The “Renon” of a Commercial Lease: A Landlord's Guide (Notice, Formalities, Time Limits)

A landlord who wishes to take back its commercial premises, sell them with vacant possession or simply refuse to renew the lease quickly runs into shifting vocabulary: should it give a “renon”, a notice to terminate (congé), pronounce a termination (résiliation)? These terms are not interchangeable, and confusing them often costs the price of an eviction indemnity, or even the nullity of the act served. The commercial lease statute, codified in Articles L.145-1 to L.145-60 of the French Commercial Code, strictly regulates the way a landlord may end the tenancy. This guide clarifies what the word “renon” covers, distinguishes it from notice to terminate and from termination, details the formalities of a notice served by the landlord and explains how it interacts with the eviction indemnity.

The “renon”, an everyday word that does not appear in the French Commercial Code

The term renon is widely used in everyday language, particularly in the north of France and in Belgium, to refer to the act by which a party ends the lease. People speak of “giving one's renon” or “receiving a renon”. Yet this word appears nowhere in the French Commercial Code.

Legally, the exact term is congé (notice to terminate). The renon is therefore not a distinct technical notion: it is a popular name for the congé, whether it comes from the tenant or the landlord. This imprecision of vocabulary is not harmless. A landlord who believes it is “giving a renon” by a simple letter sometimes thinks it has validly ended the lease, whereas the landlord's notice is subject to rigorous formalities, failure to comply with which results in nullity.

Remembering this equivalence is the starting point: when a practitioner speaks of a renon of a commercial lease, he or she is in fact speaking of the congé within the meaning of Articles L.145-9 et seq. of the French Commercial Code. All the rest of the reasoning follows from it. The neighbouring term denunciation (dénonciation), used in the same sense, is the subject of our article on the denunciation of a commercial lease, its cases and its formalities.

Notice to terminate, termination, non-renewal: three notions not to be confused

The difficulty for the landlord is that three different mechanisms allow it, each within its own framework, to end the lease or not to extend it. Confusing them leads to choosing the wrong procedure.

Notice to terminate (congé)

The congé is the unilateral act by which a party expresses its wish to end the lease at its expiry or on a statutory date. It takes effect on a fixed date (the last day of a calendar quarter) and requires notice. The landlord's notice may pursue two opposite aims: either to refuse renewal (with, in principle, an eviction indemnity), or, in limited cases, to take back the premises on a ground provided by law.

Termination during the lease (résiliation)

Termination ends the lease before its normal expiry. It covers several situations:

• operation of the forfeiture clause (clause résolutoire), which applies by operation of law where the tenant fails to perform its obligations (non-payment of rent, absence of insurance) after an order to comply that has remained unsuccessful;
• judicial termination, ordered by the judge for a sufficiently serious breach;
• the right to terminate at the end of each three-year period, known as the three-yearly notice (congé triennal), available mainly to the tenant.

Termination is clearly distinct from the congé: it penalises a failure to perform or exercises a right of early exit, whereas the congé fits into the normal rhythm of the lease's expiry dates. The situations in which the owner may obtain termination of the lease are set out in our article on the landlord's rights to terminate a commercial lease.

Refusal of renewal

Non-renewal is the most frequent case and the one with the heaviest consequences for the landlord. When the term arrives, a tenant under a commercial lease benefits from a right to renewal (propriété commerciale). A landlord who refuses this renewal must, save for exceptions, pay an eviction indemnity intended to compensate the loss caused by the loss of the business or the leasehold. A landlord's notice to terminate a commercial lease served without an offer of renewal is therefore legally a refusal of renewal, with all its financial consequences.

When can the landlord serve notice?

The timetable for the notice is locked down by law. A notice served at the wrong time is ineffective or recharacterised, which delays the vacation of the premises by as much.

On expiry of the nine-year lease

The commercial lease has a minimum term of nine years (Article L.145-4 of the French Commercial Code). It is as this term approaches that the landlord can normally serve notice, either to refuse renewal or, less often in practice, to accept it while setting new conditions.

During tacit extension

Contrary to a widespread belief, the commercial lease is not subject to tacit renewal for a new nine-year period. Failing a notice or a renewal request, it continues by tacit extension (tacite prolongation) for an indefinite period, beyond the term. During this period, each party may serve notice at any time, for the last day of a calendar quarter and subject to six months' notice. This distinction is essential: a landlord who has let the term pass without acting retains the right to serve notice, but under the rules of the extension.

The three-yearly right, tightly restricted for the landlord

The tenant may give notice at the end of each three-year period. The landlord has this right only in cases exhaustively listed: in particular where it intends to build, rebuild or add storeys to the building, or to carry out certain works provided for by law (Articles L.145-4, L.145-18 et seq. of the French Commercial Code). Outside these situations, a landlord who wishes to take back the premises must wait for the end of the lease.

