A restaurant has been run at the back of a beach, in premises let under a commercial lease (bail commercial, the French 3-6-9 lease) since 2012. Pursued for rent arrears, the operator fights back: the land belongs to the public domain, the lease is void, the rents must be returned and the loss of the business compensated. The Court of Appeal annuls the lease and refuses the landlord any occupation indemnity, since he is not the owner. The Cour de cassation (the French supreme court for civil matters), in a reported decision of 21 May 2026, confirms the nullity but quashes on the indemnity: ten years of actual use are to be returned in value. What remains is to say which value.
The facts
On 12 December 2012 a private individual let, under a commercial lease, premises at the back of a beach for the operation of a restaurant, later carried on through a company. On 3 September 2021 the landlord served a demand for payment of rent arrears. On 13 October 2021 the operator and his company sued him for annulment of the lease, as granted over property belonging to the public domain, for return of the rents paid and for compensation for the loss of the business.
On 14 March 2024 the Basse-Terre Court of Appeal held the claim admissible, annulled the lease, ordered the landlord to return the rents and dismissed his claim for an occupation indemnity: not being the owner of the property, he was not entitled to claim it.
The decision
The Cour de cassation dismissed the landlord’s appeal on the nullity and allowed it on the indemnity (Cass. 3e civ., 21 May 2026, appeal no. 24-16.483, reported).
The nullity. “Since the parties cannot choose to subject their letting relationship to the statute of commercial leases where it concerns property belonging to the public domain, a commercial lease whose subject is such property is absolutely void for an unlawful object” (translated from the French). The claim is time-barred after five years “from the day on which the party seeking nullity knew or ought to have known of the unlawfulness of the object of the contract”, not from the conclusion of the lease.
The restitution. Under former articles 1131 and 1304 of the French Civil Code, “the parties must, after the annulment of their agreements even for an unlawful cause or object, be restored to their previous position, and each may claim restitution in value of the performance provided”. The Court of Appeal, which had found that the landlord “had provided the tenant with the actual use of premises for use as a restaurant”, could not dismiss his claim on the ground that he was not the owner.
What this changes for the valuation
Restitution in value, not rent. The annulled lease can no longer serve as the measure: the agreed rent disappears with it, and the rents paid are returned. In return, the tenant owes the value of what it received, the use of restaurant premises for nearly ten years. The two restitutions set off against each other in whole or in part, and the balance turns on a single question: what was that use worth, year by year?
What the use of premises without a commercial lease is worth. The value of use of premises is not the rental value under a commercial lease. The tenant never had what the statute gives, a right to renewal, eviction compensation, a rent cap; it occupied property whose use fell under a public-domain authorisation, by nature precarious and revocable. The expert starts from the rents of comparable premises in the area, then adjusts for the absence of commercial tenancy rights and for precariousness, as for an occupation indemnity, with a deduction supported by references of neighbouring public-domain occupations, fees for beach or terrace concessions. He also allows for what the landlord actually provided: the premises and their fittings, not the right to trade, which belonged to the public body.
The business, without the statute. The operator also claimed compensation for the loss of his business (fonds de commerce). On public land, a business can exist only under the conditions laid down by the French Code of public property, with an occupation authorisation, and its value depends on the remaining term of that authorisation more than on the clientele. A report that values such a business without starting from the occupation title overstates what is lost.
Restitutions over ten years. The value of use is fixed period by period, with the references of each year, not by an average rent applied to the whole duration; the final figure depends as much on the method as on the market. The same requirement applies to the rents to be returned, to be reconstructed from documents. The report presents both columns and their balance, as for any annulment.
What the expert takes from it
- A commercial lease over public land is absolutely void; the claim is time-barred five years from knowledge of the unlawfulness.
- Annulment requires the tenant to return the value of the use, even where the landlord was not the owner.
- That value is neither the rent under the annulled lease nor the commercial rental value: it allows for precariousness and the absence of the statute.
- A business on public land is valued from the occupation title and its remaining term.
- The report quantifies restitutions in both directions, year by year, with its references.
Further reading
The Commercial rent and leases page describes the assignment, its timescale and its fee. The glossary entries indemnité d’occupation, valeur locative and fonds de commerce complement this article. On the same theme: Concealed foundation works: sale annulled, use to be paid for and Occupation indemnity under a commercial lease: option and property tax. The decision is available on Légifrance.
What next
Premises on a beach, a harbour or a quay, and a lease whose validity is in doubt?
I establish the value of the use of the premises over the period, allowing for the precariousness of the occupation and references in the area, to fix or contest the restitution due.
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