Joint and several suretyship of the tenant in a commercial lease: securing the guarantee for the landlord

A landlord who signs a 3/6/9-year commercial lease (bail commercial 3/6/9) commits its real estate asset for a long period to a tenant whose solvency may deteriorate well before the first three-year break. When rent stops being paid, eviction and recovery proceedings often stretch over several months, during which the rent debt keeps running. In this context, the joint and several suretyship (cautionnement solidaire) of the tenant remains the guarantee most used to transfer the risk of non-payment to a third party, generally the manager or a parent company. The instrument must still be drafted to withstand the grounds of nullity that the 2021 reform of security law reorganised. This article analyses, from the standpoint of the institutional landlord, the conditions of validity of joint and several suretyship in a commercial lease, how it compares with the independent guarantee (garantie autonome) and the security deposit, and the practical means of enforcing it where rent is unpaid.

Joint and several suretyship, the landlord's reference guarantee

Suretyship is defined in Article 2288 of the French Civil Code as the contract by which a surety undertakes towards the creditor to pay the debtor's debt if the debtor defaults. Applied to the commercial lease, the surety undertakes to honour the tenant's financial obligations if the tenant does not perform them. It is an ancillary contract: it follows the fate of the principal obligation, which fundamentally distinguishes suretyship from the independent guarantee examined below.

What the surety's undertaking covers

The base of the suretyship depends closely on how the instrument is drafted. A well-constructed suretyship is not limited to the principal rent. It covers all sums due under the lease: rent, service charge payments on account and reconciliations, recoverable taxes, occupation indemnity due after termination, default interest, penalty clause, the cost of tenant's repairs and procedural costs charged to the tenant.

The precision of this base conditions the effectiveness of the guarantee. An instrument that refers only to rent does not allow the surety to be called for the occupation indemnity, which is legally a separate debt arising after termination of the lease. Yet it is precisely during the period of occupation without right or title, between termination and actual vacation of the premises, that the debt grows fastest. A landlord that neglects this wording deprives itself of the guarantee on the heaviest part of its claim.

The scope of joint and several liability

A simple suretyship leaves the surety the benefit of discussion (bénéfice de discussion), provided for in Article 2305 of the French Civil Code, and, where there are several sureties, the benefit of division (bénéfice de division) of Article 2306. In concrete terms, a simple surety can require the landlord to pursue the tenant first and have its assets sold before turning to the surety.

Joint and several suretyship deprives the surety of these benefits. The landlord can claim payment of the whole debt directly from the surety, without first discussing the tenant's assets, as soon as the default occurs. This is the central interest of joint and several liability for a landlord: the speed and simplicity of calling the guarantee. Waiver of the benefits of discussion and division must result from a clear stipulation in the instrument, joint and several liability not being presumed outside the cases where it applies by law.

What the 2021 reform of security law changed

Ordinance No. 2021-1192 of 15 September 2021 reforming security law, which entered into force on 1 January 2022, profoundly rewrote the law of suretyship. It brought back into the French Civil Code, in Articles 2288 et seq., rules previously scattered in the French Consumer Code, and changed the regime of the handwritten statement and of proportionality. For a landlord, these changes determine the strength of the guarantee: a suretyship entered into on or after 1 January 2022 is governed by the new regime, whereas earlier suretyships remain subject to the texts in force on the day they were signed.

The statement written by an individual surety (Article 2297)

Where the surety is an individual, Article 2297 of the French Civil Code requires that the surety write a statement himself or herself acknowledging that he or she is undertaking as surety, up to a stated amount covering the principal and accessories. The reform abolished the rigid sacramental wording that previously existed and which fuelled abundant litigation over the slightest variation of a comma. What now matters is that the statement expresses the nature and extent of the undertaking.

The same article specifies that, if the surety waives the benefit of discussion or division, the surety must say so expressly. In other words, the joint and several liability sought by the landlord requires the individual surety to write the waiver of these benefits himself or herself. Failing that, the sanction is heavy:

Failing that, the surety cannot rely on these benefits or, as the case may be, the undertaking is limited to the amount stated in the statement.