Complying with the time limit and the date

Article L.145-9 sets the timetable rule:

Leases of premises subject to this chapter end only by the effect of a notice given [...] for the last day of the calendar quarter and at least six months in advance.

In concrete terms, a notice that refers to a date that is not the last day of a calendar quarter (31 March, 30 June, 30 September, 31 December) or that does not respect the six-month notice period does not take effect on the intended date. Case law accepts that a notice served prematurely or for the wrong date may take effect on the next appropriate expiry date, but it is better not to rely on this tolerance and to calculate the date as precisely as possible.

The formalities of the notice served by the landlord

This is where confusion around the word “renon” does the most damage. The landlord's notice is not a simple letter.

The mandatory extrajudicial act

Since Law No. 2015-990 of 6 August 2015, known as the Macron Law, Article L.145-9 requires that the notice be given by extrajudicial act (acte extrajudiciaire). This means that it must be served by a commissaire de justice (bailiff), a profession created by the merger of the huissiers de justice and the commissaires-priseurs judiciaires by Order No. 2016-728 of 2 June 2016.

A historical reminder sheds light on this requirement. Law No. 2014-626 of 18 June 2014, known as the Pinel Law, had opened the possibility of serving the notice by registered letter with acknowledgment of receipt. The Macron Law reversed this flexibility for the notice, restoring the extrajudicial act. Today, a landlord's notice sent by simple letter, even registered, is void. A landlord who “gave its renon” by letter has, in law, given nothing at all.

Mandatory particulars on pain of nullity

The notice must contain precise particulars, failing which it is liable to be void. The notice must in particular:

• specify whether it is a refusal of renewal or a notice with an offer of renewal;
• state the grounds on which it is given, in particular where the landlord intends to avoid paying the eviction indemnity;
• reproduce the terms of Article L.145-9 informing the tenant of its rights, in particular of the time limit for challenging the notice or claiming payment of the eviction indemnity, on pain of nullity of the notice.

The drafting of these particulars is not a matter of style. A notice that refuses renewal without saying clearly whether or not it gives rise to an indemnity, or that omits to reproduce the statutory information, exposes the landlord to having its act annulled and, often, to having to wait for a later expiry date.

Stating the grounds of the notice

Where the landlord refuses renewal relying on a ground that exempts it from the eviction indemnity, it must state that ground in the notice itself. The ground cannot be added or substituted after the event as the needs of the litigation dictate. This requirement protects the tenant, who must know from receipt of the act on what basis the landlord is acting and whether it can claim an indemnity.

Notice and eviction indemnity: the central interplay

Understanding the link between the notice and the eviction indemnity is the key to any decision by the landlord. It is this link that determines the real cost of taking back the premises.

The principle of the eviction indemnity

Article L.145-14 of the French Commercial Code lays down the principle: a landlord who refuses to renew the lease must pay the evicted tenant an eviction indemnity (indemnité d'éviction) equal to the loss caused by the failure to renew. This indemnity comprises in particular the market value of the business (or of the leasehold), increased by removal and resettling costs, the transfer costs and duties payable for a business of the same value, and, where applicable, an ancillary indemnity.

The eviction indemnity is therefore the normal counterpart of a refusal of renewal. A landlord who serves a notice to terminate a commercial lease without an offer of renewal must, in the great majority of cases, expect to have to compensate the tenant. The question is not so much whether to pay as how much, since the valuation of the business may be high for a well-established shop.

Remaining in the premises until payment

Another consequence that is often underestimated: as long as the eviction indemnity has not been paid, the tenant is entitled to remain in the premises. It then remains liable for an occupation indemnity. The notice therefore does not mechanically free the premises on its effective date; it opens a phase in which the indemnity is fixed, sometimes lengthy where its amount is debated before the commercial rent judge.

Cases of refusal without indemnity

The law provides for situations in which the landlord may refuse renewal without paying an indemnity, or by paying a reduced one. Among the main ones:

• a serious and legitimate ground against the tenant (Article L.145-17), for example failure to operate the business or repeated breaches of the lease obligations, subject, for breaches capable of being remedied, to a prior formal notice that has remained unsuccessful;
• a building that is unfit for habitation or in a state of demolition recognised by the administrative authority (Article L.145-17);
• taking back to build, rebuild or add storeys, with a specific regime of postponement or partial compensation depending on the case (Articles L.145-18 et seq.);
• taking back ancillary residential premises in certain conditions.

These exceptions are interpreted strictly. Wrongly relying on a serious and legitimate ground exposes the landlord to having its refusal recharacterised as a straightforward refusal, with an obligation to pay the eviction indemnity. Hence the importance of stating the grounds of the notice precisely and of assembling the evidence of the ground relied on beforehand.

