Paying or Depositing Eviction Compensation: The Landlord's Right of Withdrawal

A landlord who has served notice refusing to renew the lease, expecting to take back the premises, sometimes discovers with dismay the amount of eviction compensation (indemnité d'éviction) set by the court: in a valuable commercial location, it can represent several years of the tenant's turnover and far exceed the benefit expected from recovering possession. The tenant, for its part, wonders whether it can be forced to stay when it was preparing to leave. Commercial lease law offers the owner a way out, the right of withdrawal (droit de repentir), which allows the landlord to give up the eviction in order to avoid paying the compensation. This article sets out how this right works and the time limits that apply, the central question of paying or depositing the compensation, and the position regarding occupation of the premises until the tenant actually leaves. It supplements the analysis of how eviction compensation is calculated by looking at the next stage: enforcement and the landlord's financial choices.

The starting point: eviction compensation and the right to remain in the premises

Refusing to renew a commercial lease is not without consequences. Article L. 145-14 of the French Commercial Code sets out the principle: a landlord who refuses renewal must pay the evicted tenant eviction compensation intended to make good the loss caused by the lack of renewal. This compensation includes in particular the market value of the business (fonds de commerce), plus the normal costs of removal and relocation, as well as the transfer costs and duties payable for a business of the same value. The methods used to assess this compensation, its additional components and the way the expert appraisal is conducted are set out in our article on the calculation of eviction compensation.

The counterpart of this obligation is a powerful right for the tenant: the right to remain in the premises (droit au maintien dans les lieux). Article L. 145-28 of the French Commercial Code provides that no tenant who is entitled to eviction compensation may be required to leave the premises before having received it. In other words, until the compensation has actually been paid, the tenant remains in the premises on the terms and conditions of the expired lease, the only difference being that it no longer pays rent but an occupation indemnity (indemnité d'occupation).

This interplay is essential to understanding the logic of the right of withdrawal. A landlord who has started the eviction process faces a choice: either to pay the compensation set by the court in order to obtain vacant possession, or to give up the eviction. The right of withdrawal governs precisely this second option.

The landlord's right of withdrawal: definition and basis

The right of withdrawal is the owner's ability to reverse its decision not to renew the lease, in order to avoid paying the eviction compensation. It is governed by Article L. 145-58 of the French Commercial Code:

The owner may, up to the expiry of a period of fifteen days from the date on which the decision has become final (force de chose jugée), and provided that the tenant is still in the premises and has not already leased or bought another property for its relocation, avoid paying the compensation, on condition that it bears the costs of the proceedings and agrees to renew the lease.

Withdrawal is a unilateral decision of the landlord: the tenant can neither oppose it nor insist on keeping the benefit of the eviction compensation. Where the statutory conditions are met, exercising the right of withdrawal automatically revives the lease by way of renewal and extinguishes the claim to compensation.

This right is best understood as an economic safety valve. The amount of the eviction compensation is only really known at the end of the litigation, often after a court-appointed expert has reported. The legislature considered that it would be unfair to lock the landlord into a refusal decision taken when it did not know the exact cost of the eviction. Withdrawal leaves the landlord one last choice: to pay or to keep its tenant.

The strict conditions for exercising the right of withdrawal

The right of withdrawal is available only if several cumulative conditions are met on the day it is exercised. They are assessed strictly, because withdrawal deprives the tenant of compensation that may be considerable.

A tenant still in the premises

First condition: the tenant must still be in the premises. If the tenant has already physically left and returned the keys, withdrawal is no longer possible. The logic is simple: renewal cannot be imposed on a trader who has already ceased to trade on the premises. Presence is assessed in fact, by reference to whether the business is continuing and to physical possession of the premises.

No replacement lease or purchase

Second condition: the tenant must not already have leased or bought another property for its relocation. This requirement protects the tenant who, drawing the consequences of the refusal of renewal, has taken concrete steps to relocate. If it has signed a new commercial lease or acquired premises to continue its business, it would be unfair to force it back into the former premises. Case law takes a demanding view of relocation: there must be a firm commitment actually intended for the business, and not a mere project or negotiations.

The fifteen-day period after the final decision

Third condition, concerning time. Withdrawal may be exercised up to the expiry of a period of fifteen days from the date on which the decision fixing the compensation has become final (force de chose jugée). The notion of force de chose jugée refers to a decision that is no longer open to any appeal with suspensive effect: the appeal period has expired without an appeal, or the appeal route has been exhausted. It is distinct from the mere authority of res judicata.

In practice, the window for exercising the right is wider than it appears. The landlord may withdraw from the moment its refusal of renewal is notified and at any time during the proceedings, up to the end of this fifteen-day period following the final decision. That is precisely the purpose of the mechanism: to wait until the final amount of the compensation is known before deciding. This fifteen-day period is a forfeiture period (délai de forclusion) and must be observed scrupulously, since missing it makes payment of the compensation unavoidable.

