Right to Remain and Occupation Indemnity: Key Points
Under Art. L. 145-28 C. com., a tenant who qualifies for an eviction indemnity cannot be compelled to vacate before it is paid in full (including accessories). The right is opposable to a building purchaser and passes with a sale of the fonds de commerce during the holdover period.
The right to remain is lost if: the landlord exercises the right of repentance; the two-year prescription for the eviction indemnity claim expires; the tenant breaches the lease conditions during holdover; or the fonds de commerce disappears through insolvency.
The occupation indemnity is assessed at market rental value under Art. L. 145-33 — not the contractual rent, not the indexed rent, and not capped by the renewal provisions. Tenant improvements are excluded from the valuation.
A precarity discount (typically 10–20%) is common but not automatic: it is refused where the tenant has not actually experienced precarity (e.g. rising turnover, continued investment). A clause in the lease that requires the tenant to remain until indemnity payment may justify an increased adjustment.
A forfeiture clause must expressly cover the occupation indemnity (not just “rent”) to be triggered for non-payment during the holdover period. A clause limited to rent cannot sanction failure to pay the occupation indemnity (Cass. 3e civ., 24 February 1999).

The Right to Remain in Occupation

Article L. 145-28 of the Code de commerce states the principle plainly: no tenant who can claim an eviction indemnity may be compelled to vacate before receiving it. Until the full indemnity (including accessory indemnities, which the Court of Cassation treats as indivisible from the main indemnity) is paid, the tenant remains in occupation on the same terms and conditions as the expired lease — except that the amount due for occupation is the occupation indemnity, not the contractual rent.

This right is opposable to a purchaser of the building (Cass. 3e civ., 17 December 2003; Cass. 3e civ., 13 July 2010). Where the tenant sells their fonds de commerce during the holdover period, the right to remain and the eviction indemnity claim pass to the assignee by operation of law, absent any contrary agreement (Cass. 3e civ., 6 April 2005). The only statutory exception before payment is repossession in a secteur sauvegardé under Art. L. 145-18, where a provisional indemnity fixed by the court president may allow early departure.

When the Right to Remain Is Lost

Four Grounds for Loss of the Right to Remain
Ground 1 Landlord exercises the right of repentance (Art. L. 145-58): the refusal is withdrawn and a new lease for minimum nine years is offered. The eviction indemnity right disappears. A tenant who has already vacated before the repentance is exercised cannot have it exercised against them.
Ground 2 Two-year prescription expires (Art. L. 145-60): the tenant must apply to court to have the eviction indemnity fixed within two years of the effective date of the refusal notice. Failure is fatal — both the indemnity right and the right to remain are lost. The tenant becomes an occupant without title and owes the general law damages indemnity for the unlawful period (Cass. 3e civ., 5 September 2012).
Ground 3 Breach of contractual obligations during holdover: the lease terms remain in force. The landlord has three options: (a) retract the eviction indemnity offer where the breach is a serious and legitimate reason (Art. L. 145-17-1 procedure required); (b) trigger the forfeiture clause if it expressly covers non-payment of the occupation indemnity; or (c) seek judicial termination. The référé judge cannot pronounce forfeiture of the right to remain.
Ground 4 Insolvency resulting in disappearance of the fonds de commerce: a tenant in liquidation judiciaire retains the right to an eviction indemnity in principle (Cass. 3e civ., 15 June 2010), but where the restructuring plan does not include the lease or the fonds de commerce disappears entirely, both the indemnity right and the right to remain are lost (Cass. 3e civ., 6 November 2001).
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Warning — Forfeiture Clause Must Cover Occupation Indemnity Expressly

A forfeiture clause that covers only non-payment of “rent” cannot be triggered for non-payment of the occupation indemnity: the Court of Cassation has confirmed these are distinct obligations (Cass. 3e civ., 24 February 1999). Landlords drafting commercial leases should ensure the forfeiture clause expressly covers “occupation indemnity and any indemnity due during holdover following refusal of renewal.” An existing clause without this wording may leave the landlord without an automatic forfeiture mechanism during a contested eviction.

