End of a commercial lease: rights and obligations 2026

End of a commercial lease: legal framework and ways the contract comes to an end

The end of a commercial lease is a decisive stage in the contractual relationship between landlords and tenants, requiring a thorough command of the statutory and case-law mechanisms. Whether the lease ends on expiry of the contractual term, by early termination or in particular circumstances, it engages specific rights and obligations governed by Articles L. 145-1 et seq. of the French Commercial Code. This analysis examines the different ways a commercial lease can end, the conditions for exercising them and their legal consequences for the parties.

Ways a commercial lease comes to an end

Expiry of the contractual term

The natural end of a commercial lease occurs on the expiry date provided for in the contract, in accordance with Article L. 145-9 of the French Commercial Code. This route requires the landlord wishing to recover the premises to complete strict formalities.

The notice with refusal of renewal (congé avec refus de renouvellement) must comply with mandatory requirements as to form and time limits. Article L. 145-9 requires service by bailiff's deed (acte d'huissier) or hand delivery against a receipt, with a minimum period of six months before the lease expires. This notification must expressly state the refusal of renewal and, where applicable, the intention to demolish or to carry out reconstruction or additional-storey works. The formalities and timetable of this notice, from the owner's side, are detailed in our landlord's guide on the landlord's notice to terminate a commercial lease (renon).

Failure to give notice in the legal form results in tacit renewal of the contract for a period of nine years, unless the parties agree otherwise or particular circumstances provided for by law apply.

Early termination by the tenant

The termination of a commercial lease by the tenant may take place through several distinct mechanisms, each subject to specific conditions.

The three-yearly termination right, enshrined in Article L. 145-4 of the French Commercial Code, allows the tenant to terminate the lease unilaterally at the end of each three-year period, subject to six months' notice. This option is a discretionary right requiring no particular justification. On the applicable notice periods and how notice is given, see our article on notice in commercial leases.

Termination for the landlord's breach presupposes serious breaches of contractual obligations. Case law requires a prior formal notice that has remained unsuccessful and leaves it to the court's sovereign assessment whether the breach is serious enough to justify ending the contract.

Termination by the court

The courts may order termination of a commercial lease for non-performance of contractual obligations by one of the parties. This procedure follows the general rules of contract law, codified in Articles 1217 et seq. of the French Civil Code.

Judicial termination at the tenant's fault mainly concerns unpaid rent and charges, failure to insure or established neighbourhood disturbance. The judge assesses whether termination is appropriate according to the seriousness of the breaches and may grant time to pay (délais de grâce) in accordance with Article 1343-5 of the French Civil Code.

The tenant's obligations at the end of the lease

Restoring the premises

Article 1730 of the French Civil Code requires the tenant to return the leased premises in good condition as regards tenant's repairs. This obligation extends to damage caused by the tenant, its employees or its customers.

The distinction between major repairs (the landlord's responsibility) and tenant's repairs (the tenant's responsibility) is assessed according to the natural wear of the equipment and the normal use of the commercial premises. The courts examine the entry inventory of fixtures (état des lieux), the length of occupation and the nature of the activity carried on in order to determine the extent of the restoration obligations.

The fittings and installations made by the tenant raise particular questions. The general principle is that improvements benefit the landlord without compensation, unless the contract provides otherwise or the parties agree. However, the tenant may be required to restore the premises to their original condition if the modifications affect the intended use of the building.

Exit inventory of fixtures

Drawing up an inventory of fixtures in the presence of both parties is an essential precaution to preserve their respective rights. Failing agreement, Article 1731 of the French Civil Code allows a court-appointed expert to be requested.

This inventory must record precisely the condition of the premises, equipment and installations, distinguishing damage attributable to the tenant from normal wear and tear. It determines the extent of the restoration works and conditions the return of the security deposit. The evidential value of this document and the disputes it gives rise to between landlord and tenant are dealt with separately in our article on inventory of fixtures disputes in commercial leases.

Return of keys and vacating the premises

The obligation to vacate is accompanied by the return of all means of access to the premises (keys, badges, codes). Remaining in the premises after the lease has expired exposes the tenant to damages for occupation without title, calculated on the basis of the rent increased by a penalty.

The landlord's rights when the lease ends

Recovering the premises free of occupation

The landlord has an eviction action against a tenant who remains in the premises after the lease has properly ended. This action falls within the jurisdiction of the tribunal judiciaire and may be brought under the accelerated procedure on the merits provided for by Articles 840 to 842 of the French Code of Civil Procedure.

Eviction presupposes a prior finding that the lease has ended and that there is no right to remain in the premises. It is generally accompanied by an order to pay damages for occupation without title.

Checking the condition of the premises and claiming for damage

The landlord must check the condition of the premises promptly in order to preserve its rights. A liability claim against the outgoing tenant is time-barred after three years from the return of the keys, in accordance with Article 2276 of the French Civil Code.

The damage found gives rise to compensation according to the cost of restoration, less wear and tear. The courts generally rely on quotes from qualified contractors to assess the amount of the works required.

Retention of the security deposit

The security deposit may be retained up to the sums owed by the tenant: unpaid rent, charges, restoration works and any damages. The landlord must prepare a detailed statement and justify the deductions made.

Any balance must be returned within a reasonable period, generally fixed by case law at two months in the absence of a contractual provision.