Bearing the costs and renewing the lease

Fourth condition: the landlord who withdraws must bear the costs of the proceedings and agree to renew the lease. Withdrawal is therefore not free. The owner bears the cost of the litigation that its own refusal caused, and must accept the continuation of the lease relationship. If there is disagreement over the terms of the renewed lease, in particular the amount of the rent, they are set under the ordinary rules of commercial lease law. The renewal procedure and the fixing of the rent under the renewed lease are covered in our guide to renewing a commercial lease after nine years.

The effects of withdrawal: an irrevocable renewal

Once exercised in the required form and subject to the required conditions, withdrawal has final effects. It is unilateral, irrevocable and cannot be made subject to conditions. The landlord therefore cannot withdraw and then change its mind again: its declaration of intent exhausts its right. Likewise, a conditional withdrawal, made subject for example to the tenant accepting a specified rent, would be ineffective.

The main effect is renewal of the lease. The contractual relationship continues, the tenant keeps its right to the lease and its business on the premises, and the claim to eviction compensation disappears. The tenant is then back in the position of a tenant under a renewed lease, with all the rights attached to the commercial lease statute.

This rigour has a strategic consequence. The landlord must be sure of its choice before exercising withdrawal. An owner who thought it was getting rid of an unwanted tenant finds itself bound for a new nine-year period, subject to the option to terminate at the end of each three-year period (résiliation triennale). Conversely, a tenant who hoped to receive substantial compensation sees that financial expectation disappear, without being able to object.

Paying or depositing: how the eviction compensation is paid

Where the landlord does not withdraw, or the withdrawal period has expired, the question becomes that of payment of the commercial lease eviction compensation. Payment is the legal condition of the tenant's departure.

Payment, the condition of departure

The right to remain in the premises means that the tenant cannot be evicted until the compensation has been paid. Actual payment of the compensation is therefore the key that opens the way to eviction. A landlord who obtained a decision fixing the compensation but did not pay it could not force the tenant to leave: the tenant would legitimately remain on the premises, paying an occupation indemnity.

This rule reverses the economic burden of the procedure. It is not the tenant who must advance anything in order to stay, but the landlord who must pay out the compensation in order to recover its property. Time thus works in favour of the tenant, which keeps operating its business until payment.

Deposit as the equivalent of payment

Direct payment to the tenant is not always possible or advisable. The landlord may then use a deposit (consignation), in particular with the Caisse des dépôts et consignations. It is accepted that a deposit of the eviction compensation, where it is regular and places the sum at the beneficiary's free disposal, counts as payment for the purposes of the right to remain in the premises and allows the eviction to proceed.

Deposit is of major practical value where there are obstacles to direct payment: continuing dispute over the amount, third parties who may claim rights over the sum, or the landlord's wish to recover its premises quickly while preserving any remedies it may have. It protects the landlord, who thereby shows that it has performed its obligation, without parting definitively with the money in favour of a creditor who might not be the right one.

The position of creditors registered against the business

A particular difficulty arises where creditors are registered against the business (fonds de commerce), in particular by virtue of a pledge (nantissement) or the business seller's lien. As the eviction compensation economically takes the place of the business, these creditors have rights over it. Where such registrations exist, the landlord cannot pay the compensation directly to the tenant without risking having to pay a second time to the creditors. Deposit, or payment to an escrow agent (séquestre), is then the prudent course: it allows the sum to be distributed among those entitled according to their ranking. A prior check of the registrations encumbering the business is therefore essential before any payment.

The occupation indemnity until the premises are vacated

Between the end of the lease and the tenant's actual departure, a special regime applies: that of the occupation indemnity. A tenant that remains in the premises is no longer bound by the contractual rent, but owes an indemnity for the occupation it continues to exercise.

The basis and calculation of the occupation indemnity

Article L. 145-28 of the French Commercial Code provides that the occupation indemnity is determined taking into account all relevant factors. In practice, it is most often assessed by reference to the rental value of the premises, as would result from the rules for fixing the rent under a commercial lease. A tenant that no longer holds a lease but only a precarious right to remain may have an occupation value applied that is higher than the rent it used to pay, where that rent had fallen below the market rental value.

The courts frequently allow a so-called precariousness discount, which takes into account the unstable position of the occupier, deprived of the stability and prospects offered by a commercial lease in force. This mechanism balances the interests involved: it compensates the landlord for the actual occupation of its property while recognising that the occupier no longer enjoys the protection of the statute. The basis of this discount, its order of magnitude and the methods of recovering the debt are examined in our article on the occupation indemnity in commercial leases.

