Precarious occupation agreement: securing the precarious nature of the agreement against the risk of requalification as a commercial lease

An asset awaiting demolition, an office building whose restructuring is planned but whose permit has not yet become final, a unit under a promise of sale whose completion depends on a condition precedent: in these situations, leaving the premises empty is costly, but letting them in the usual form creates a right of renewal that will block the transaction. The precarious occupation agreement (convention d'occupation précaire) is the tool that makes it possible to generate interim income without giving the occupier the protection of the commercial lease statute. The precarious nature must still withstand scrutiny by the court: a badly constructed agreement turns into a nine-year lease carrying an eviction indemnity (indemnité d'éviction) that includes the market value of the business (fonds de commerce). This guide sets out, from the standpoint of the institutional landlord, the conditions on which precariousness holds, the clauses that trigger requalification as a commercial lease (bail commercial), and how to recover the asset at expiry without losing the benefit of the agreement.

The statutory definition: precariousness cannot be declared into existence

The commercial lease statute is set aside only on the strict terms of Article L. 145-5-1 of the French Commercial Code, introduced by Law No. 2014-626 of 18 June 2014, known as the Pinel law.

The precarious occupation agreement, which is characterised, whatever its duration, by the fact that occupation of the premises is authorised only by reason of special circumstances independent of the sole will of the parties, is not subject to this chapter.

Two lessons must be drawn from this wording, and they contradict two persistent misconceptions among asset managers.

First, the precarious occupation agreement is not a short contract. The text says expressly whatever its duration. An agreement of several years may remain precarious if the circumstance that justifies it continues; conversely, an agreement of six months is not precarious by its brevity alone. Duration is merely one indication among others in the court's assessment, never a statutory criterion.

Second, precariousness does not result from the agreement of the parties. The text requires special circumstances independent of the sole will of the parties. In other words, a clause by which the occupier acknowledges the precarious nature of its title and waives the statute is not enough, and never will be. What justifies excluding the statute is an external, objective and verifiable fact that makes the occupation necessarily temporary.

The title of the document does not bind the court

The judge's reasoning does not start from the title of the document. Article 1188 of the Civil Code provides that a contract is interpreted according to the common intention of the parties rather than by stopping at the literal meaning of its terms. A document entitled "precarious occupation agreement" that makes premises available against a market-rate fee, for a term renewed year after year, without any external circumstance being identifiable, meets the definition of a lease in Article 1709 of the Civil Code: to allow the other to enjoy a thing for a certain time and in return for a certain price. If the premises house a business operated by a trader registered in the trade and companies register, or by a craft business registered in the national business register, the conditions for application of the statute laid down in Article L. 145-1 of the Commercial Code are met, and requalification follows.

Disputes over characterisation fall to the judicial court (tribunal judiciaire), which has exclusive jurisdiction over commercial leases, except disputes relating to the setting of the rent of a revised or renewed lease, professional leases and precarious occupation agreements in commercial matters (Article R. 211-3-26, 11°, of the Code of Judicial Organisation). A summons issued before the commercial court is a waste of time in a transaction timetable that is already tight.

Not to be confused: precarious agreement and short-term derogatory lease

The two tools are regularly used for one another in institutional portfolios, although their logics are opposite.

The short-term derogatory lease (bail dérogatoire) of Article L. 145-5 of the Commercial Code rests on the sole will of the parties: they may derogate from the statute "on the tenant's entry into the premises", provided that the total duration of the lease or successive leases does not exceed three years. No external circumstance is required. In return, the guillotine is automatic: if, at the end of that period, and at the latest on expiry of a period of one month from the expiry date, the tenant remains and is left in possession, a new lease subject to the statute comes into being. The same applies in the event of express renewal or of the conclusion of a new lease between the same parties for the same premises. The article further requires a condition report on taking possession and on return, drawn up jointly, and failing that by a commissaire de justice (bailiff) at costs shared equally. The regime of this instrument and the conditions of its conversion are detailed in our article on the short-term derogatory lease and its switch to a 3-6-9 lease.

