A landlord refuses to renew a French commercial lease (bail commercial), the notice is challenged and the tenant stays in the premises for years, waiting for its eviction compensation (indemnité d’éviction, the statutory compensation for a tenant refused renewal). Is the occupation indemnity (indemnité d’occupation, the sum owed for occupying premises after the lease ends) owed for that period calculated like a renewal rent, within the statutory cap (plafonnement), or on the basis of rental value? In a reported decision of 17 June 2021, the Third Civil Chamber of the Cour de cassation (the French supreme court for civil and commercial matters) answers that the “rent cap rule applies to the setting of the rent of the renewed or revised lease, but not to the occupation indemnity owed by the tenant kept in the premises” (translated from the French). The valuer therefore starts from rental value, not from the indexed expired rent.
The facts
A meat distribution company is the tenant of commercial premises owned by an SCI (société civile immobilière, a French property-holding company). On 23 March 2011 the SCI served notice effective 1 October 2011, refusing renewal and refusing to pay eviction compensation. A judgment of 11 March 2013 rejected the SCI’s application to have the notice declared valid and ordered an expert appraisal of the eviction compensation; the tenant stayed in the premises. On 13 April 2016 the SCI exercised its right of withdrawal (droit de repentir), thereby giving up the eviction, and agreed to renew the lease for nine years.
That left the period from 1 October 2011 to 13 April 2016. In a judgment of 15 January 2020, the Paris Court of Appeal set the occupation indemnity for that period at rental value. The tenant appealed, arguing that article L. 145-28 of the French Commercial Code refers, for determining that indemnity, to sections VI and VII of the chapter on commercial leases, “taking all elements of assessment into account”, that the cap rule, laid down in article L. 145-34, sits in section VI, which deals with rent, and that the cap should therefore have applied.
The decision
The Cour de cassation dismissed the appeal (Cass. 3e civ., 17 June 2021, appeal no. 20-15.296, reported). It laid down the rule: “The rent cap rule applies to the setting of the rent of the renewed or revised lease, but not to the occupation indemnity owed by the tenant kept in the premises on expiry of the lease under article L. 145-28 of the Commercial Code”. It cited two reported decisions, of 14 November 1978 (no. 77-12.032) and 27 November 2002 (no. 01-10.058): the solution is not new. It then concluded: “Consequently, the Court of Appeal rightly held that this indemnity had to be set according to rental value.”
The reference in article L. 145-28 to the rent rules therefore leaves the cap out of the indemnity: the cap remains tied only to the rent of the renewed or revised lease.
What this changes for valuation
Rental value, not the indexed expired rent. For the period of occupation, the valuer does not adjust the last rent by the index, as the cap would require, but establishes rental value from the factors in article L. 145-33: characteristics of the premises, permitted use, the parties’ respective obligations, local commercial factors, and prices commonly charged in the neighbourhood. The evidence is rents of comparable premises, analysed as for an uncapped renewal rent. Whether the conditions for releasing the renewal rent from the cap (déplafonnement) are met does not matter (the four cases of rent uncapping): the cap does not apply to the indemnity.
More recent decisions on rental value. On 27 February 2025 the Court held that the indemnity owed by a tenant kept in the premises while awaiting eviction compensation (article L. 145-28) corresponds, failing any agreement to the contrary, to rental value determined under the criteria of article L. 145-33, and that it retroactively replaces the rent from the expiry of the lease where the landlord exercises its right of option (droit d’option, the right of either party to abandon the renewal once the court has fixed the rent) (occupation indemnity from lease expiry when the landlord opts out). On 29 January 2026, concerning the indemnity owed by a tenant that itself exercised its right of option (article L. 145-57), it held that property tax passed on to that tenant by the lease, without consideration, is a factor reducing rental value (property tax passed to the tenant reduces the indemnity). Neither decision departs from the 2021 ruling. The 2026 decision reasons on the rental value of article L. 145-33, which the indemnity of a tenant kept in the premises also refers to, without ruling on that indemnity: the report flags this point where the lease passes property tax on to the tenant.
A rule that cuts both ways. The indemnity may exceed the rent the cap would have produced, which explains the tenant’s appeal; it may also be lower than the expired rent if rental value is lower. The report presumes neither outcome: it measures, then compares the result with the sums paid during the occupation.
A long period to document. Here the occupation lasted more than four and a half years. The valuer establishes rental value at the date the lease expired and states, with evidence, whether it changed afterwards, in case the judge retains different amounts for different periods.
The withdrawal closes the period. The indemnity period ends on 13 April 2016, when the SCI agreed to renew the lease. The report separates the two periods: before the withdrawal, the occupation indemnity at rental value, without the cap; after it, the rent of the renewed lease, which follows its own rules and on which the decision is silent.
Characterise the occupation before quantifying. The ruling concerns the tenant kept in the premises under article L. 145-28. In a reported decision of 23 June 2016 (no. 15-11.440), the Cour de cassation overturned a Court of Appeal that had applied the rental value of farmland to the operator of a classified installation that stayed on after ending the lease, to restore the site; according to the published summary, the indemnity is then set by reference to the rent provided for in the lease (occupation indemnity during site restoration). After a lease is annulled for a reason unrelated to the tenant, the indemnity is the consideration for the enjoyment of the premises: a tenant that did not enjoy premises fit for their contractual use owes none (lease annulled for premises unfit for use).
What the valuer takes from it
- The occupation indemnity of a tenant kept in the premises (article L. 145-28) is set according to rental value, without the rent cap.
- Rental value is established under article L. 145-33, from rents of comparable premises, not by indexing the expired rent.
- The indemnity period, here closed by the landlord’s withdrawal, is kept separate from the renewed lease.
- The report compares rental value with the sums paid during the occupation, presuming neither a rise nor a fall.
- The rule applies to a tenant kept in the premises under article L. 145-28: the report first checks the basis of the occupation.
Further reading
The Commercial rent and leases page describes the assignment, its timescale and its fee. The guide My landlord refuses to renew my commercial lease and the glossary entries indemnité d’occupation, valeur locative and loyer plafonné complement this article. The decision of 3 November 2021, given after a lease was annulled, is discussed in Lease annulled, premises unfit for use: no occupation indemnity. On the same theme: Occupation indemnity: backdated to lease expiry after the option and Occupation indemnity: property tax passed to tenant lowers it. The decision is available on Légifrance.
What next
A tenant still in the premises after a refusal to renew, and an occupation indemnity to set?
I establish the rental value of the premises for each period of occupation, with verifiable rent evidence and without applying the rent cap. The report gives both the landlord and the tenant a quantified basis for discussing the occupation indemnity.
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