For the landlord, the practical consequence is simple: a joint and several suretyship signed by a manager who is an individual, without the manager having written by hand the statement of the undertaking and the waiver of the benefits, may be deprived of its joint and several force, or even reduced to the amount clumsily stated. Drafting vigilance on this point conditions the whole value of the security.

The principle of proportionality (Article 2300)

Article 2300 of the French Civil Code provides that a suretyship given by an individual to a professional creditor must not be manifestly disproportionate to the individual's income and assets at the time it is entered into. A landlord who lets premises in the course of business falls within the category of professional creditor.

The reform changed the sanction for disproportion. Under the former Article L.332-1 of the French Consumer Code, manifest disproportion resulted in total forfeiture of the right to rely on the suretyship, the landlord losing the whole of its guarantee. Since 1 January 2022, the sanction is no longer extinction but reduction: the suretyship is brought down to the amount up to which the surety could commit on the day it was entered into. The landlord therefore keeps a partial guarantee rather than losing everything.

This development does not remove the need for caution. Having a manager with modest personal assets sign a surety undertaking covering several years of rent exposes the guarantee to a substantial judicial reduction. Good practice is to collect, at signing, an asset statement completed, dated and signed by the surety, making it possible to assess the proportion of the undertaking and to build evidence in the event of later challenge. The criteria for assessing disproportion and the allocation of the burden of proof between creditor and surety are set out in our article on manifestly disproportionate suretyship.

The duty to warn (Article 2299)

Article 2299 of the French Civil Code establishes a duty to warn on the professional creditor towards the individual surety, where the principal debtor's undertaking is unsuited to its financial capacity. A breach is sanctioned by forfeiture of the creditor's right against the surety to the extent of the harm suffered by the surety.

This duty concerns the bank lender more than the landlord, but an institutional landlord that grants a lease on financial terms manifestly beyond the tenant's means, with an inexperienced manager as surety, cannot ignore this risk. Documenting the information given to the surety, in particular on the total amount of the secured commitments, secures the landlord's position.

The information obligations borne by the landlord

The new regime maintains and generalises information obligations that weigh on the professional creditor throughout the life of the suretyship. A failure to comply does not annul the guarantee but reduces its yield, which is enough to make it a concrete recovery issue.

Article 2302 of the French Civil Code requires the professional creditor to inform the individual surety, before 31 March each year, of the amount of principal, interest, commissions, costs and accessories remaining due at the preceding 31 December. Failing that, the surety is not liable for penalties or default interest accrued from the previous information until the date the new information is communicated. For a commercial lease, where default interest and the penalty clause can represent a significant share of the debt, forgetting this annual information directly cuts the recoverable claim.

Article 2303 adds an obligation to inform on the debtor's default: the professional creditor must inform the individual surety of the debtor's default from the first payment incident not remedied within the month of its falling due. The sanction is identical: forfeiture of the penalties and interest accrued between the date of that incident and the date on which the surety was informed of it.

These two mechanisms require the landlord to organise rigorous monitoring. In concrete terms, a lease management department must record the date of the first unpaid instalment and send a notification to the surety within the month, then renew the information on the outstanding amount each year. Administrative negligence is paid for here by an outright loss of claim.

Suretyship, independent guarantee and security deposit: how they fit together

Suretyship is not the only security that can be used. A well-advised landlord reasons in terms of a combination of guarantees, cumulating a security deposit, a suretyship and, in some structures, an independent guarantee. Each instrument follows a distinct logic. Real security granted for another person's debt, in particular a mortgage given by a SCI (French property holding company) for the operator, is dealt with separately in our article on real security for another's debt.

The security deposit

The security deposit is a sum paid by the tenant on entering the premises, which the landlord keeps to cover any defaults. By nature it is a first-rank guarantee, immediately available, without procedure. Its limit lies in its amount, often equivalent to one or two rent instalments. Article L.145-40 of the French Commercial Code moreover provides that sums paid in advance to the landlord, beyond two rent instalments, bear interest for the benefit of the tenant, which in practice caps the deposit that can be demanded.

The deposit therefore absorbs an isolated unpaid instalment, but is quickly exhausted by a rent debt that runs over several months of proceedings. It never removes the need for a complementary guarantee covering a wider base.

