CGPPP
The Code général de la propriété des personnes publiques (Arts. L 2111-1, L 2111-2, L 2122-1) — the primary source defining the public domain, governing precarious occupation, and establishing the absolute exclusion of commercial leases on public domain assets.
L 145-2
Article L 145-2, I-4° of the Code de commerce — the provision that expressly confirms the full commercial lease statute applies to public body private domain assets, including the right of renewal and the eviction indemnity even for refusals motivated by public interest.
Clause exorbitante
The single biggest drafting trap in leases of public body private domain. One exorbitant clause transforms the entire contract into an administrative one, removes jurisdiction from ordinary courts, and strips the tenant of all commercial lease statutory protection.

The Fundamental Divide: Public Domain vs. Private Domain

French public property law draws a fundamental distinction between two categories of public property. The domaine public comprises assets belonging to public bodies that are either assigned to direct public use or assigned to a public service and subject to special development works indispensable to that service, as defined by Articles L 2111-1 and L 2111-2 of the CGPPP. Assets that form an indissociable accessory to a public domain asset are also part of the public domain. The domaine privé comprises all other assets owned by the public body.

This distinction is decisive for the commercial lease statute. On the public domain, the statute can never apply. On the private domain, it applies in full as it would between private parties — subject to one critical trap that can convert the contract into an administrative one and remove the tenant from the statutory regime entirely.

Public Domain: No Commercial Lease Ever
Assets assigned to public use or a public service. The commercial lease statute cannot apply. The only instruments available are the bail emphytéotique administratif (BEA) and the autorisation d'occupation temporaire (AOT), both of which are precarious and revocable without any renewal rights or eviction indemnity.
Private Domain: Full Statute Applies
All other public property. Under Article L 145-2, I-4° of the Code de commerce, the full commercial lease statute applies if the general conditions of Article L 145-1 are met — including the right of renewal and the eviction indemnity even for refusals motivated by public interest reasons (Art. L 145-26 C. com.).

The Public Domain: An Absolute Exclusion

The conclusion of statutory commercial leases is excluded on all public domain assets. This exclusion flows from the principle of precarity that governs all use of the public domain, which itself derives from the inalienable and non-transferable character of that domain under CGPPP Arts. L 2122-1 and following. The courts apply this rule strictly across all categories of public domain: maritime (Cass. 3e Civ. 24-1-1996 n° 134), communal (Cass. 3e Civ. 19-3-2003 n° 402), departmental (CAA Bordeaux 15-2-2024 n° 21BX02891), and the SNCF railway domain (Cass. 3e Civ. 13-5-1997 n° 95-14.994).

The exclusion has been applied to: a restaurant in the Bois de Boulogne; a tobacco and newspaper kiosk in a motorway bridge building; all the commercial spaces within the national estate of Chambord; a club-house and brasserie inside a communal stadium without independent street access; and premises in a departmental technopole let by a delegation-of-public-service holder. A public body cannot choose to treat a public domain asset as private domain by calling a contract a "bail commercial" — the label does not override the legal nature of the asset (CAA Nancy 28-3-2013 n° 11NC01928).

The Fonds de Commerce on the Public Domain: A Post-2014 Development

The 2014 reform introduced Article L 2124-32-1 of the CGPPP, which expressly recognises that a fonds de commerce can be operated on the public domain where the occupant has its own clientele. However, this recognition does not create any equivalent to a propriété commerciale. The occupation title remains precarious and revocable, and cannot be transferred to a purchaser of the fonds as of right: the acquirer must separately apply to the competent public authority for a new occupation authorisation, which is not guaranteed (CGPPP Art. L 2124-33 ; CE 24-11-2014 n° 352402). In practice, the commercial value of a fonds operated on the public domain is therefore necessarily limited by the absence of any security of tenure.

Private Parties Are Equally Bound

The prohibition on commercial leases of public domain assets is not confined to public bodies acting as landlords. A private person who holds occupation rights over the public domain cannot sub-let to a third party under a commercial lease (Cass. 3e Civ. 20-12-2000 n° 1765). This applies even where only part of the leased premises falls on the public domain, if that part is indivisible from the rest (Cass. 3e Civ. 18-3-1998 n° 439). A private person holding a bail emphytéotique administratif over public domain cannot grant commercial sub-leases (Cass. 3e Civ. 19-12-2012 n° 11-10.372).