The precarious occupation agreement, by contrast, rests on an objective circumstance, and is confined within no maximum duration. The choice between the two instruments is therefore made on a simple criterion: is there, or is there not, a documentable external fact that governs the timing of the occupation? If the answer is no, the precarious agreement is a losing bet and the derogatory lease, with its three-year ceiling, is the appropriate vehicle. If the answer is yes, and the horizon of the transaction exceeds three years, the precarious agreement is the only tool available.

A practical point: the three-year term of the derogatory lease is not counted against the precarious agreement or vice versa, but a sequence of derogatory lease followed by precarious agreement on the same premises with the same occupier will be closely scrutinised. The contractual chronology forms part of the characterisation file.

The special circumstances: content and management of proof

No text defines the special circumstances. Their content derives exclusively from case law, which requires the institutional landlord to reason in terms of evidence rather than categories.

The situations accepted by the courts share a common logic: the asset is destined for a future use that rules out any lasting occupation, and that use does not depend on the landlord's wishes. In practice one finds the building slated for demolition or heavy restructuring, the property under a promise of sale, the property included in an area subject to expropriation proceedings, occupation granted by a holder whose own title is itself limited in time, or occupation of premises pending the outcome of judicial or administrative proceedings. These illustrations come from decisions handed down, not from the code: they do not form a closed list, and none operates automatically.

Document the circumstance, do not merely declare it

The most frequent weakness of agreements drafted in series across portfolios is that the circumstance is asserted in a recital with no supporting document. A recital stating that "the landlord is considering a restructuring of the building" establishes nothing: the owner's intention is precisely a matter of its will, which Article L. 145-5-1 excludes as a basis for precariousness.

The agreement must therefore be backed by annexed and dated documents, and it is on this point that cases are won:

• the building or demolition permit application filed, its acknowledgement of receipt, then the decision and evidence that the period for appeals has expired
• the signed promise of sale or preliminary sale agreement (compromis de vente), with its completion timetable
• the resolution of the competent body fixing the works programme and its timetable
• the documents of the expropriation or pre-emption procedure under way
• the head lease, finance lease or mandate from which the landlord's title derives, where the occupation is granted by an intermediate holder
• works contracts, service orders or general contractor schedules

The circumstance must also be alive. An abandoned restructuring project, an expired permit, a lapsed promise remove the foundation of precariousness. Leaving the occupier in place after the circumstance relied on has vanished is one of the heaviest indications retained by the courts in favour of requalification. Monitoring of the agreement must therefore be aligned with monitoring of the transaction, with a checkpoint at each milestone: the permit becoming final, signature of the notarial deed, actual start of the works.

The clauses and conduct that trigger requalification as a commercial lease

The court reasons from a body of indications, and it compares the real economics of the agreement with those of a commercial lease. The factors that, in the case law, weigh against the landlord are known and, for the most part, avoidable at the drafting stage.

A fee aligned with the market rental value deprives the agreement of its internal coherence: if the occupier pays the price of a lease, it is difficult to argue that its enjoyment is diminished. An agreement renewed several times without the transaction progressing reveals that the circumstance relied on never governed the timing. Exclusive, peaceful and unrestricted enjoyment, identical to that of a tenant under the statute, neutralises the announced precariousness. Finally, transposing typical clauses of the commercial lease, a precise and stable use, annual indexation to the ILC (commercial rent index), allocation of charges according to the inventory specific to the statute, a right to assign the lease to the purchaser of the business, a security deposit calibrated in quarters, compliance works charged to the occupier, produces a document that looks like a lease and will be treated as one.

Waiver of the statute has no effect

One point must be stressed that the drafting of agreements still often ignores. Article L. 145-15 of the Commercial Code, as worded following the Pinel law, provides:

Clauses, stipulations and arrangements, in whatever form, that have the effect of defeating the right of renewal established by this chapter or the provisions of Articles L. 145-4, L. 145-32-1, L. 145-37 to L. 145-41, the first paragraph of Article L. 145-42 and Articles L. 145-47 to L. 145-54, are deemed unwritten.