Special cases and specific disputes

Termination for neighbourhood disturbance

Disturbance caused by the commercial activity may justify termination of the lease at the tenant's sole fault. Case law assesses the seriousness of the disturbance according to its frequency, its intensity and its impact on the environment.

Established noise, odour or visual nuisance is grounds for termination where it exceeds the normal inconveniences of neighbourhood life. The landlord must establish the reality of the disturbance and that it is attributable to the tenant, by any means of evidence.

Failure to insure

The tenant's obligation to insure, provided for by Article L. 145-2 of the French Commercial Code, is a matter of public policy. Termination may be ordered even where no loss has occurred, once the failure to insure is established.

A formal notice to take out appropriate insurance is a mandatory prerequisite. The tenant has a period in which to regularise its situation before termination can be sought.

Unauthorised change of activity

Carrying on an activity that does not comply with the intended use of the premises or is not authorised by the lease is a contractual breach that may justify termination. Seriousness is assessed according to the impact on the building, neighbourhood relations and regulatory obligations.

Indemnities and damages

Eviction indemnity

Where the landlord refuses renewal without a serious and legitimate reason, it must pay the tenant an eviction indemnity (indemnité d'éviction) corresponding to the loss suffered. This indemnity comprises the value of the leasehold right, removal and relocation costs and, where applicable, loss of customers.

Article L. 145-14 of the French Commercial Code provides that this indemnity may not be less than the market value of the business (fonds de commerce), less the items incorporated by the owner.

Damages for wrongful termination

Wrongful termination of a commercial lease exposes the party responsible to damages covering the whole of the loss caused. For the tenant, this loss may include the cost of looking for new premises, loss of trading and removal costs.

Penalty clause

The penalty clauses stipulated in the lease apply in the event of non-performance of contractual obligations. Their amount may be revised by the judge in accordance with Articles 1231-2 et seq. of the French Civil Code if it appears manifestly excessive or derisory.

Amicable procedures and alternative methods

Settlement and memorandum of agreement

The settlement agreement (transaction), governed by Articles 2044 et seq. of the French Civil Code, allows the parties to settle amicably their disputes relating to the end of the lease. It must be in writing and clearly set out the reciprocal concessions.

The memorandum of agreement may organise the practical arrangements for the end of the lease: vacating timetable, allocation of works, conditions for the return of the security deposit. It has the advantage of speed and cost control.

Mediation and conciliation

Commercial mediation, encouraged by Article L. 611-15 of the French Commercial Code, offers a structured framework for resolving disputes at the end of a lease. It preserves relations between the parties and allows creative solutions suited to the economic stakes.

Tax and accounting aspects

Treatment of provisions and impairments

The end of the commercial lease affects the accounting treatment of doubtful debts and provisions for works. Businesses must adjust their entries according to the rules of the General Accounting Plan (Plan comptable général).

Impairments on tenant receivables may be recorded once recovery becomes uncertain. They are reversed when the receivable is finally extinguished or paid.

Consequences for VAT

Vacating the premises may change the applicable VAT regime, in particular for VAT-registered landlords that have opted for taxation of property lettings. Cessation of the activity requires adjustment of deductions previously made.

The end of a commercial lease calls for particular vigilance as to the time limits for recovering deductible VAT and the parties' reporting obligations.

Frequently asked questions

Can the tenant terminate its commercial lease at any time?

No, early termination by the tenant is possible only on the three-yearly dates (Article L. 145-4 of the French Commercial Code) or in the event of serious breach by the landlord. The three-yearly termination right requires six months' notice by bailiff's deed or registered letter with acknowledgement of receipt.

When can the landlord refuse renewal without paying an indemnity?

The landlord may refuse renewal without paying an eviction indemnity where there is a serious and legitimate reason: non-payment of rent, failure to insure, unauthorised subletting or non-performance of other contractual obligations (Article L. 145-17 of the French Commercial Code). The landlord must give the reason in the notice.

How is the eviction indemnity calculated?

The eviction indemnity covers the whole of the loss suffered by the evicted tenant: market value of the business, removal and relocation costs, loss of customers. It may not be less than the value of the business, less the items incorporated by the owner.

Can the security deposit be kept in full?

The security deposit may be retained only up to the sums actually owed: unpaid rent, charges, the cost of damage less wear and tear. The landlord must provide a detailed statement and return the balance within a reasonable period.

Is an exit inventory of fixtures mandatory?

No statutory provision requires an exit inventory of fixtures to be drawn up, but it is an essential means of proof of the condition of the premises returned. Failing agreement between the parties, the court may order a court-appointed expert report (Article 1731 of the French Civil Code).

What happens if the tenant stays on after the lease has expired?

Remaining in the premises after expiry exposes the tenant to an eviction action and to payment of an occupation indemnity, generally calculated on the basis of the increased rent. The tenant has no right to remain if notice was properly given.

Does termination for neighbourhood disturbance require a formal notice?

Yes, termination for neighbourhood disturbance requires a prior formal notice allowing the tenant to put an end to the disturbance. Only breaches of exceptional seriousness may justify immediate termination without prior formal notice.

The end of a commercial lease engages a complex body of law that calls for a case-by-case analysis of each party's rights and obligations. Legal certainty depends on rigorous anticipation of the ways the lease may end and precise documentation of any breaches. Given the diversity of situations and constant developments in case law, the support of an adviser experienced in commercial property law is essential to protect the interests involved and prevent costly disputes.