Art. L. 145-14
Core provision: landlord can refuse renewal but must pay the eviction indemnity equal to the actual prejudice caused by non-renewal
Landlord's initiative
Right arises only from the landlord's refusal — a tenant who voluntarily exercises the option right to leave has no eviction indemnity claim
Unwritten — no limit
Advance exclusion or lump-sum cap clauses are unwritten; no limitation period applies; retroactive to existing leases (Cass. 3e civ., Nov. 2023)
Method only — valid
A clause defining the calculation method (without capping the result) is enforceable (Cass. 3e civ., 18 Jan. 2023)

The Principle: Refusal of Renewal Triggers the Indemnity

Article L. 145-14 of the Code de commerce is the central provision: a landlord can refuse renewal, but must pay the evicted tenant an indemnity equal to the prejudice caused by the non-renewal. The landlord does not need to justify their decision to refuse — refusing renewal in exchange for paying the eviction indemnity is an unrestricted right. There are, however, statutory exceptions under Articles L. 145-17 and following (serious and legitimate reasons, demolition, reconstruction, personal repossession, and others) where the landlord can refuse without paying the indemnity.

A refusal of renewal giving rise to an eviction indemnity can come about in three ways: through a formal notice refusing renewal with an offer of eviction indemnity; through a refusal in response to the tenant's renewal request; or through the landlord's exercise of the option right under Article L. 145-57. There is also an involuntary route: where a landlord serves a notice refusing renewal without an indemnity and the stated grounds are not upheld by the court, the notice stands for its stated date but the landlord becomes liable for the indemnity — unless they immediately exercise the right of repentance and offer renewal instead.

The Three Conditions for Entitlement

Who Qualifies for the Eviction Indemnity
All three conditions must be met at the date of the notice and its effective date.
  • Condition 1 — Landlord's initiative: the refusal of renewal must come from the landlord, not from the tenant's own decision to leave
  • Condition 2 — Fonds ownership: the tenant must own the fonds de commerce actually operated at the premises. The assignee of the business qualifies (Cass. 3e civ., 7 Dec. 2017)
  • Condition 3 — Renewal conditions met: all Art. L. 145-8 conditions (registration, ownership, three-year exploitation) at notice date and effective date
  • Where the fonds has value remaining after a post-effective-date liquidation, the liquidator retains the right (Cass. 3e civ., 23 March 2017, n° 16-13.060)
Who Does Not Qualify
The indemnity right is lost in the following cases.
  • Tenant exercises option right voluntarily: choosing to leave rather than accept the new rent is the tenant's free choice — no indemnity arises
  • Management lessee (locataire-gérant): operates someone else's business — no right to the indemnity (Cass. 3e civ., 26 Sept. 2001)
  • Total subletting: head tenant risks being denied a fonds de commerce at the premises — and therefore the indemnity
  • Renewal conditions not met: tenant without RCS/RNE registration at the correct address/activity, or without ownership and exploitation of the fonds for three years
  • Fonds disappeared before effective date: judicial liquidation with no remaining commercial value before the notice takes effect

The Three Conditions in Detail

The Landlord's Initiative

The right to an eviction indemnity arises only from the landlord's refusal of renewal — not from the tenant's own decision to leave. A tenant who exercises their right of option (choosing not to accept the new lease following a renewal notice or request) is not entitled to an eviction indemnity. The option right belongs to a tenant who prefers to leave rather than accept the new rent being proposed, and exercising it is a voluntary choice.

Ownership of the Fonds de Commerce

Only the owner of the fonds de commerce operated at the premises qualifies. The management lessee has no such right, since they operate someone else's business (Cass. 3e civ., 26 September 2001). The assignee of the business does have the right (Cass. 3e civ., 7 December 2017). Where the tenant has totally sublet the premises, they risk being denied ownership of a fonds de commerce operated there. In the case of partial subletting, the main tenant can only claim an indemnity for the part of the premises they occupy personally; the sub-tenant has no direct claim against the head landlord unless they hold a direct right under Article L. 145-32.

Meeting the Conditions for Renewal

The right to an eviction indemnity is the counterpart of the right to renewal. A tenant who does not meet the conditions for renewal (registration at the RCS or RNE at the premises address and for the actual activity, ownership and exploitation of the fonds de commerce during the three years preceding expiry) also loses the right to the indemnity. These conditions are assessed at the date of the notice and at the date of its effect. A registration lapse occurring after the date of the notice's effect does not affect the right already vested.

