French Commercial Code provides that, within one month of service of the final decision, the parties draw up a new lease on the terms fixed by the court, unless the tenant gives up renewal or the landlord refuses it, the party that has expressed its disagreement bearing all the costs.

In a decision of 27 February 2025 (appeal no. 23-18.219, reported), the Third Civil Chamber held that, where the landlord exercises its right of option, the tenant becomes liable for an occupation indemnity equal to the rental value, which retroactively replaces the rent due since the date the lease expired.

In a valuation report

I often act before the option, to inform the decision: the rental value report allows each party to measure the gap between the rent fixed and what the occupation indemnity would be. After the option, I quantify that indemnity, period by period, from the expiry of the lease until the tenant leaves or the eviction compensation is paid, according to the criteria of article L. 145-33. I set out the account between the sums paid as rent and those due as indemnity, which may show a balance owed by the tenant or a refund owed by the landlord.

Example

A lease that expired on 31 December 2019 is renewed at the capped rent of €28,000, fixed by a judgment that became final in March 2024. The landlord exercises its right of option in April 2024. The rental value, established by the valuer, was €36,000 in 2020 and €39,000 in 2024. The tenant owes the difference between the occupation indemnity and the rent paid, about €40,000 over four years, and then continues to pay the indemnity until it leaves, while the landlord owes it eviction compensation.

Not to be confused with

The right of repentance (droit de repentir) under article L. 145-58, which allows a landlord who has refused renewal to withdraw that refusal so as to avoid eviction compensation, as long as the tenant is still in the premises.