A landlord under a French commercial lease (bail commercial) accepts renewal, asks for an uncapped rent, that is, one free of the index-linked limit on increases, and is granted only a capped rent by the court. The law then gives it one month to change its mind: it refuses renewal and owes eviction compensation (indemnité d’éviction, statutory compensation for refused renewal). What does the tenant owe for the period since the lease expired, more than two years in the case decided? The reported decision of the Third Civil Chamber of the Cour de cassation (the French supreme court for civil and commercial matters) of 27 February 2025 answers: an occupation indemnity (indemnité d’occupation) equal to the rental value, which retroactively replaces the rent from the expiry of the lease, a date the valuer in practice takes as the first valuation date.
The facts
A company was the tenant of commercial premises owned by another company, the landlord, under a nine-year lease running from 1 February 2005. On 23 October 2014 the tenant requested renewal with effect from 1 January 2015. On 7 October 2015 the landlord asked for the rent of the renewed lease to be set at an uncapped amount (déplafonnement, release of the renewal rent from the statutory cap), then applied to the commercial rent judge (juge des loyers commerciaux). By a final ruling of 1 December 2016, the rent of the new lease was set under the capping rules (plafonnement).
On 26 January 2017 the landlord exercised its right of option (droit d’option) and claimed an occupation indemnity equal to the rental value of the premises from 1 January 2015. On 25 June 2018 the tenant sued the landlord for eviction compensation and asked for the occupation indemnity due since 1 January 2015 to be set at the amount of the last rent.
On 20 April 2023 the Bourges Court of Appeal applied the rental value only from 1 January 2016. Since the landlord had tacitly accepted the principle of renewal from 1 January 2015 and had asked for a new rent only on 7 October 2015, its claim for an indemnity at an amount other than the rent could, in the court’s view, be granted only from 1 January 2016, under article L. 145-11 of the French Commercial Code. For 2015, the tenant was held to owe, as rent or occupation indemnity, plus charges and taxes, €3,700.50. The landlord appealed, arguing that the indemnity ran from the effective date of the renewal request, the date the lease expired.
The decision
The Cour de cassation dismissed the first two grounds of appeal without specific reasoning (article 1014, second paragraph, of the Code of Civil Procedure), but quashed the ruling on the third (Cass. 3e civ., 27 February 2025, appeal no. 23-18.219, reported), under article L. 145-28, first paragraph, and article L. 145-57, second paragraph, of the Commercial Code.
Under the second text, within one month of service of the final decision setting the rent of the renewed lease, the parties draw up a new lease, “unless the tenant waives renewal or the landlord refuses it” (translated from the French). From the first, the Court derived that, where the tenant remains in the premises pending payment of the eviction compensation, the landlord may claim, from the expiry of the lease, payment of an occupation indemnity “distinct from the rent, which, failing agreement to the contrary, corresponds to the rental value of the premises determined according to the criteria of article L. 145-33 of the Commercial Code”.
It concluded that “where the landlord exercises its right of option, the tenant becomes liable for an occupation indemnity, equal to the rental value, which retroactively replaces the rent due, from the date of expiry of the lease whose renewal the landlord had first accepted in principle”. By applying the rental value only from 1 January 2016, a date derived from the request for a new rent, the Court of Appeal breached those texts. The quashing covers the period from 1 January to 31 December 2015, and the case was sent back to the Poitiers Court of Appeal.
What this changes for valuation
First valuation date: the expiry of the lease. The decision sets the starting point of the indemnity; in practice, the valuer takes it as the first valuation date. Here, the option was exercised in January 2017 for an indemnity running from 1 January 2015. The valuer therefore establishes a retrospective rental value, from rents agreed, renewed or set by the courts in the neighbourhood around that date, not from rents observed on the day of the inspection. The method is comparison (Charte de l’expertise en évaluation immobilière, the French property valuation charter, 6th edition, November 2025, Title III, ch. 2), applied to the criteria of article L. 145-33 referred to in the decision: characteristics of the premises, permitted use, respective obligations of the parties, local commercial factors, and rents commonly charged in the neighbourhood.
The account is redone over the whole period. The indemnity runs until the premises are vacated. The valuer follows the rental value year by year if the market has moved; the report compares, period by period, the indemnity owed and the sums actually paid. If the indemnity exceeds them, the tenant owes a top-up; in the opposite case, the landlord refunds the excess.
The capped rent ceases to be a reference. Set for the renewed lease that the landlord then refuses by exercising its option, because it had not obtained uncapping, that rent ceases to apply: the account is made on the sums actually paid. The Court held in 2021 that the capping rule does not apply to the occupation indemnity under article L. 145-28 (Occupation indemnity: rental value applies, rent cap does not). The rental value itself follows article L. 145-33: a decision of 29 January 2026, discussed separately, holds that property tax (taxe foncière) passed to the tenant without consideration reduces it (Occupation indemnity: property tax passed to tenant lowers it).
The option is decided with figures in hand. Within the month available, the landlord weighs the gap between rental value and capped rent over the elapsed period against the eviction compensation owed to the tenant; quantifying both heads gives each party a basis.
What the decision does not settle. The Court rules only on the starting point; the amount of the rental value for 2015 is left to the court of remand. The limitation period for the claim, a separate question, is not addressed. The report records the relevant dates for the lawyers to argue.
What the valuer takes from it
- After the landlord’s option, the occupation indemnity at rental value replaces the rent from the expiry of the lease, not from the request for a new rent or from the option.
- The rental value is established at that date, with references from that time, then followed period by period until the premises are vacated.
- It follows the criteria of article L. 145-33; the capped rent ceases to apply.
- The report sets the account between the indemnity owed and the sums actually paid, in either direction.
Further reading
The Commercial rent and leases page describes the assignment, its timescale and its fee; the Eviction compensation page covers the eviction that follows the option. The guide My landlord refuses to renew my lease in France: what compensation? and the glossary entries indemnité d’occupation, droit d’option and valeur locative complement this article. On property tax passed to the tenant: Occupation indemnity: property tax passed to tenant lowers it. On the same theme: Occupation indemnity: rental value applies, rent cap does not and Denial of lease status after option: until compensation is set. The decision is available on Légifrance.
What next
Has the landlord exercised its right of option after the rent was set?
Landlord or tenant, I assess the rental value at the date the lease expired, then period by period, with verifiable rent references, to set the account between the rent paid and the occupation indemnity owed.
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