A tenant of premises in a business park, sued by its landlord for unpaid rent, obtains a ruling that the indexation clause of its lease is deemed unwritten and claims a refund of the overpayment. The Paris court of appeal grants it, but reduces the amount to almost nothing: the action for recovery is time-barred after five years, so, it says, the refund is computed from the rent paid at the start of that five-year period, already indexed, and not from the initial rent. On 23 January 2025 the Cour de cassation (the French supreme court for civil matters), in a reported decision, quashed: a stipulation deemed unwritten “is deemed never to have existed”, and “the claim for restitution of the overpayment must be computed on the basis of the rent that would have been due had such a stipulation not been applied”. The limitation period restricts the refundable period, not the basis of the computation. For anyone quantifying a rent liability or valuing let commercial premises, the difference is considerable.
The facts
A company owning commercial premises in a business park lets them to a waterproofing contractor. After a formal demand for unpaid rent and charges in November 2014, it sues in February 2015 for a finding that the termination clause has taken effect, then serves a second demand in July 2015, which the tenant contests. In June 2016 the landlord serves notice without an offer of renewal; the tenant sues for eviction compensation. The proceedings are joined.
The tenant asks that the indexation clause of the lease be deemed unwritten and that the landlord refund the rent overpaid through indexation, retroactively over five years. The Paris court of appeal, on 29 March 2023, deems the clause unwritten but limits the refund to 128.84 euros before tax: the action for recovery of the overpayment being subject to the five-year limitation period, the claim can only be computed on the basis of the rent paid at the starting date of the limitation period. It also orders the tenant to pay 75,276.60 euros of unpaid charges, holds the termination clause effective and dismisses the eviction compensation. The tenant, in liquidation, appealed.
The decision
The third civil chamber quashed, under articles 2224 of the Civil Code and L. 145-15 of the Commercial Code (Cass. 3e civ., 23 January 2025, no. 23-18.643, reported). It recalled that “the action to have a clause of a commercial lease deemed unwritten is not subject to limitation”, and that “the commercial tenant who has paid an indexed rent under an indexation clause later deemed unwritten may sue for payment of the sums unduly paid in the five years preceding its claim in court”.
Then the computation rule: “Since a stipulation deemed unwritten is deemed never to have existed, the claim for restitution of the overpayment must be computed on the basis of the rent that would have been due had such a stipulation not been applied.” By computing the overpayment on the rent paid at the start of the limitation period rather than on the initial rent, the court of appeal breached those provisions. The ruling is also quashed for contradictory reasons on the charges, which entails the quashing of the heads relating to the termination clause and the eviction compensation. The case is sent back to the Paris court of appeal, differently composed.
What this changes for valuation
Two computations, results of a different order. The court of appeal’s method compared, over five years, the rent paid and the rent already indexed at the start of the period: the gap represented only the indexations of those five years, a few dozen euros. The Cour de cassation’s method compares, over the same five years, the rent paid and the initial rent of the lease, never indexed: the gap accumulates all the indexations since the outset, applied to each instalment of the period. On a 2008 lease with an initial rent of 100,000 euros indexed at 2 per cent a year, and a claim brought ten years later, the first method yields about 35,000 euros for five years, the second nearly 90,000 euros. The valuer’s report shows both curves, rent paid and rent without the clause, and the area between them over the period not time-barred.
What the rent “would have been” without the clause. The refund is computed on “the rent that would have been due had such a stipulation not been applied”. Where the clause is deemed unwritten in its entirety, that rent is the initial rent, possibly modified by a statutory revision or an amendment; the valuer checks whether there is a three-yearly revision, an agreement or a renewal that would have set a new rent independently of the clause. The article on the automatic increase with no limit deemed unwritten and the one on automatic rent indexation describe the clauses concerned; this one says how the consequence is quantified.