The independent guarantee (Article 2321)

The independent guarantee, defined in Article 2321 of the French Civil Code, is the undertaking by which the guarantor, in consideration of an obligation entered into by a third party, undertakes to pay a sum either on first demand or on agreed terms. Its strength lies in its autonomy: the guarantor cannot raise against the beneficiary defences drawn from the underlying contract. It pays first, and disputes relating to the lease are settled afterwards between the tenant and the landlord.

For a landlord, the attraction is obvious: an independent guarantee on first demand allows an almost automatic call for payment, without having to demonstrate beforehand that the rent claim is well founded, unlike suretyship, where the surety can raise all the defences available to the tenant.

This advantage has a legal counterpart. The courts are reluctant to accept an independent guarantee granted by a manager who is an individual in favour of the landlord of commercial premises, because of the risk of requalification as suretyship where the guarantee in fact refers to the obligations of the lease rather than to an autonomous sum. A guarantee drafted as covering unpaid rent under the lease risks being analysed as a disguised suretyship, with reinstatement of all the protections that the independent guarantee was meant to exclude. The independent guarantee finds its natural ground in bank guarantees or sophisticated parent company undertakings, less in the suretyship of a manager who is an individual. On the bank guarantee and the guarantee on first demand required by property investment companies, see our analysis of the institutional landlord's security in a commercial lease.

Choosing between the instruments

The choice is made according to the quality of the guarantor and the level of security sought:

• The security deposit covers short-term non-payment, is available without procedure, but is capped.
• The joint and several suretyship of a manager or a parent company covers a wide base over the term of the lease, at the price of strict formalities and defences that can be raised.
• The independent guarantee, reserved for informed and institutional guarantors, offers a call on first demand, but is exposed to requalification if badly drafted for a guarantor who is an individual.

The most robust combination, for a commercial lease of significant amount, combines a security deposit of two rent instalments, a joint and several suretyship of the manager covering all the obligations under the lease and, where the tenant belongs to a group, an independent guarantee granted by the parent company.

Enforcing the suretyship where rent is unpaid

The drafting quality of the instrument is worth something only if the landlord knows how to enforce the guarantee without a procedural misstep. Enforcement follows a precise chronology.

From the first unpaid instalment that is not remedied, the landlord must serve on the tenant a payment notice (commandement de payer) referring to the termination clause (clause résolutoire), in application of the rules specific to the commercial lease, while informing the surety of the default in accordance with Article 2303 of the French Civil Code. This double step avoids forfeiture of interest and prepares the call on the guarantee.

The call on the joint and several surety takes the form of a formal demand for payment, specifying the statement of the debt: rent due, charges, interest and, where applicable, occupation indemnity. Since joint and several liability allows direct action, the landlord does not have to wait for the outcome of proceedings against the tenant to claim payment from the surety, provided that the debt is certain, liquid and due.

The landlord must anticipate the defences that the surety can raise. As an ancillary guarantor, the surety can invoke all the defences inherent in the debt that are available to the tenant: challenge to the amount, set-off, limitation, defects affecting the lease. This is the major difference from the independent guarantee. The surety may also invoke the disproportion rule of Article 2300 to obtain a reduction of the undertaking, or breaches of the information obligations to set aside interest and penalties.

A recurring point of vigilance concerns the duration of the undertaking in relation to renewal of the lease. A suretyship given for the term of an initial 3/6/9-year lease does not automatically cover the periods after renewal, unless expressly stipulated. A landlord that lets a lease renew without having the surety's undertaking reiterated or extended risks discovering, at the time of non-payment, that the guarantee expired with the initial lease. The drafting must therefore specify that the suretyship extends to renewals, or provide for it to be reiterated at each renewal.

Drafting points of vigilance

Several precautions distinguish an enforceable suretyship from a fragile guarantee. The institutional landlord has an interest in building these requirements into its standard instruments:

• expressly refer to all the sums guaranteed, including the occupation indemnity, interest, the penalty clause and procedural costs;
• for an individual surety, have the statement required by Article 2297 of the French Civil Code written, expressing the nature and extent of the undertaking as well as the waiver of the benefits of discussion and division;
• collect an asset statement dated and signed by the surety in order to assess proportionality within the meaning of Article 2300;
• stipulate a clear duration of the undertaking and its extension to renewals of the lease;
• organise internally compliance with the annual information obligation (Article 2302) and the obligation to inform on default (Article 2303).

