Occupation indemnity (indemnité d'occupation)

When a bail commercial (French commercial lease) ends without being renewed and the tenant stays in the premises, it no longer pays rent: the contract on which the rent rested has gone. It owes an occupation indemnity, the counterpart of its enjoyment of the premises until it leaves. Under a commercial lease, this indemnity is called statutory when the tenant stays on pending payment of the eviction compensation to which it is entitled.

Its basis is the rental value, not the last rent. It may therefore be higher or lower than the rent paid until then, which makes it a real financial issue, all the more so as the period of occupation often lasts several years.

Where the rule comes from

Article L. 145-28 of the French Commercial Code provides that a tenant entitled to eviction compensation cannot be made to leave the premises before receiving it, and that until payment it owes an occupation indemnity determined in accordance with article L. 145-33, taking into account all relevant factors. That cross-reference requires the respective obligations of the parties to be taken into account: the Cour de cassation held on 29 January 2026 (appeal no. 24-17.227) that property tax passed on to the tenant without any counterpart reduces the rental value on which the indemnity is based.

The Charte de l’expertise en évaluation immobilière (French property valuation charter, Title III § 1.19) states that the indemnity is determined on the principle used to calculate the renewal rental value, to which it is customary to apply a precariousness allowance, assessed at the judge’s discretion.

In a valuation report

I establish the rental value at the date the lease expired, then follow it over time if the market has moved, generally year by year. I go through the five elements of article L. 145-33 with consistent comparables, deduct the landlord’s charges passed on to the tenant, and present the result as an annual amount. I show separately the effect of a precariousness allowance, often argued between 10 % and 30 %, without taking it for granted. Finally, the report draws up the account between the sums paid and the sums due.

Example

A lease expired on 30 June 2021 with a rent of €19,000. The tenant stayed until 30 June 2025, the date on which the eviction compensation was paid. I adopt a rental value of €24,000 for 2021 and 2022, then €25,500 for 2023 and 2024, less €1,800 of property tax passed on. The occupation indemnity comes to €91,800 over four years, or €78,030 with a precariousness allowance of 15 %. The tenant having paid €76,000, a balance remains due in both cases.

Not to be confused with

The occupation indemnity between joint owners (article 815-9 of the French Civil Code), owed by the one who occupies a jointly owned property alone and calculated on the rental value of the home with an allowance for precariousness, in a framework distinct from the commercial lease.