What Landlords Should Know Before Refusing Renewal of a French Leaseback "Bail Commercial"
Published on :
15/11/2025
15
November
Nov
11
2025
In leaseback résidences de tourisme, owners lease their property to a management company under a commercial lease.
As the 9-year term approaches, many landlords consider refusing renewal—often due to low rent, poor maintenance, or a desire to regain control of the property.
Before doing so, it is essential to understand the legal framework and the practical risks.
1. NON-RENEWAL AUTOMATICALLY TRIGGERS THE QUESTION OF EVICTION PENALTY
Under the French Commercial Code, the operator has a statutory right to renew the lease. If the landlord refuses, an eviction penalty (indemnité d’éviction) may be due, unless the operator is in serious breach of its obligations. This penalty compensates the operator for the impact on its business.
2. NON-RENEWAL IS A COMPLEX LEGAL PROCESS
Non-renewal is not a simple letter. It requires:
- a strictly drafted non-renewal notice (“congé”),
- served by a huissier within mandatory deadlines.
3. MANAGEMENT COMPANIES OFTEN OVERSTATE EVICTION PENALTY CLAIMS
Operators frequently pressure landlords by asserting that non-renewal will result in very high compensation. In practice, even when an eviction penalty is owed, the amounts finally paid are usually far lower than the operator’s initial claims.
4. NON-RENEWAL CAN STILL BE A VIABLE AND STRATEGIC CHOICE
Even considering the potential cost of an eviction penalty, non-renewal may be justified when: the management company performs poorly ; rent payments are irregular ;the owner wants to recover personal use of the property,
5. BEFORE NON-RENEWAL, LANDLORDS SHOULD SEEK LEGAL ADVICE
Before refusing renewal, landlords should:
- assess possible operator breaches,
- evaluate realistic exposure to compensation,
- and plan a negotiation strategy.
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