The distinction between an individual surety and a corporate surety deserves emphasis. Most of the protections analysed, the statement, proportionality, the duty to warn and information, benefit the individual surety. Where the guarantee comes from a company, bank or parent company, these protections do not apply in the same way, which makes the undertaking more stable but requires an assessment of the institutional guarantor's solvency.

Conclusion

Joint and several suretyship remains, for the commercial landlord, the guarantee offering the best ratio between extent of cover and cost of setting up, provided it is drafted with the rigour required by the new law of security. The 2021 reform relaxed the formality of the statement and softened the sanction for disproportion, now reduction rather than extinction, but it maintained a system of information obligations whose breach mechanically cuts the recoverable claim. The point to retain is clear: the value of a suretyship is determined less at the time of non-payment than at the time of signing and in the administrative follow-up that comes after. An instrument that is imprecise on its base, silent on renewals or negligent on the annual information turns into a façade guarantee.

The independent guarantee and the security deposit do not replace suretyship; they complement it: deposit for the immediate unpaid instalment, joint and several suretyship for long and wide cover, independent guarantee for informed institutional guarantors. Before any renewal of the lease or any assignment, have an adviser check that the surety's undertaking remains in force and properly covers the later period, failing which the expiry of the guarantee may be discovered at the worst moment.

Frequently asked questions

Does the joint and several suretyship of a commercial lease cover the occupation indemnity after termination? Only if the instrument expressly so provides. The occupation indemnity due by a tenant remaining without right or title after termination is a debt legally distinct from rent. A suretyship referring only to rent does not allow the surety to be called on that basis. The drafting must refer to all sums due, including the occupation indemnity, interest and costs.

Does the 2021 reform of security law apply to suretyships signed before 2022? No. Suretyships entered into before 1 January 2022, the date of entry into force of Ordinance No. 2021-1192 of 15 September 2021, remain subject to the law in force on the day they were signed, in particular to the former provisions of the French Consumer Code on the handwritten statement and proportionality. The new regime of Articles 2288 et seq. of the French Civil Code applies only to later instruments.

What is the sanction if the suretyship is disproportionate to the surety's assets? Since the reform, Article 2300 of the French Civil Code provides that a suretyship manifestly disproportionate to the income and assets of an individual surety, on the day it is entered into, is reduced to the amount up to which the surety could commit. The sanction is no longer the total forfeiture that existed under the former Article L.332-1 of the French Consumer Code, but a reduction of the undertaking.

Can a manager raise the same defences as under an independent guarantee? No, and this is an essential difference. The surety, as an ancillary guarantor, can raise against the landlord all the defences inherent in the debt that are available to the tenant: challenge to the amount, limitation, set-off, defects in the lease. The independent guarantor of Article 2321 of the French Civil Code cannot raise defences drawn from the underlying contract and must pay on first demand, save in cases of fraud or manifest abuse.

Does the suretyship remain valid after renewal of the commercial lease? Not automatically. A suretyship given for the term of an initial lease covers the periods after renewal only if the instrument expressly so stipulates. Failing that, the guarantee expires with the initial lease. The landlord must provide for the extension of the suretyship to renewals or have it reiterated at each renewal.

What information must the landlord send to the surety each year? Article 2302 of the French Civil Code requires the professional creditor to state to the individual surety, before 31 March each year, the amount of principal and accessories remaining due at the preceding 31 December. Failing that, the surety is not liable for penalties and interest accrued since the last information. Notification of the tenant's default is also due within the month of the first payment incident not remedied, in application of Article 2303.

Should an independent guarantee be preferred to suretyship for a commercial lease? It all depends on the quality of the guarantor. For an institutional guarantor, bank or parent company, the independent guarantee of Article 2321 offers a very protective call on first demand. For a manager who is an individual, it is exposed to requalification as suretyship where it refers to the obligations of the lease, which reinstates all the protections set aside. In that case, a carefully drafted joint and several suretyship is safer than a fragile independent guarantee.