Some premises are built for a single use, as is often the case with a hotel or a clinic, and the renewal rent under their French commercial lease (bail commercial) is then set according to the practice observed in the trade. In the case decided here, campsite land had been so classified by a final decision. Can a tenant that invested heavily during the lease also obtain an allowance (abattement) for its improvements? In a reported decision of 5 October 2017, the Third Civil Chamber of the Cour de cassation (the French supreme court for civil and commercial matters) answered no: the regime for single-use premises (locaux monovalents) excludes article R. 145-8 of the Commercial Code, on which the claim for an allowance rested.
The facts
An agricultural land group (groupement foncier agricole, a company that owns farmland), as landlord, granted a company a commercial lease for sixteen and a half years from 1 September 1994, covering land used to run a campsite business (fonds de commerce, the business as a going concern). On 30 June 2010 it served a notice (congé) with an offer of renewal at a stated annual rent, then sued the tenant to have the rent set at that amount.
A final decision of 26 November 2013 held that the lease covered property for a single use within the meaning of article R. 145-10 of the Commercial Code, set a provisional rent and ordered an investigative measure (mesure d’instruction, a step to inform the court, such as an expert appraisal). The tenant, relying on the improvements it had financed during the lease up for renewal, asked for an allowance when the renewal rent was set.
On 8 March 2016 the Montpellier Court of Appeal set the annual rent of the renewed lease from 1 March 2011 without any allowance; according to the appeal to the Cour de cassation, that rent was €144,000 and the Court of Appeal acknowledged that the improvements existed. The tenant had sought, for those improvements, which the appeal puts at over seven million euros, an allowance of 40 % on the rental value, computed by reference to campsite practice under the so-called hotel method adapted to campsites and based on its takings. Before the Cour de cassation it argued that the tenant’s improvements cannot be taken into account at the first renewal, and relied on articles R. 145-8, L. 145-33 and R. 145-10 of the Commercial Code.
The decision
The Cour de cassation dismissed the appeal (Cass. 3e civ., 5 October 2017, appeal no. 16-18.059, reported). It held that “the fact that the lease is subject to the provisions of article R. 145-10 of the Commercial Code on the setting of the rent of premises built for a single use excludes the application of the provisions of article R. 145-8 of the same code” (translated from the French).
It then applied this to the case: “having found that the lease covered property let for a single use within the meaning of the first of those texts, the Court of Appeal, disregarding an erroneous but superfluous ground, rightly held that the rent had to be set at the rental value according to the practice observed in the line of business concerned”. The decision does not say which ground of the Court of Appeal was erroneous: it approves the outcome, not each of the reasons given.
On its scope: the single-use character of the land, settled since the final decision of 2013, was no longer in dispute; the Court draws the consequences.
What this changes for valuation
One frame of reference: trade practice. For ordinary premises, the renewal rental value (valeur locative de renouvellement) is built from the factors in article L. 145-33, which article R. 145-8 adjusts for the parties’ obligations, including landlord’s charges passed to the tenant without consideration, improvements and new statutory obligations. For premises built for a single use, article R. 145-10 refers to the practice of the line of business, and the decision holds that this reference excludes article R. 145-8. Here, according to the appeal, the rental value was computed under the so-called hotel method adapted to campsites; in valuation practice, this method applies a percentage specific to the sector to the takings, as presented in the article on valuing a hotel. The decision does not rule on that method. The same regime also takes the renewal rent outside the statutory cap, as the article on the four ways out of the cap recalls.
The tenant’s investment is discussed within trade practice. The decision rules out an allowance based on article R. 145-8; it says nothing on how trade practice treats the tenant’s investment. The rate applied to takings may depend on what the landlord provides: land fitted out by the operator and a business asset handed over fully equipped by the landlord are not directly comparable. Where practice draws that distinction, the valuer reflects it in the rate used, with references from the trade, rather than through an allowance percentage taken from another text.
Classifying the works still matters. For ordinary premises, the classification of the tenant’s works determines the regime: improvements fall under article R. 145-8, which takes them into account only if the landlord has borne their cost, directly or indirectly; a material change in the characteristics of the premises may, for its part, justify uncapping (déplafonnement) on its own, as held in the decision of 9 September 2021 on the tenant’s works. For single-use premises, the report describes the investment, its date and who financed it, because practice may take it into account, without computing a separate allowance.
A general wording, stated about improvements. The Court excludes “the application of the provisions of article R. 145-8” without confining itself to improvements. That article also carries the adjustments for landlord’s charges passed to the tenant, which apply to ordinary premises, as illustrated by the decision of 29 January 2026 on property tax passed to the tenant. A report that sets them aside for single-use premises can rely on the 2017 wording, while noting that it was stated about improvements; it still describes the lease clauses, which practice may take into account.
Renewal and review are different exercises. A review during the lease follows other rules, for instance for a clause barring any reduction of the reviewed rent below the contractual rent: see the decision of 30 March 2017 on the floor clause.
What the valuer takes from it
- The renewal rent of single-use premises is set at rental value according to the practice of the line of business; that regime excludes article R. 145-8, and with it the allowance for the tenant’s improvements.
- The tenant’s investment is discussed within trade practice, for example in the rate applied to takings, not through a separate allowance: the report describes the works, their date and how they were financed, then shows whether the practice relied on takes them into account.
- Practice is documented: professional scales, reported decisions, practice observed on comparable businesses, reference takings over several financial years.
- The Court’s wording covers the whole of article R. 145-8, but it was stated about improvements: the report says so if it sets other adjustments aside.
Further reading
The Commercial rent and leases page describes the assignment and its fee. The guide Lease renewal in France: my landlord wants to uncap the rent and the glossary entries renewal rental value, rent uncapping and allowance complement this article. On rent review during the lease, see the separate article: Commercial rent review in France: the floor clause is unlawful. On the same theme: Commercial rent uncapping in France: four ways out of the cap and Rent uncapping: tenant’s works and interest from the summons. The decision is available on Légifrance.
What next
Premises built for a single activity with a lease up for renewal?
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