Two consequences. On the one hand, the sanction is that the clause is deemed unwritten (réputé non écrit), not nullity, a wording abandoned since 2014: the clause is neutralised and the contract survives without it. On the other hand, an advance waiver of the statute inserted in an agreement that otherwise meets the conditions of a commercial lease is deprived of effect. The institutional landlord's security is therefore never found in the strength of the clause, but in the reality of the external circumstance.

It should be noted that Law No. 2026-403 of 26 May 2026 added, by its Article 62, Article L. 145-32-1 to the list of provisions protected by L. 145-15.

The real cost of requalification for an asset holder

Measuring the exposure to risk means working out what the agreement becomes after requalification. The move from a precarious agreement to a statutory lease changes the asset itself, not just the contractual relationship.

The term becomes captive. Article L. 145-4 provides that the term of the lease may not be less than nine years, with a right to terminate at the end of each three-year period open to the tenant alone, on six months' notice given by registered letter with acknowledgement of receipt or by extrajudicial act. The landlord has a symmetrical right only in the cases exhaustively listed in the same article, notably to build, rebuild or add storeys to the existing building, and in the form and within the periods of Article L. 145-9. Contrary stipulations remain possible for leases concluded for a term of more than nine years, premises built for a single use, premises used exclusively as offices and storage premises referred to in 3° of III of Article 231 ter of the General Tax Code, but a judicial requalification does not reconstitute such stipulations.

Exit becomes formal. Under Article L. 145-9, the lease ends only by notice to terminate (congé) given six months in advance, and notice must be given by extrajudicial act. The possibility of notice by registered letter at the landlord's choice disappeared with Law No. 2015-990 of 6 August 2015. The notice must, on pain of nullity, state its grounds and inform the tenant of the two-year period for applying to the court.

Refusal to renew becomes expensive. Article L. 145-14 requires, save exceptions, payment of an eviction indemnity equal to the loss caused by the failure to renew, which includes in particular the market value of the business, determined according to the practices of the trade, plus removal and reinstallation costs as well as transfer costs and duties. For a Parisian commercial location, this value frequently exceeds several years of rental income. On the cases in which the landlord may refuse renewal without paying an indemnity, see our analysis of the grounds for refusing renewal and the eviction indemnity.

Recovery of possession becomes uncertain in time. Article L. 145-28 is, from the standpoint of a transaction timetable, the most costly provision: no tenant who may claim an eviction indemnity can be required to leave the premises before having received it. Until payment, the tenant remains in the premises on the terms of the expired lease, the occupation indemnity being determined in accordance with sections 6 and 7 of the chapter. A restructuring works site is then held up pending the judicial determination and then payment of the eviction indemnity.

Added to this, since Law No. 2026-403 of 26 May 2026, is a constraint on cash flow and management. Article L. 145-32-1 makes monthly payment of rent a matter of right where the tenant of premises intended for retail or wholesale trade, or for commercial or craft services, requests it, subject to there being no arrears in payment of the sums due as rent and charges that have not been the subject of a prior challenge, the request taking effect from the next due date provided for in the lease. These provisions apply to leases being performed on the date the law was promulgated. For a portfolio invoiced quarterly in advance, a requalification now has an effect on the pace of collection.

The occupier's window for action

Article L. 145-60 provides that all actions brought under this chapter are time-barred after two years. The interplay of this two-year limitation period with the regime of clauses deemed unwritten in Article L. 145-15 is debated, and it cannot be taken for granted that an action for requalification of a precarious occupation agreement would in every case be confined to that period. An institutional landlord that builds its strategy on the passing of time rather than on the soundness of the agreement takes an uncontrolled risk.

Drafting an agreement that holds: the locking points

Drafting does not create precariousness, it expresses it and makes it demonstrable. A few choices structure the document.

The recital must set out the circumstance with its supporting documents, its timetable and its source. It must expressly link the duration of the occupation to the occurrence of the event: the occupation is granted because the building will be demolished, and for that reason alone.