Duration: until actual departure

The occupation indemnity is due until the premises are actually vacated, that is, until the premises and the keys are physically returned. It does not end on the theoretical date on which the lease ends, nor even on the day the eviction compensation is paid, but on the day the tenant actually leaves. A tenant who was slow to leave after receiving its compensation would continue to owe this occupation indemnity.

This timing has a direct financial impact. The longer the procedure drags on, the longer the period of occupation after the lease expires, and the greater the cumulative amount of the occupation indemnity. For the landlord, this claim partly offsets the fact that its property is tied up and that it is waiting to pay the eviction compensation.

Strategic points for the landlord and the tenant

For the landlord, the decision to pay or to withdraw calls for a rigorous comparative analysis. The final amount of the eviction compensation, the real value of recovering the premises, the rental value that a renewed lease would produce, and the costs of the proceedings must be weighed against each other. Withdrawing simply in reaction to the amount of the compensation, without a clear plan for the future lease relationship, means risking keeping a tenant for a further long period. Paying or depositing, by contrast, ties up significant cash but frees the property for the long term.

For the tenant, vigilance concerns maintaining its rights until the matter is concluded. Leaving the premises or signing a replacement lease before the decision is final means losing the benefit of the right to remain and, admittedly, removes the risk of withdrawal, but also leaves the tenant with no room for manoeuvre if the landlord does not perform promptly. The tenant has an interest in securing the timetable, documenting the date on which the premises are vacated and anticipating the occupation indemnity regime, which weighs on its cash flow for as long as it remains on the premises.

Conclusion

The right of withdrawal is not a mere procedural accessory: it shifts the centre of gravity of the whole eviction dispute. As long as the fifteen-day period following the final decision has not expired, and as long as the tenant is still present and has not relocated, the landlord retains control of the outcome. This right calls for a clear-sighted financial reading: payment of the commercial lease eviction compensation and withdrawal are two branches of the same choice, one freeing the property at a high price, the other keeping a tenant in place at the cost of the procedural costs. Between the two, the occupation indemnity continues to run until actual departure, which makes the time factor decisive.

The position is clear: neither the landlord nor the tenant should enter this phase without having costed each scenario precisely. Before any decision, a landlord should have the registrations encumbering the business checked and calculate, in constant euros, the comparative cost of withdrawal against payment or deposit. A tenant, for its part, should refrain from any act of relocation or departure until it has secured, in writing and with the support of an adviser, the exit timetable and the fate of its compensation.

Frequently asked questions

Can the tenant refuse the landlord's withdrawal? No. The right of withdrawal under Article L. 145-58 of the French Commercial Code is a unilateral prerogative of the owner. Where the statutory conditions are met, namely a tenant that is still present and has not relocated, and exercise within the fifteen-day period following the final decision, renewal of the lease is imposed on the tenant. The tenant can neither oppose it nor insist on keeping its eviction compensation.

Within what period can the landlord exercise its right of withdrawal? Withdrawal may take place at any time during the proceedings, from the refusal of renewal, and up to the expiry of a period of fifteen days from the date on which the decision fixing the compensation has become final (force de chose jugée). This fifteen-day period is a forfeiture period: once it has passed, the landlord can no longer avoid paying the eviction compensation.

Does depositing the eviction compensation count as payment? Yes. Where it is regular and actually places the sum at the beneficiary's disposal, a deposit, in particular with the Caisse des dépôts et consignations, is accepted as the equivalent of payment. It allows the landlord to proceed with the eviction while securing the allocation of the sum, which is particularly useful where creditors are registered against the business.

Must the tenant leave before receiving the eviction compensation? No. Under Article L. 145-28 of the French Commercial Code, no tenant who is entitled to eviction compensation may be required to leave the premises before having received it. The tenant has a right to remain in the premises until the compensation is actually paid or deposited, in return for an occupation indemnity.

How is the occupation indemnity calculated between the end of the lease and departure? It is determined taking into account all relevant factors, most often by reference to the rental value of the premises. The courts frequently apply a precariousness discount reflecting the occupier's unstable position. This indemnity is due until the premises are actually vacated, that is, until the property and the keys are physically returned.

Can withdrawal be reversed once it has been exercised? No. Withdrawal is final and irrevocable as soon as it is validly expressed. The landlord can neither retract it nor attach conditions to it, for example by making it subject to acceptance of a specified rent. It is then bound by the renewal of the lease, subject to the options to terminate at the end of each three-year period provided for by the statute.

What happens if the tenant has already relocated elsewhere? If the tenant has already leased or bought another property for its relocation, the right of withdrawal is closed to the landlord. Case law nevertheless requires a firm commitment actually intended for the business, and not a mere project or negotiations. In that case, the owner can no longer avoid paying the eviction compensation.