FRANCE Law and Practice Contributed by: Antoine Mercier, Myriam Mejdoubi and Gabriel Dalarun, DLA Piper France LLP
• to build or rebuild the existing building; • to reassign the ancillary dwelling to this use; or • to carry out works imposed or authorised for a property restoration operation. In principle, the landlord should pay an eviction indemnity to the tenant (see 6.21 Forced Evic- tion ). In addition, commercial leases usually provide for an automatic termination clause in favour of the landlord in the event of the tenant breaching its obligations under the lease. The tenant is in principle entitled to break options at the end of each three-year period, and the parties may agree on additional break options in favour of the tenant. 6.20 Registration Requirements Although it is not mandatory to register commer - cial leases in the Trade and Companies Register, all leases with a term exceeding 12 years must be executed in a notarised form and published at the French land registry. Such publication is required for the rights under the lease to be enforceable against third parties. This gives rise to the payment of notary fees and the land regis - try tax, to be borne by the tenant (it being speci - fied that the lessor is, however, jointly liable for the payment of such tax), equal to approximately 0.715% of the total amount of the rent and ser - vice charges due over the whole duration of the lease (within the limit of 20 years). 6.21 Forced Eviction In some cases, the landlord may force a ten - ant to leave at the end of the three-year period, but will have to pay compensation ( indemnité d’éviction ) unless the refusal to renew is due to circumstances provided for by law.
If the tenant defaults on the rent, the landlord can force the tenant to vacate the building. Associated legal proceedings can take around six months or more. In addition, if the lease contains a termination clause, the landlord may terminate it prior to the date agreed if the tenant fails to comply with the terms and conditions of the lease. The imple - mentation of the automatic termination clause requires a formal notice to address the breach to be served to the tenant by a bailiff. Should the tenant fail to address the breach within one month, the landlord is entitled to initiate pro - ceedings to obtain acknowledgement by the court of the termination of the lease. 6.22 Termination by a Third Party Where a compulsory purchase order takes effect, the lease is automatically terminated and the tenant is paid compensation by the purchaser. 6.23 Remedies/Damages for Breach In the event of a tenant breach and termination of a lease, there are no legal or contractual limits concerning damages that a landlord may collect. Landlords typically hold a security deposit, which is often equal to three months of rent (one instalment) in order to avoid the applica - tion of interest at the legal rate of 6.75% which is applicable if the landlord holds more than two instalments of rent. Furthermore, this could be completed or replaced by a first demand bank or corporate guarantee, the amount of which is not limited by law.
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