The right of repentance

Article L.145-58 of the French Commercial Code gives the landlord a way out: the right of repentance (droit de repentir). Where the amount of the eviction indemnity fixed by the judge proves higher than expected, the landlord may, within fifteen days of the decision becoming final, change its mind and finally offer renewal, provided that the tenant is still in the premises and has not already leased or bought another property in order to resettle. This mechanism allows the landlord to abandon the recovery of the premises if the indemnity proves dissuasive. It must be handled with care, as it is irrevocable once exercised. On the exercise of the right of repentance and the choice between payment and consignment of the eviction indemnity, see our analysis devoted to this question.

Mistakes that cost the landlord dearly

Several pitfalls recur regularly and end in a loss of time or money.

The first is to believe that a letter is enough. A “renon” sent by letter, even registered with acknowledgment of receipt, has not counted as a landlord's notice since the Macron Law. Only the extrajudicial act served by a commissaire de justice is valid.

The second is to get the effective date wrong. A notice that does not refer to the last day of a calendar quarter, or that does not respect the six-month notice period, misses its objective or postpones the expiry date.

The third is to neglect the statement of grounds. A refusal of renewal based on a serious and legitimate ground that is poorly characterised, or for which the evidence has not been prepared, turns into a refusal that gives rise to compensation.

The fourth is to underestimate the cost and the duration. Between the phase in which the eviction indemnity is fixed, the tenant remaining in the premises and a possible exercise of the right of repentance, actually taking back premises may take considerable time and represent a significant investment.

Conclusion

The “renon” is nothing other than the congé, and the landlord's congé is anything but informal: it is an extrajudicial act, set for the last day of a calendar quarter, preceded by six months' notice, with stated grounds and drafted on pain of nullity. The real decision is not how to draft the letter, but to anticipate the interplay with the eviction indemnity, because it is this that determines the real cost of taking back the premises. A well-advised landlord reasons in reverse: it first assesses the foreseeable indemnity and the strength of any ground for exemption, then chooses its notice strategy accordingly. Before serving any notice, have the potential eviction indemnity quantified and the strength of your grounds checked by a real estate lawyer: it is the only way to prevent a poorly calibrated act from turning against you financially.

Frequently asked questions

Are the renon and the notice to terminate a commercial lease the same thing? Yes. The “renon” is a term of everyday language, used in particular in the north of France and in Belgium, which designates the congé. The word does not appear in the French Commercial Code, which recognises only the notion of congé (Articles L.145-9 et seq.). When one speaks of the renon of a commercial lease, one is therefore legally referring to the congé.

Can a landlord give notice by registered letter? No. Since Law No. 2015-990 of 6 August 2015, known as the Macron Law, Article L.145-9 of the French Commercial Code requires that the notice be served by extrajudicial act, that is, by a commissaire de justice. The possibility of using registered letter, opened for a time by the Pinel Law of 18 June 2014, has been removed for the notice. A landlord's notice sent by simple letter is void.

What notice period applies to the landlord's notice? The notice must be given for the last day of a calendar quarter (31 March, 30 June, 30 September or 31 December) and at least six months in advance, in accordance with Article L.145-9. A shorter notice period or a poorly chosen date postpones the effect of the notice to the next appropriate expiry date, or even deprives it of effect, depending on the case.

Does a refusal of renewal always require payment of an eviction indemnity? In principle, yes. Article L.145-14 of the French Commercial Code provides that a landlord who refuses renewal must pay an eviction indemnity compensating the tenant's loss. Exceptions exist, in particular the serious and legitimate ground (Article L.145-17), a building unfit for habitation or to be demolished, or taking back to rebuild. These cases are interpreted strictly and must be stated in the notice.

Can the tenant remain in the premises after the notice? Yes, where the notice amounts to a refusal of renewal with an eviction indemnity. As long as the indemnity has not actually been paid, the tenant is entitled to remain in the premises, in return for an occupation indemnity. The notice therefore does not lead to immediate vacation of the premises on its effective date.

What is the landlord's right of repentance? The right of repentance, provided for in Article L.145-58 of the French Commercial Code, allows the landlord to go back on its refusal of renewal and finally offer renewal, within fifteen days after the decision fixing the eviction indemnity has become final. It is possible only if the tenant is still in the premises and has not already resettled elsewhere. Once exercised, it is irrevocable.

Can a landlord give notice at the end of a three-year period? Only in limited cases. Unlike the tenant, who has a general three-yearly right, the landlord may give notice at the end of a three-year period only in the situations provided for by law, in particular to build, rebuild, add storeys to the building or carry out certain works (Articles L.145-4, L.145-18 et seq.). Outside these cases, it must wait for the end of the lease or act during the tacit extension.