When a French commercial lease (bail commercial) is renewed, a landlord seeking an uncapped rent (déplafonnement, the release of the renewal rent from the statutory cap) may rely on works that the tenant itself carried out during the expired lease. In a reported decision of 9 September 2021, the Third Civil Chamber of the Cour de cassation (the French supreme court for civil and commercial matters) rejected the objection that such works must also have benefited the tenant’s business: a material change in the characteristics of the premises let justifies uncapping on its own, for works that were not argued to be improvements. The same decision made interest on the rent arrears run from the summons served by the landlord, not from the renewal date.
The facts
A company let commercial premises from 1 July 2002; another company later took over the rights of the original tenant. By a notice (congé) served on 28 December 2010, the landlord offered to renew the lease from 1 July 2011. On 31 July 2013 it applied to the commercial rent judge (juge des loyers commerciaux) to have the renewal rent set.
On 2 May 2019 the Caen Court of Appeal set that rent at €136,543 excluding tax and service charges from 1 July 2011. It found that works decided and carried out by the tenant had, during the expired lease, materially changed the characteristics of the premises let. The Cour de cassation’s decision does not describe them; according to the appeal, the Court of Appeal relied on their nature and their effect on the layout. It added statutory interest on the arrears from 1 July 2011, the renewal date.
The tenant appealed to the Cour de cassation. In its view, a change in the characteristics of the premises uncaps the rent only if it has had a favourable effect on the business carried on, which the Court of Appeal had not examined, and interest could run only from the summons of 31 July 2013.
The decision
The Cour de cassation (Cass. 3e civ., 9 September 2021, appeal no. 19-19.285, reported) dismissed the first ground and quashed the decision on the second.
On uncapping, under articles L. 145-33 and L. 145-34 of the French Commercial Code relied on by the appeal, the Court answered: “The Court of Appeal, which did not have to carry out an irrelevant enquiry, since it had found that the works, which it was not argued were improvements and which had been decided and carried out by the tenant, had, during the expired lease, materially changed the characteristics of the premises let, rightly held that that material change in the characteristics of the premises let justified, on its own, the uncapping of the renewal rent” (translated from the French). An enquiry into a favourable effect is therefore irrelevant where the premises themselves have materially changed. The Court ruled neither on improvement works, a characterisation that was not argued, nor on the threshold of what is material, a matter found by the Court of Appeal.
On interest, under article 1155 of the Civil Code, in its wording prior to the ordinance of 10 February 2016, under which rents fallen due bear interest from the day of the claim or of the agreement, the Court held that the Court of Appeal had erred in using the renewal date: “interest due on the difference between the renewal rent and the rent paid since renewal runs, absent agreement to the contrary, from service of the summons to set the rent where it comes from the landlord” (translated from the French). It decided the point itself, without sending the case back to another court: it ordered the tenant to pay statutory interest from 31 July 2013 on the instalments fallen due that enter into the calculation of the arrears, and ordered the capitalisation of interest, so that interest fallen due itself bears interest.
What this changes for valuation
Two criteria, two regimes. The first four elements of rental value listed in article L. 145-33 of the Commercial Code, namely the characteristics of the premises, the permitted use of the premises, the parties’ respective obligations and local commercial factors (facteurs locaux de commercialité), set the cap aside if they have materially changed during the expired lease (article L. 145-34). For local commercial factors, the Cour de cassation derives an additional condition from articles L. 145-34 and R. 145-6 of the Commercial Code: the change must be likely to have a favourable effect on the business carried on, as the decision of 18 September 2025 on likely effect confirms. For the characteristics of the premises, the 2021 decision dispenses with that enquiry. A terrace extended onto public land, outside the premises let, is a different question: see the decision of 13 October 2021 on the terrace. The article on the four ways out of the cap sets out the full grid.
Describing the premises before and after. Since the material change is enough, the valuer describes the make-up of the premises when the expired lease took effect and then at the renewal: area, layout, access, fittings. Plans, planning permits, invoices and inventories of condition date the works and measure their extent. The report does not have to demonstrate any gain in trade. It establishes that the change is material, which the judge assesses. That the tenant decided and carried out the works makes no difference, subject to their classification, discussed below.
Classifying each item of work. Improvements made to the premises during the lease being renewed, a characterisation not argued here, follow a rule of their own in article R. 145-8 of the Commercial Code, which takes them into account only if the landlord has borne their cost, directly or indirectly. The report therefore distinguishes a transformation of the premises from an improvement, as each follows its own regime.
Quantifying the arrears and the interest. The arrears go back to the renewal date, here 1 July 2011, but interest runs only from the landlord’s summons, here 31 July 2013, with capitalisation where the judge orders it: absent agreement to the contrary, no interest is due for the period before the summons, more than two years in this case. The report sets out the arrears instalment by instalment: rent paid, rent set, difference, starting point of interest set by the judge.
What the valuer takes from it
- A material change in the characteristics of the premises let, resulting from works decided and carried out by the tenant and not argued to be improvements, justifies uncapping on its own.
- For this criterion, unlike local commercial factors, no favourable effect on the business needs to be shown.
- The report describes the premises before and after, dates the works and classifies each item, since improvements follow their own rule.
- The arrears run from the renewal, interest from the landlord’s summons to set the rent, as the instalment table shows.
Further reading
The Commercial rent page describes the assignment and its fee. The guide Lease renewal in France: my landlord wants to uncap the rent and the glossary entries déplafonnement, modification notable and loyer plafonné complement this article. On the terrace, see the separate article: Rent uncapping: terrace on public land, local commercial factors. On the same theme: Commercial rent uncapping in France: four ways out of the cap and Local commercial factors: a potential effect on trade is enough. The decision is available on Légifrance.
What next
Premises transformed during the lease, a renewal rent and arrears to quantify?
I examine the works carried out during the expired lease, document their effect on the characteristics of the premises and quantify the renewal rent, the arrears and the interest, for negotiation or before the commercial rent 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).
