The Owner's Risks During a Location-Gérance: Debts, Liability and Publicity

The owner's risks during a location-gérance: debts, liability, publicity

Letting the business out does not let the owner out. Until the location-gérance contract is published, the owner is solidarily liable with the tenant-manager for the debts the tenant contracts in operating the fonds (C. com. Art. L 144-7) - and an unpublished contract leaves that solidarity running without any time limit. On the other side of the ledger, the owner's own term creditors can react to the letting by having their claims declared immediately payable where the operation puts their recovery in peril (C. com. Art. L 144-6). Between those two provisions sits everything an owner needs to know before signing: which debts are caught, who can invoke the solidarity, what defences fail, and why the fifteen-day publication is the cheapest insurance in the whole regime.

This guide covers the owner's exposure during the location-gérance: the two creditor fronts, the solidarity's scope, duration, beneficiaries and enforcement, the escapes and the recourse - with the parallel tax solidarity of Article 1684, 3 of the Tax Code covered in this series' joint-liability guide and only mapped here.

The owner's own creditors and the location-gérance

The tenant owes them nothing. The letting does not turn the owner's creditors into the tenant's: the tenant-manager is not the owner's universal successor and, save an express clause, answers for none of the owner's personal debts - the decided case put the compensation owed to a deceased employee's heirs on the owner who had hired him, not on the tenant.

The term creditors' safety valve. Creditors whose claims are not yet due can fear that the letting will depreciate the fonds - their security. The law gives them a reaction: asking the commercial court of the fonds' location to declare their claims immediately payable (C. com. Art. L 144-6), on three cumulative conditions:

• only debts connected to the operation of the fonds qualify - not the owner's other debts;
• the action must be brought within three months of the contract's publication (a limit that does not apply to suing on debts already due);
• the court grants the acceleration only where the location-gérance puts the claim's recovery in peril - the tenant's insolvency being the textbook case.

The window's start is the publication: an owner who publishes on time knows, three months later, that its term debt is safe from acceleration; an owner who never publishes leaves the question open.

What passes and what stays. The letting transmits the employment contracts by law (C. trav. Art. L 1224-1 - the mechanics are in this series' employees guide) but no other contract: a maintenance contract stayed with the owner, insurance does not follow, and the tenant cannot invoke the owner's contracts absent a stipulation, as the contract guide in this cluster details.

The solidarity for the tenant's debts: what the location-gérance costs an unpublished owner

The rule and its clock. Until the publication of the contract, the owner is solidarily liable with the tenant-manager, or even with the third party who substituted itself for the tenant with the owner's knowledge, for the debts contracted in operating the fonds (C. com. Art. L 144-7, as amended in 2016 for contracts published since 11 December 2016; the previous regime extended the solidarity six months beyond publication). Two exceptions spare specific lessors: court-appointed officials who let a fonds under a court authorisation and completed the publicity (an administrator who renewed the contract beyond its authorised period lost the shield), and lettings authorised by the court that adopted a cession plan in the owner's own insolvency (C. com. Art. L 642-14).

Never published, never over. The consequence the case law hammers: without publication, the solidarity has no time limit. The owner's only remaining arguments are the pursuing creditor's bad faith or fault - thin shields, as the beneficiaries section shows. Publication, due within fifteen days of conclusion, is the single act that converts an open-ended guarantee into a closed one.

Which debts - the date. The owner answers only for debts born between the contract's conclusion and its publication: nothing for debts the operator contracted before becoming tenant-manager. What counts is the debt's date of birth, not its due date - the owner was held for advertising services ordered during the solidarity period though deliverable over three years, and for VAT whose triggering event fell in the period though its declaration was due after the solidarity had ended.

Which debts - the nature. The debt must be necessary to the operation of the fonds - no more: the owner need not have co-operated the fonds or mandated anything. Held within the solidarity: an advertising insertion, raw-materials supplies, the purchase of the previous operator's stock. Held outside: the tenant's own retirement contributions, a loan taken to obtain the gérance or to fund the security deposit, works to complete and improve a building where the letting covered only the café-restaurant, and restaurant equipment plus an ice machine bought for a bar-tabac that had always operated without one. The line is the fonds as let - not the tenant's ambitions for it.

Is the owner on the hook? The location-gérance solidarity check

Pick the situation - the check gives the rule the courts apply.

Who can invoke the solidarity - and who cannot use the location-gérance against the owner

Not the tenant. The tenant-manager cannot invoke the owner's solidarity: the protection exists for third parties, not for the person whose debts it guarantees.

Good-faith third parties only. Only third parties in good faith benefit - a creditor who interfered in the fonds' management would not. But good faith is read generously for creditors: merely knowing that a location-gérance existed does not bar the claim where the contract was unpublished, and neither does a clause of the unpublished contract obliging the tenant to pay all orders in cash - even where that clause appeared in the (late) legal publication.

The creditor's own fault. A creditor can forfeit the guarantee by fault in recovering against the tenant. The bar is high: an owner argued that a social-security body had faultily granted the tenant payment facilities, letting the debt grow - and lost, the body showing it had run all the diligences needed to clear the tenant's arrears.

Enforcing against the owner - and the owner's exits from the location-gérance exposure

The defences that fail. The enforcement rules are creditor-friendly across the board: the owner cannot plead the location-gérance's nullity to escape (C. com. Art. L 144-10); a non-trader owner is still sued before the commercial court; the omitted publicity keeps the owner liable even where the tenant is in insolvency proceedings; a claim brought under the old statutory numbering still works; and in the tenant's insolvency the action against the owner escapes the court-appointed officer's monopoly - each creditor sues the owner directly, unless the owner is itself in proceedings.

After publication: the common law. Once the solidarity closes, the owner can still answer on ordinary principles - for creating confusion between its own business and the let fonds, or for fault: the decided case is the owner who, having terminated the contract, immediately seized all the asset values that were the creditors' security, making their recovery against the tenant impossible. The lesson pairs with the restitution guide in this cluster: taking the fonds back is a regulated manoeuvre, not a land-grab.

The recourse. An owner who pays under the solidarity recovers from the tenant under the ordinary rules of recourse between solidary co-debtors - worth securing in the contract through the deposit and, where the amounts justify it, guarantees.

The tax twin. The same publication gate governs the owner's solidarity for the tenant's surcharged direct taxes (CGI Art. 1684, 3) - narrower in scope, identical in cure: publish within the fifteen days. This series' joint-liability guide covers it; the operational rule is one line - publish on the day of signature.

Protecting the owner through the location-gérance

Pick your stage - the check gives the protective moves.

Frequently Asked Questions

This article is for general information only and states French law as published in the sources available at the date shown above. It does not constitute legal advice. Always seek qualified advice before acting.