⚠️
Consequences of a Null Commercial Lease on the Public Domain

A purported commercial lease concluded over public domain assets is null. The public body that creates the impression that a tenant occupies under a statutory commercial lease commits a fault capable of engaging its liability (CAA Marseille 24-1-2011 n° 09MA00172 ; CE 24-11-2014 n° 352402). A private landlord who fails to verify whether the space falls on the public domain before concluding a commercial lease equally commits a fault engaging its liability to its tenant (Cass. 3e Civ. 18-12-2012 n° 11-28.251). If a commercial lease is subsequently requalified as a precarious public domain occupation convention, the tenant loses the right of renewal but may be compensated for the loss of the propriété commerciale they believed they held (Cass. 3e Civ. 28-1-2021 n° 19-25.036).

The Two Available Instruments on the Public Domain

Where a public body wishes to allow commercial activity on its public domain, two instruments are available. Neither confers any right of renewal or eviction indemnity.

Bail Emphytéotique Administratif (BEA)
Defined at Articles L 1311-2 and following of the CGCT. Available only to local authorities, their groupings and public establishments. The object must be an operation of general interest within the public body's competence, or the allocation of a place of worship to a religious association.
Since 1 April 2016, a BEA can no longer have as its object the execution of works, supply of goods, provision of services, or management of a public service mission. Real rights can be granted to the occupant; the occupant may mortgage those rights. Compensation is payable on early withdrawal in the absence of occupant fault.
Autorisation d'Occupation Temporaire (AOT)
Any occupation of the public domain requires a title under CGPPP Art. L 2122-1. Authorisations are temporary, precarious and revocable. They may take the form of a permission de voirie, a permis de stationnement (unilateral), or a concession de voirie (contractual).
Since 1 July 2017, where an occupation title allows economic exploitation of the public domain, the competent authority must organise a prior selection procedure with transparency and publicity guarantees (CGPPP Art. L 2122-1-1). Real rights over constructions are possible; compensation for early withdrawal without fault is available.

Decommissioning Does Not Automatically Create a Commercial Lease

A formal act of decommissioning (déclassement) transfers an asset from the public domain to the private domain. But it does not, by itself, transform a precarious occupation convention into a commercial lease. A fresh agreement between the parties is required for the statutory regime to apply (Cass. 3e Civ. 5-3-1997 n° 369). The courts have repeatedly confirmed this rule: the cause of the precarity survives decommissioning in the absence of novation (CA Paris 16-10-2013 n° 11/22236 ; Cass. 3e Civ. 19-11-2014 n° 13-20.089). The same follows where a decommissioned asset is subsequently sold to a private party: no commercial lease arises without a new agreement (Cass. 3e Civ. 27-4-2017 n° 16-14.187).

The converse also applies: in the absence of a formal decommissioning act, an asset continues to belong to the public domain even if it is no longer assigned to public use. De facto désaffectation is not sufficient to remove an asset from the public domain (TA Paris 23-12-2011 n° 1105721). A commercial lease operating over public domain premises for twenty-two years does not acquire private law status through the passage of time (CE 13-12-2006 n° 286252).

Re-affectation to the Public Domain

A public body that has granted a commercial lease on its private domain may subsequently re-affect the asset to the public domain. When this occurs, the commercial lease is transformed into a public domain occupation convention: clauses incompatible with public domain status are no longer enforceable against the public body, though the convention continues to authorise the occupant to remain until the public body brings it to an end. The tenant may seek compensation before the administrative courts (CE 27-12-2022 n° 464505).

The Private Domain: Full Statutory Protection

Where a public body lets premises forming part of its private domain and those premises satisfy the conditions of Article L 145-1 of the Code de commerce, the full commercial lease statute applies. Article L 145-2, I-4° of the Code de commerce expressly confirms this. The tenant has all the statutory rights of any commercial tenant: the right of renewal, the right to an eviction indemnity, and — importantly — Article L 145-26 of the Code de commerce makes clear that the eviction indemnity is due even where the landlord's refusal of renewal is motivated by reasons of public interest.

Workshop units built by a municipality to support local economic development do not become public domain assets merely because their construction serves a public service mission — absent special development works and actual public service assignment, they belong to the private domain (CE 11-6-2004 n° 261260). A lease by the SNCF of terrain from its private domain to a private commercial operator, with rent indexed on commercial lease rules, is a commercial lease and not a precarious occupation convention (CA Versailles 4-11-1993 n° 918133). No competitive tendering is required before granting a commercial lease on the private domain (CE 2-12-2022 n° 460100).

The Clauses Exorbitantes Trap

The most dangerous pitfall in leases of public body private domain assets is the clause exorbitante du droit commun. Under well-established case law, the presence of such clauses — provisions unusual between private parties that reflect the public body's special prerogatives — confers an administrative character on the contract, removes it from the jurisdiction of ordinary courts, and strips the tenant of commercial lease statutory protection.

