A company runs its business (fonds de commerce, the business as a going concern) on an enclosed terrace in front of its establishment, under a free and precarious authorisation granted in 1981. The plot is compulsorily purchased (expropriation), and a development company argues that so fragile a title gives no right to any compensation. In a reported decision of 20 December 2018, the Third Civil Chamber of the Cour de cassation (the French supreme court for civil matters) instead approved the award, the authorisation still being in force at the time of the expropriation proceedings. For the valuer, the occupation title is checked before the loss is quantified.
The facts
On 18 March 1981 the association syndicale libre (a private landowners’ association) of the Tête du Pont de Sèvres zone d’aménagement concerté (ZAC, a public-led development zone), then, on 26 May 1981, a co-owners’ association (syndicat des copropriétaires) granted a company a temporary authorisation to create an enclosed terrace in front of its establishment, free of charge and on a precarious basis. On the plot stood a veranda that the company was authorised to occupy temporarily to run its business.
The plot was expropriated. By a judgment of 13 December 2016, the Versailles Court of Appeal set the compensation due to the company, since placed in compulsory liquidation (liquidation judiciaire), after noting that the authorisation, although precarious, was still in force at the time of the expropriation proceedings. According to the appeal, the compensation awarded amounted to €104,900.60.
A development company lodged the main appeal. Relying on article L. 321-1 of the Code de l’expropriation pour cause d’utilité publique (the French Compulsory Purchase Code), under which compensation covers the whole of the direct, material and certain loss caused by the expropriation, it argued that an expropriated party without a legally protected right cannot claim any compensation, which would be the case of the holder of a mere precarious authorisation, and that the authorisation’s remaining in force was an irrelevant ground. A cross-appeal was also lodged.
The decision
The Cour de cassation dismissed the appeals (Cass. 3e civ., 20 December 2018, appeal no. 17-18.194, reported).
On the main appeal, it approved the Court of Appeal, which had found that the company “held a temporary authorisation to create an enclosed terrace in front of its establishment, granted free of charge and on a precarious basis” (translated from the French). The Court went on: having “noted that this authorisation was still in force at the time of the expropriation proceedings, the court of appeal rightly deduced that, the company’s loss being linked to the expropriation, it was entitled to compensation”. The ground of appeal “is not well founded”.
The cross-appeal, whose content the decision does not set out, was dismissed without a specially reasoned decision, as clearly not such as to lead to cassation.
Two findings therefore support the solution: the existence of the authorisation and its remaining in force at the time of the proceedings. The appeal called the second irrelevant; the Court relies on precisely that finding. It does not, however, describe the authorisation as a legally protected right, the notion relied on by the appeal, and rules neither on the method of calculation nor on the amount.
What this changes for valuation
Listing every occupier, precarious ones included. A free and precarious authorisation does not, in principle, rule out compensation. The report therefore begins with an inventory of the occupations of the land taken: leases, sub-leases, occupation agreements, authorisations from a landowners’ association or a co-owners’ association. As early as 2016, the Court had held that the extinction of the real and personal rights existing over a property sold after a public-utility order (déclaration d’utilité publique) gives their holders a right to compensation, in favour of an evicted sub-tenant.
Establishing the title and its date. The report gathers the authorisation deed, its date, who granted it, its withdrawal conditions, and what shows it was still running at the time of the proceedings: correspondence, insurance of the installation, continuous use of the site. The decision says nothing about an authorisation withdrawn before the proceedings.
Quantifying the occupier’s loss, not a lease. A free and precarious authorisation is not a lease: the valuer therefore does not measure the loss as the loss of a leasehold right (droit au bail). The starting point is what the occupier actually loses: the margin generated by trading on the site, based on the accounts and the terrace’s capacity, the value of the fittings the occupier paid for, reorganisation costs. The precariousness of the title did not stand in the way of the principle; the decision does not say whether it weighs on the amount. The report therefore gives reasons for the period over which the loss is calculated, based on the age of the authorisation, its withdrawal conditions and the owners’ known plans. The Charte de l’expertise en évaluation immobilière (the French property valuation charter) deals with compulsory purchase compensation (6th edition, November 2025, Title III, § 1.20). If the business carries on without its terrace, the Court accepted in 2024 that the partial eviction of a business may cause a separate loss to the activity continued outside the land taken, provided the operator proves it.
A title in force, not mere presence. On 15 February 2024, the Court recalled that only a loss resting on a legally protected right at the date of the expropriation can be compensated, and refused any compensation for an unlawful building on an unbuildable plot, even though the action for demolition was time-barred. Although more recent, that decision does not contradict the 2018 one, because it does not decide the same question. Read together, they point the valuer to whether a regular title existed at the time of the expropriation rather than to its strength: a precarious authorisation still in force gave a right to compensation, a building put up without any right on unbuildable land gives none, however old.
Linking each head of loss to the expropriation. Here, the loss compensated is the company’s, “linked to the expropriation”. Two other reported decisions of 2018, discussed separately, clarify what falls within the expropriation: the landlocking of the garage left to the owners is a direct loss, compensable on top of the reinvestment allowance (indemnité de remploi), whereas the extra building cost due to a tunnel results from the public works, not from the taking.
What the valuer takes from it
- A free and precarious authorisation still in force during the expropriation proceedings does not prevent compensation for the loss linked to the expropriation.
- The report establishes the occupation title and that it was still in force during the proceedings.
- The decision approves a principle, not a method: the valuer quantifies the occupier’s actual loss, not the value of a leasehold right.
- The period used to calculate the loss is reasoned in light of the title’s precariousness, a question the decision leaves open.
- Each head of loss is linked to the expropriation.
Further reading
The Compulsory purchase and pre-emption page describes the assignment and its fee. The guide Compulsory purchase of my business premises: what compensation? and the glossary entries juge de l’expropriation, fonds de commerce and indemnité principale complement this article. The two other 2018 decisions are discussed separately: Compulsory purchase: landlocked remaining garage is compensated and Subsoil compulsory purchase: the tunnel’s extra cost is excluded. On the same theme: Compulsory purchase of an unlawful building: no compensation due and Public-utility amicable sale: sub-tenant entitled to compensation. The decision is available on Légifrance.
What next
Were you occupying an expropriated site under a mere authorisation?
I start from your occupation title, its dates and what shows it was still in force during the proceedings, then quantify what the compulsory purchase makes you lose: trading on the site, fittings paid for, reorganisation. The report links each head of loss to the expropriation and gives reasons for the period used.
Free quote, by email or by phone. No commitment before the quote is accepted. Fees are never linked to the value of the property (Charte de l’expertise, Title I, §2.1).