Where the fonds de commerce has disappeared entirely before the effective date (for example, through a judicial liquidation before the effective date of the notice with no remaining value), the tenant loses the right to an indemnity (Cass. 3e civ., 6 November 2001). However, where the liquidation occurs after the effective date and some commercial value remains, the liquidator retains the right (Cass. 3e civ., 23 March 2017, n° 16-13.060).

Clauses Attempting to Limit or Exclude the Indemnity

The eviction indemnity flows from the mandatory public order protection of the right to renewal under Article L. 145-15. Any clause that would prevent the tenant from claiming an eviction indemnity, or that would fix it at a lump sum in advance, is treated as unwritten — and the action to have it declared unwritten is subject to no limitation period (Cass. 3e civ., 1 April 1987; Cass. 3e civ., 19 November 2020; Cass. 3e civ., 18 December 2020).

The 2014 Pinel Act changed the sanction from nullity to "unwritten" (réputée non écrite). The Court of Cassation confirmed in November 2023 that this change applies retroactively to leases in existence at the time of the reform, even where the prior limitation period for an annulment action had already run (Cass. 3e civ., 16 November 2023, n° 22-14.091).

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Warning — Advance Lump-Sum Clauses Are Unwritten

A clause fixing the eviction indemnity at a predetermined amount — even if commercially reasonable at the time of drafting — is treated as unwritten. This is true even where the clause does not formally exclude the indemnity but caps it in a way that prevents full compensation of the tenant's actual loss. The Court of Cassation has drawn the line at clauses that merely specify the calculation method, without excluding or capping the result: those remain valid (Cass. 3e civ., 18 January 2023, n° 21-22.209). Any clause in this area should be reviewed against that distinction before relying on it.

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Accession Clauses Do Not Reduce the Relocation Component

An accession clause (under which tenant improvements vest in the landlord at the end of the lease) does not deprive the evicted tenant of compensation for the cost of fitting out equivalent premises elsewhere. The Court of Cassation has confirmed that the landlord retaining improvements does not reduce the tenant's relocation indemnity (Cass. 3e civ., 13 September 2018, n° 16-26.049).

Special Rule for Tourism Residence Investors

Under Article L. 321-3 of the Tourism Code, marketing documents for investors purchasing units in a résidence de tourisme must expressly mention the existence of the eviction indemnity right and the general basis for its calculation. This acknowledges that individual investors in this structure often do not appreciate that they will be in the position of a commercial landlord, liable for an eviction indemnity when the lease with the operator is not renewed.

Eviction Indemnity Conditions: Key Points
  • Landlord's initiative required (Art. L. 145-14): right arises only from the landlord's refusal of renewal — a tenant who exercises the option right to leave voluntarily has no claim. Refusal can come through a formal notice, a refusal of the tenant's request, or the Art. L. 145-57 option exercise.
  • Fonds de commerce ownership: only the owner of the fonds actually operated at the premises qualifies. Management lessees (no right, Cass. 3e civ., 26 Sept. 2001), total subletters (risk of denial), and tenants without a real business at the premises do not qualify. Assignees of the business do qualify (Cass. 3e civ., 7 Dec. 2017).
  • Renewal conditions must be met: all Art. L. 145-8 conditions (registration at correct address/activity, ownership and 3-year exploitation) assessed at notice date and effective date. A registration lapse after the effective date does not defeat a right that has already vested. Fonds disappeared before effective date with no remaining value = right lost.
  • Exclusion/cap clauses are unwritten — no limitation period: any clause excluding the indemnity or capping it as a lump sum in advance is unwritten (Art. L. 145-15 mandatory public order). No time limit on declaring it unwritten. Applies retroactively to existing leases even where the prior annulment limitation had run (Cass. 3e civ., 16 Nov. 2023, n° 22-14.091).
  • Calculation method clauses remain valid: a clause specifying the calculation method (e.g. which revenue years, which EBITDA version) without excluding or capping the actual result is enforceable (Cass. 3e civ., 18 Jan. 2023, n° 21-22.209). Accession clause does not reduce the relocation component (Cass. 3e civ., 13 Sept. 2018).
Facing a Refusal of Renewal or Assessing an Eviction Indemnity Claim?

Whether you are a tenant whose renewal has been refused or a landlord considering the financial implications of a refusal, we advise on qualification for the indemnity, its calculation, and any clauses in the lease that may affect entitlement.

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This article is for general information and educational purposes only. It does not constitute legal advice and does not create a lawyer-client relationship. Laws and regulations may have changed since publication. Always seek qualified French legal advice on eviction indemnity matters in a French commercial lease.