A liability for the landlord, a discount for the premises. For the buyer or the lender valuing let commercial premises, a fragile indexation clause is a double risk: the future rent falls back to the rent without the clause, and the past is refunded over five years. The value by capitalisation is then computed on the rent without the clause, not on the invoiced rent, and the refund liability is deducted or provided for. The report flags the clause, quantifies both effects and gives the value with and without the risk, so the buyer negotiates with full knowledge. The guide on renewal and uncapping also recalls that the market rental value can be very different from the indexed rent.
Rental value remains a separate question. The rent without the clause is not the rental value; it is a frozen contractual rent. If the lease is renewed or uncapping is at issue, the rental value is determined under the criteria of article L. 145-33, independently of indexation. The valuer therefore distinguishes three figures in the report: the invoiced rent, the rent that would have been due without the clause, and the market rental value, each with its use.
Charges too. The ruling also quashes on the charges, because the court of appeal had refused the tenant the supporting documents while admitting it could not check whether they were payable. In a lease audit, the valuer asks for the same documents, service charge demands, reconciliations, apportionment in a co-owned building or a business park, and quantifies undue charges separately; they add to the indexation overpayment in the account between landlord and tenant.
Judicial review and index-linked clause: the base index is adjusted. In a reported ruling of 17 May 2018 (Cass. 3e civ., no. 17-15.146), the Court held that “where the rent is reviewed by the court and the effective date of the reviewed rent does not match the date set for annual indexation, the judge must adapt the index-linked clause by changing the base index so that the rent review does not, by itself, create the distortion prohibited by article L. 112-1 of the Monetary and Financial Code”. A report that quantifies a reviewed rent therefore states the base index to be used afterwards for indexation.
The tenant cannot waive downward review in advance. In a reported ruling of 30 March 2017 (Cass. 3e civ., no. 16-13.914), the Court quashed the ruling that had upheld a clause by which the tenant waived, for the whole lease, any court setting of the rent below the contractual rent: “the tenant’s waiver of its right to obtain a review could validly occur only once that right had accrued, that is after the finding of a rent increase of more than a quarter through the index clause”. The article on the clause barring downward review presents that ruling.
The statutory three-yearly review falls outside article L. 112-1. In a reported ruling of 8 September 2016 (Cass. 3e civ., no. 15-17.485), the Cour de cassation held article L. 112-1 of the Monetary and Financial Code “inapplicable to the statutory three-yearly review”. After a renewal, the base index of the review is that of the effective date of the renewed lease, even if the rent became payable only later. The ruling of 17 May 2018 (no. 17-15.146), presented in this article, follows on from it: the distortion rule does not govern the computation of the review, but the base index of the index-linked clause, which the judge adapts once the review is made. The article on the review of the commercial rent after renewal presents the 2016 ruling.
What the valuer takes from it
- An indexation clause deemed unwritten is deemed never to have existed; the overpayment is computed on the rent that would have been due without it, generally the initial rent.
- The five-year limitation period restricts the refundable period to the five years before the claim, not the basis of the computation.
- The report shows the rent paid and the rent without the clause, instalment by instalment, over the period not time-barred.
- For commercial premises, the value by capitalisation rests on the rent without the clause and the refund liability is deducted.
- Invoiced rent, rent without the clause and market rental value are three distinct figures.
Further reading
The Commercial rent and leases page describes the assignment, its timescale and its fee. The guide Commercial lease renewal: my landlord wants to uncap the rent and the glossary entries clause d’échelle mobile, indice des loyers commerciaux and valeur locative complement this article. On the same theme: Commercial rent: an unlimited flat-rate rise is deemed unwritten and French commercial lease: can rent rise automatically each year?. The decision is available on Légifrance.
What next
A contested indexation clause, a rent that has drifted for years, and an overpayment to quantify?
I reconstruct the rent as it would have been due without the clause, year by year, quantify the overpayment of the last five years and compare it with the rental value, for the tenant, the landlord or the buyer of the premises.
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