The Occupation Indemnity: Calculation and Quantum

The occupation indemnity is assessed at the market rental value of the premises (valeur locative) under Art. L. 145-33 C. com., but without the rent cap provisions that apply to renewals (Cass. 3e civ., 14 November 1978; Cass. 3e civ., 17 June 2021). It cannot be fixed by reference to the lease indexation clause (Cass. 3e civ., 8 June 2023), cannot simply equal the contractual rent (Cass. 3e civ., 29 November 2000), and where the original lease contained a turnover-based rent clause, is still assessed at market value (Cass. 3e civ., 3 October 2007). Tenant improvements are excluded: the indemnity is assessed on the premises as if without the tenant’s works (Cass. 3e civ., 13 October 1993). A contractual clause fixing the occupation indemnity at a specific amount is treated as a penalty clause, giving the court discretion to reduce a manifestly excessive amount (Cass. 3e civ., 8 April 2010).

The Precarity Discount

The occupation indemnity is routinely reduced by a precarity discount (coefficient de précarité), typically 10%, sometimes 20%, reflecting the tenant’s inherent instability. The discount is not automatic: it must be justified by the circumstances. Where the tenant’s turnover has increased during the holdover period or where the tenant has continued investing, courts have refused the discount (CA Paris, 16 January 2008). Conversely, where the lease contains a valid clause requiring the tenant to remain in occupation until the eviction indemnity is paid (Cass. 3e civ., 15 June 2023), that forced retention may justify an increased precarity adjustment.

TVA

The Conseil d’État has ruled that the occupation indemnity paid by a tenant without legal title is not subject to TVA, since there is no service rendered in exchange (CE, 30 May 2018, n° 402447). Where the expired lease provided for TVA on top of the rent, the Court of Cassation has held that the same TVA treatment follows during holdover since holdover operates on the terms of the expired lease (Cass. 3e civ., 13 December 2018). The Conseil d’État’s position as the competent tax court should prevail, but the position remains technically unsettled.

Prescription of the Occupation Indemnity Claim

The landlord must also claim the occupation indemnity within two years under Art. L. 145-60. The start date depends on the circumstances: ordinarily from the effective date of the refusal notice; if the tenant’s entitlement to an eviction indemnity was contested, from the date the court finally confirmed that entitlement in principle. Prescription of the occupation indemnity claim does not extinguish the debt entirely: if the claim is prescribed but the tenant continued in occupation, the last contractual rent paid is treated as the reference amount for the holdover period.

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Practical Point — Prescription Runs from Notice, Not from Proceedings

Both the eviction indemnity claim and the occupation indemnity claim are subject to the two-year prescription of Art. L. 145-60. For the eviction indemnity, the period runs from the effective date of the refusal notice. For the occupation indemnity, the period ordinarily runs from the same date — meaning that if the landlord delays initiating proceedings, they may find that early months of the occupation indemnity period are already prescribed before they claim them. Where entitlement was contested and only confirmed by the court at a late stage, the prescription for the occupation indemnity begins from that confirmation date.

Practical Checklist: Landlords and Tenants in Holdover
Tenants — diary the two-year prescription immediately: the eviction indemnity claim must be brought within two years of the effective date of the refusal notice. Missing this deadline is fatal to both the indemnity right and the right to remain. Apply to court in good time; do not rely on negotiation alone to preserve the right.
Tenants — pay the occupation indemnity promptly: the lease terms remain in force during the holdover period. Non-payment of the occupation indemnity can trigger the forfeiture clause (if properly drafted), justify retraction by the landlord, or support a judicial termination claim. Budget for market value — not the historical rent.
Landlords — commission a market value assessment early: the occupation indemnity is assessed at market rental value, not the expired lease rent. Obtain a valuation at the start of the holdover period so that demands for the correct amount can be made promptly and so that any prescription issues are identified in advance.
Landlords — check the forfeiture clause before relying on it: verify that the forfeiture clause expressly covers the occupation indemnity, not just “rent.” If the clause is limited to rent, consider whether a judicial termination claim is available instead, or whether the Art. L. 145-17-1 retraction procedure based on a serious and legitimate breach is appropriate.
Both parties — assess the precarity discount evidence: tenants should preserve evidence of any actual disadvantage caused by the uncertain holdover position (reduced investment, inability to plan, lost business opportunities). Landlords should document any continuing investment or rising turnover by the tenant that could defeat a precarity discount claim.
In a Holdover Situation After Refusal of Renewal?

Whether you are a tenant assessing how long you can remain and what you will owe, or a landlord seeking to bring the holdover period to an end and recover the correct occupation indemnity, we advise on the conditions, the calculation, and the procedural steps required.

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Legal Notice. This article is for general information and educational purposes only. It does not constitute legal advice. Laws and regulations may have changed since publication. Always seek qualified French legal advice on holdover and occupation indemnity matters in a French commercial lease.