The fee must carry a discount that is acknowledged and justified by the reduced enjoyment granted. There is no statutory scale, but a fee calculated like a market rent, and indexed like a market rent, mechanically weakens the characterisation.

Enjoyment must be genuinely reduced, and not only on paper: continued access for the landlord and contractors, site footprints, the possibility of moving the occupier to other premises, visits, neutralisation of lasting fit-out works, prohibition of any sub-occupation or assignment. A rapid recovery clause, tied to the milestones of the transaction, completes the arrangement.

As to duration, the choice deserves thought. A fixed-term agreement benefits from Article 1212 of the Civil Code: each party must perform it until its end and no one may demand renewal of the contract. An indefinite-term agreement falls under Article 1211: each party may terminate it at any time, subject to observing the contractually agreed notice period or, failing that, a reasonable period. The second formula better suits an uncertain transaction timetable, provided that clear notice is stipulated; the absence of a stipulation leads to a reasonable period whose assessment will be beyond the landlord's control.

Finally, implementation remains subject to Article 1104 of the Civil Code, which requires contracts to be negotiated, formed and performed in good faith, and specifies that this provision is mandatory (ordre public). Invoking an immediate recovery clause a few weeks after entry into the premises, when the transaction has not progressed, exposes the landlord to a debate on abuse.

Although a joint condition report is required by Article L. 145-5 only for the derogatory lease, carrying one out on entry and on return remains recommended practice: it secures any dispute over reinstatement and documents the nature of the occupation.

Recovering the asset at expiry without losing the benefit of the agreement

The end of the agreement is the moment when a sound agreement is lost through management negligence.

First reflex: never let the occupier remain without a document. Tolerated continued possession is, for the derogatory lease, a statutory ground for requalification once the one-month period provided by Article L. 145-5 has run; for the precarious agreement, it feeds the argument that the occupation was not governed by an external circumstance. As the end date approaches, notice must be sent, the exit must be organised, and any extension must be the subject of an amendment that updates the circumstance and its supporting documents.

Second reflex: do not confuse the end of the agreement with recovery of the premises. Article L. 411-1 of the Code of Civil Enforcement Procedures provides that, save special provision, eviction from a building or inhabited premises may be pursued only under a court decision or an enforceable record of conciliation and after service of an order to vacate the premises. Changing the locks at expiry is unlawful self-help (voie de fait), whose procedural and reputational cost far exceeds the gain of a few weeks. The summary proceedings (référé) applicable to this situation are dealt with separately in our article on evicting an occupier without right or title.

Third reflex: characterise the premises before building the enforcement timetable. The two-month period following the order to vacate (Article L. 412-1 of the same code) applies to eviction that concerns premises inhabited by the person evicted or by any occupier deriving title from that person, and the winter moratorium from 1 November to 31 March (Article L. 412-6) forms part of the same set of protections. These periods do not transpose automatically to purely commercial premises. By contrast, as soon as part of the property is inhabited, whether staff accommodation, mixed-use premises or de facto residential occupation, the timetable for recovery must be reworked.

Fourth reflex: deal with the question of the occupation indemnity due from an occupier who remains after the end of the agreement. The occupation indemnity provided for in Article L. 145-28 concerns only the commercial tenant who remains in the premises pending payment of its eviction indemnity. For the precarious occupier without title, compensation of the landlord rests on a construct of case law. It is therefore prudent to stipulate in the agreement the amount and terms of the indemnity due in the event of holding over after the end date, while ensuring that its calibration does not contradict the precarious economics of the whole.

Fifth and last reflex: anticipate the ground of the dispute. An occupier who wishes to stay will plead requalification as a commercial lease, which shifts the debate to the judicial court, the only court with jurisdiction under Article R. 211-3-26, 11°, of the Code of Judicial Organisation, including for precarious occupation agreements in commercial matters. The speed of recovery will then depend less on the drafting of the agreement than on the quality of the evidence file built up beforehand on the circumstance relied on.