The Tribunal des conflits applies an objective approach by reference to the general interest (T. confl. 13-10-2014 n° 3963). Clauses found to be exorbitant include: the right to terminate by simple mayoral decree; the right to require works by administrative notice; mandatory nationality conditions for permanent staff with the mayor entitled to require dismissal (Cass. 3e Civ. 25-6-1970 n° 69-12166); an obligation to open every day with any other closure requiring municipal consent; a requirement to participate in all municipal events; prescribed maximum menu prices (CA Grenoble 20-2-1995 n° 92-3448); and an obligation to make an ice rink available to school groups with qualified sports instructors at the operator's expense (CA Rennes 9-2-2011 n° 09-7955).

The courts have, however, sought to restrict the reach of exorbitant clause analysis to genuine cases. The Cour de cassation has held that a clause derogating from the commercial lease statute by conferring precarity does not by itself qualify as an exorbitant clause (Cass. 3e Civ. 2-2-2005 n° 130). The Tribunal des conflits has refused exorbitant status to: a termination right in favour of the tenant public body alone; a mutual termination right with notice; and an automatic rent adjustment clause linked to the municipality's general tariff schedule (T. confl. 12-12-2011 n° 3824).

⚡
The Drafting Risk for Tenants

A tenant who signs a lease of public body private domain premises containing clauses exorbitantes may find, years later when they attempt to invoke the right of renewal or claim an eviction indemnity, that an administrative court has jurisdiction and that no statutory protection exists. Public bodies that deliberately insert such clauses to escape the statute are subject to the courts' restrictive scrutiny, but the risk of a genuinely exorbitant clause slipping through — especially in leases drafted by municipal services — is real. Any lease of premises owned by a public body should be reviewed for exorbitant clauses before signature.

Key Points: Commercial Leases on French State and Municipal Property
The commercial lease statute can never apply to public domain assets — the exclusion is absolute and flows from the inalienable character of the public domain under CGPPP Art. L 2122-1. The label "bail commercial" cannot override the legal nature of the asset.
The public domain concept is broad: restaurants, kiosks, sports facilities and commercial spaces within public assets all fall within it, regardless of contractual labels. Private parties holding public domain occupation rights cannot sub-let under commercial leases — the prohibition applies even where only part of the leased space is on the public domain, if indivisible.
Since 2014, a fonds de commerce can exist on the public domain (CGPPP Art. L 2124-32-1), but no propriété commerciale arises. Occupation remains precarious and revocable; the fonds cannot be transferred as of right — the acquirer must separately obtain a new occupation authorisation.
The two instruments available on the public domain are: the BEA (bail emphytéotique administratif — local authorities only, CGCT Art. L 1311-2) and the AOT (autorisation d'occupation temporaire — all public bodies, CGPPP Art. L 2122-1). Neither confers renewal rights or an eviction indemnity.
Decommissioning (déclassement) alone does not transform a precarious convention into a commercial lease — a fresh agreement is required. Conversely, de facto désaffectation without a formal decommissioning act does not remove an asset from the public domain. Twenty-two years of commercial lease operation does not acquire private law status by passage of time.
On the private domain, the full commercial lease statute applies under Art. L 145-2, I-4° — including the eviction indemnity even for refusals motivated by public interest (Art. L 145-26). No competitive tendering is required before granting a commercial lease on the private domain (CE 2-12-2022 n° 460100).
A single clause exorbitante du droit commun transforms the entire lease into an administrative contract, removes it from ordinary courts' jurisdiction, and strips the tenant of all commercial lease statutory protection. Any lease of premises owned by a public body must be reviewed for exorbitant clauses before signature.
Exorbitant clauses include: termination by mayoral decree; mandatory nationality conditions for staff; requirements to participate in all municipal events; prescribed maximum menu prices; and public service obligations with operating requirements. However: a precarity clause alone, mutual termination rights, and automatic rent adjustment linked to municipal tariffs have been refused exorbitant status.
Leasing Space from a French Public Body?

Whether you are a business operator negotiating with a municipality or public establishment, an investor acquiring assets subject to public body leases, or an in-house counsel assessing statutory exposure across a French property portfolio, the public/private domain divide and the exorbitant clause risk require careful legal review before commitment.

Speak with a French Lawyer

This article is for general information and educational purposes only. It does not constitute legal advice. The legal analysis reflects the provisions of the CGPPP, the CGCT, the Code de commerce and the case law cited. French commercial lease law and public property law are complex and evolving areas. Always seek qualified legal advice for your specific situation before making any decision with legal consequences.