Tenants have erected buildings on the land they rent; a town acquires that land by pre-emption (droit de préemption, a public body’s right to buy first when a property is sold), then evicts them for a development scheme. Are they compensated for their buildings, in addition to the leasehold right (droit au bail), despite the levelling clause (clause de nivellement) for the end of the lease, and by what method? In a reported decision of 23 November 2023, the Third Civil Chamber of the Cour de cassation (the French supreme court for civil matters) allows the compensation and leaves the method to the expropriation judge (juge de l’expropriation), who is not bound by article 555 of the French Civil Code.
The facts
On 12 September 1990 a town acquired by pre-emption two plots on which two tenants held the leasehold right and on which buildings had been erected. According to the town’s appeal, the leases contained a levelling clause: at the end of the lease, the buildings erected by the tenant would be demolished or pass to the landlord.
The town needed the premises vacated permanently for a development scheme; failing agreement, it asked the expropriation judge to fix the indemnité d’éviction (eviction compensation, here under compulsory purchase rules). The tenants appealed against that judge’s decision. After a first annulment by the Cour de cassation (Cass. 3e civ., 4 March 2021, appeal no. 19-24.099), the case was reheard by the Paris Court of Appeal, which on 30 June 2022 awarded compensation including, in addition to the value of the leasehold right, that of the buildings.
The town appealed. According to its ground of appeal, the first-instance judges had awarded €606,105 as principal compensation, taking into account the loss of a temporary right of ownership of the building, land excluded, and the Court of Appeal added €435,000, being the value of the property less that of the land. It invoked the levelling clause, double compensation and the temporary nature of the tenants’ right.
The tenants cross-appealed (pourvoi incident), criticising the Court of Appeal for not answering their argument based on article 555 of the Civil Code: the town should have chosen between the increase in value brought by the buildings, €800,000 as at 22 September 2016 according to their private valuation report, and the cost of materials and labour, €980,640; absent a choice, they claimed the latter sum.
The decision
The Cour de cassation dismissed both appeals (Cass. 3e civ., 23 November 2023, appeal no. 22-20.866, reported).
On the town’s appeal, it cited article L. 314-2 of the French Planning Code, to which article L. 213-10 refers for pre-empted property: “if the works require the permanent eviction of the occupants, they benefit from the provisions applicable to expropriation” (translated from the French). And under article L. 321-1 of the French Expropriation Code, “the compensation awarded must cover the whole of the direct, material and certain loss caused by the expropriation”.
It recalled, citing a decision of 5 January 2012 (appeal no. 10-26.965): “The tenant remains, for the duration of the lease, the owner of the buildings it has lawfully erected on the leased land; consequently, the early termination of the lease as a result of expropriation does not deprive it of its right to compensation for those buildings”. It follows that the tenant “is entitled to compensation for the buildings it erected on the property, even where there is a levelling clause applicable at the end of the lease, provided that, on the date of the tenant’s permanent early eviction because of development works following a pre-emption that ended the lease prematurely, it owned those buildings”. The Court of Appeal, which had set aside the end-of-lease clauses on that ground, “rightly inferred that the [M] parties were entitled to seek compensation including, in addition to the value of the leasehold right, that of the buildings erected on the pre-empted property”.
On the tenants’ appeal, the Court held that “the expropriation judge chooses, within its sovereign power, the method for assessing the dispossession compensation, so that there is no need to apply article 555 of the Civil Code to fix the amount of the compensation due to the evicted tenant for the loss of the buildings”. The Court of Appeal therefore did not have to answer that ineffective argument.
The Court did not discuss the amounts; the double-compensation complaint was dismissed with the rest of the ground of appeal, without specific reasons.
What this changes for valuation
Two heads, no overlap. The leasehold right is the average price a tenant can obtain by assigning its lease to a successor (Charte de l’expertise en évaluation immobilière, the French property valuation charter, 6th edition, November 2025, Title III, § 1.18); the buildings are a separate asset, assessed according to their nature, condition and use. The Court approved compensation comprising both heads; the report defines what each one covers, the leasehold right here relating to the leased land, so that the judge can check for the overlap alleged by the town.
Ownership on the eviction date. Entitlement to compensation for the buildings depends on owning them on the date of the early eviction: the report sets out the chronology and notes the remaining term of the lease. The decision does not say how that remaining term weighs on the value of the buildings: the judge decides, and the report makes this parameter visible.
Several methods, a reasoned choice. The figures cited in the decision show what is at stake in the choice of method: €800,000 or €980,640 according to the tenants’ private valuation, €435,000 for the value of the property less that of the land, according to the town’s appeal. The report compares depreciated replacement cost, that is gross replacement cost less wear and obsolescence (Charter, Title III, § 1.9), comparison with sales of similar buildings, and the value of the whole less that of the land, then explains its choice.
Lawful buildings, early eviction. The Court refers to buildings “lawfully erected”; an unlawful building on an unbuildable plot gives no right to compensation, even if demolition is time-barred: see Compulsory purchase of an unlawful building: no compensation due. On a purchase notice (délaissement), buildings put up without a permit may justify a discount: see Unauthorised buildings: discount despite time-barred demolition. The solution concerns the early eviction of a tenant protected by compulsory purchase rules; on the extinction of the right over the buildings at the end or on termination of an emphyteutic lease (bail emphytéotique, a very long lease), see Emphyteutic lease: buildings sold end with the lease.
What the valuer takes from it
- A tenant evicted early after a pre-emption is compensated for its buildings on top of its leasehold right, despite the end-of-lease levelling clause.
- That right rests on owning the buildings on the date of the early eviction: the report establishes that date and checks each building is lawful.
- The leasehold right and the buildings are valued separately, each sum covering a defined head.
- Article 555 of the Civil Code does not bind the expropriation judge: the report sets out several methods and explains the one it adopts.
Further reading
The Eviction compensation page describes the assignment, its timescale and its fee. The guide Compulsory purchase of my business premises: what compensation? and the glossary entries droit au bail, juge de l’expropriation and coût de remplacement déprécié complement this article. On a business relocated to less attractive premises: Eviction compensation in France: landlord must prove a lower loss. On the same theme: Relocated for less, the leasehold right lost still has a value and Decontamination costs and eviction compensation in France. The decision is available on Légifrance.
What next
Is a pre-emption or a development scheme ending your lease before its term?
I value separately your leasehold right and the buildings you have erected, tracing the chronology up to the eviction, setting out several methods and stating what each sum covers. The report is designed to be produced before the expropriation judge.
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).