Conclusion

The precarious occupation agreement is not a lighter lease: it is an agreement whose validity depends on an external fact that the landlord does not control and must nonetheless prove. The reflex of reinforcing the precariousness clauses is counter-productive: Article L. 145-15 neutralises stipulations that defeat the statute, and Article 1188 of the Civil Code allows the court to disregard the title of the document. What really protects the asset holder is an up-to-date evidence file, a discounted fee consistent with genuinely reduced enjoyment, and management of the end date that leaves no room for tolerance.

Operational recommendation: before any signature, have a precariousness file drawn up separately from the agreement, bringing together the dated documents that support the circumstance relied on, and build into the transaction timetable a checkpoint at each milestone (permit becoming final, completion of the sale, service order), with the instruction to give notice of the end of the agreement as soon as the circumstance occurs or disappears. On an asset being restructured, the cost of a characterisation audit is out of all proportion to that of an eviction indemnity that includes the market value of the business.

Frequently asked questions

Can a precarious occupation agreement last more than three years? Yes. Article L. 145-5-1 of the Commercial Code excludes the statute whatever its duration, provided that occupation is authorised only by reason of special circumstances independent of the sole will of the parties. The three-year ceiling is that of the derogatory lease of Article L. 145-5, which is a separate instrument. A long duration nevertheless remains an indication that the courts take into account if the circumstance relied on has disappeared or never had substance.

Is a clause by which the occupier waives the commercial lease statute valid? No, if the situation falls within the statute. Article L. 145-15, as worded following the Pinel law, deems unwritten clauses, stipulations and arrangements that have the effect of defeating the right of renewal or the provisions it lists, a list to which Law No. 2026-403 of 26 May 2026 added Article L. 145-32-1. The sanction is that the clause is deemed unwritten, not nullity. Only the existence of an external special circumstance effectively removes the statute.

Which special circumstances do the courts accept? No text defines them: the content of the concept derives exclusively from case law. Situations regularly accepted are those in which the asset is destined for a future use that rules out lasting occupation, for example a planned demolition or restructuring, a pending promise of sale, expropriation proceedings under way, or a landlord's title that is itself limited in time. The decisive element is proof: the recital must refer to annexed and dated documents.

Which court has jurisdiction over an action for requalification as a commercial lease? The judicial court, under Article R. 211-3-26, 11°, of the Code of Judicial Organisation, which gives it exclusive jurisdiction over commercial leases, except disputes relating to the setting of the rent of a revised or renewed lease, professional leases and precarious occupation agreements in commercial matters. The commercial court has no jurisdiction, and the name tribunal de grande instance is no longer in use.

What does requalification as a commercial lease cost an institutional landlord? The lease becomes one with a minimum term of nine years with a right to terminate at each three-year period for the tenant alone (Article L. 145-4), it can end only by notice given six months in advance and by extrajudicial act (Article L. 145-9), and refusal of renewal gives rise to an eviction indemnity equal to the loss, including in particular the market value of the business (Article L. 145-14). Above all, the tenant cannot be required to leave the premises before having received that indemnity and remains on the terms of the expired lease, against an occupation indemnity determined under sections 6 and 7 (Article L. 145-28).

How can a precarious occupation agreement be ended? If it is concluded for a fixed term, it is performed until its end and no one may demand its renewal (Article 1212 of the Civil Code). If it is for an indefinite term, each party may end it at any time, subject to observing the contractually agreed notice period or, failing that, a reasonable period (Article 1211). Implementation remains subject to the mandatory requirement of good faith in Article 1104.

Can the occupier be evicted as soon as the agreement ends? No. Save special provision, Article L. 411-1 of the Code of Civil Enforcement Procedures makes eviction from a building or inhabited premises subject to a court decision or an enforceable record of conciliation, and to prior service of an order to vacate the premises. The two-month period after the order (Article L. 412-1) and the winter moratorium from 1 November to 31 March (Article L. 412-6) are, according to the wording of those texts, attached to eviction concerning inhabited premises: they do not transpose automatically to purely commercial premises, but the configuration of the premises must be checked before a timetable for recovery is fixed.