Short-term commercial lease (bail dérogatoire): rules and automatic conversion into a 3-6-9 lease

A trader moving into premises to test a location, a craftsman unwilling to commit for nine years, a landlord reluctant to grant commercial property rights to an unknown tenant: the short-term commercial lease (bail dérogatoire) meets this need for flexibility. But that flexibility has a formidable counterpart. Once the statutory period has expired, a tenant who remains in the premises becomes the holder of a commercial lease subject to the protective statute of Articles L. 145-1 et seq. of the French Commercial Code, without any new signature being required. This guide sets out the rules governing the short-term commercial lease, distinguishes it from the precarious occupation agreement (convention d'occupation précaire) and from the standard commercial lease, and analyses the mechanism of automatic conversion into a 3-6-9 lease provided for by Article L. 145-5, together with the situations in which the lease may be requalified.

What a short-term commercial lease outside the commercial lease statute is

The short-term commercial lease is a contract for the letting of premises used for a commercial, industrial or craft activity, by which the parties voluntarily exclude the application of the commercial lease statute. It is governed by Article L. 145-5 of the French Commercial Code, which authorises this derogation on one central condition: the total duration of the lease, or of successive leases relating to the same premises, must not exceed three years.

This three-year ceiling results from Law No. 2014-626 of 18 June 2014, known as the Pinel Act, which raised the maximum duration from two to three years for contracts entered into from 1 September 2014. Before that reform, the limit was set at twenty-four months. This development is worth noting because older short-term leases sometimes continue to produce effects and are governed by the regime in force at the time they were entered into.

The purpose of the short-term commercial lease is well established. The tenant tests a location, a customer base, or a seasonal or temporary activity, without taking on a long-term commitment. The landlord, for its part, keeps control of the property: at expiry, it recovers the premises free of any commercial property rights, with no right to renewal and no eviction compensation (indemnité d'éviction) payable to the tenant. It is precisely this absence of commercial property rights that characterises the derogatory regime and sets it radically apart from the 3-6-9 lease.

The terminology to master

Practice uses several expressions for the same reality: bail dérogatoire, precarious lease (bail précaire), short-term lease, short-term commercial lease. These terms all cover the contract of Article L. 145-5. The expression "bail précaire" is however misleading, because it fosters confusion with the precarious occupation agreement, which follows a distinct legal logic described below. For the sake of rigour, it is preferable to speak of a lease derogating from the commercial lease statute. The advantages and risks associated with this label are set out in our guide to the precarious commercial lease.

Three regimes not to be confused: short-term commercial lease, precarious occupation, 3-6-9 lease

The first difficulty is that three legal instruments allow an occupier to carry on an activity in premises, with very different consequences in terms of protection. Confusing them exposes the parties to serious errors of characterisation.

The standard commercial lease (3-6-9)

The commercial lease subject to the statute, commonly called the 3-6-9 lease, is entered into for a minimum term of nine years, with the tenant entitled to give notice at the end of each three-year period (Article L. 145-4 of the French Commercial Code). This lease gives the tenant commercial property rights (propriété commerciale): right to renewal, rent capping, and eviction compensation in the event of refusal of renewal. It is the regime that is most protective for the tenant and most restrictive for the landlord.

The short-term commercial lease

The short-term commercial lease excludes this statute for a total duration capped at three years. The decisive criterion is time: it is compliance with the three-year ceiling that validates the derogation. No particular circumstance is required to justify the use of this contract. The parties are free to decide to use it, simply because they do not wish to commit to a long lease.

The precarious occupation agreement

The precarious occupation agreement follows an entirely different logic, now codified in Article L. 145-5-1 of the French Commercial Code, introduced by the Pinel Act. The text provides:

This chapter does not apply to a precarious occupation agreement which is characterised, whatever its duration, by the fact that occupation of the premises is authorised only by reason of particular circumstances independent of the sole will of the parties.

Here, the criterion is not duration but the objective precariousness of the occupation. It must be justified by particular circumstances independent of the will of the parties: a building subject to a dangerous-building order, premises earmarked for demolition under an urban planning operation, a property undergoing expropriation proceedings, premises occupied pending completion of a sale. The financial consideration paid by the occupier is generally modest, which reflects the fragility of the occupier's right. A precarious occupation agreement may, in theory, last several years without falling within the statute, provided that the precariousness remains established.

The distinction is fundamental. The court is not bound by the characterisation chosen by the parties: it examines the reality of the precariousness. An agreement entitled "precarious occupation" but lacking objective circumstances justifying the fragility of the occupation, with a market rent and peaceful enjoyment, will be requalified. Depending on the context, that requalification will result in a short-term commercial lease if the duration is under three years, or directly in a lease subject to the statute beyond that. On the arrangements that allow premises to be occupied outside the statute and their risk of requalification, see our analysis of the options for renting an office without a commercial lease.

The legal regime of the short-term commercial lease

The duration condition and the calculation of the ceiling

The rule is strict: the total duration of the lease or of successive short-term leases relating to the same premises may not exceed three years. The parties may therefore enter into a single three-year lease, or several successive leases whose total does not exceed that limit, for example a first one-year lease renewed twice. What matters is the total.

Article L. 145-5 specifies the starting point: the derogation is possible only when the tenant takes possession of the premises. A short-term lease cannot therefore be entered into for the benefit of a tenant already in occupation under another regime in order to restart a three-year clock.

The ceiling is assessed by reference to the same tenant operating the same business in the same premises. A genuine change of tenant, by way of a real and not fictitious assignment of the lease, may open a new cycle. By contrast, an arrangement designed to circumvent the three-year limit artificially, for example by the formal substitution of companies within the same group, is exposed to requalification.

Form and content

The law imposes no particular form for the validity of the short-term commercial lease. A written document is nonetheless indispensable, since it is what evidences the parties' common intention to derogate from the statute. A verbal or imprecise contract carries a major risk: in the absence of proof of the common intention to enter into a short-term lease, the tenant may claim the application of the statute, which is more favourable.

The document must express unambiguously the intention to derogate from the commercial lease statute, expressly refer to Article L. 145-5, and set a fixed term that complies with the ceiling. It states the authorised activity, the amount of the rent and the terms of its review, and the allocation of charges and works. The Pinel Act also extended certain obligations to the short-term lease, in particular the drawing up of a precise inventory of charges, taxes and fees (Article L. 145-40-2).

The inventory of condition (état des lieux), a formality that is now mandatory

Since the Pinel Act, Article L. 145-5 requires an inventory of condition to be drawn up by both parties:

An inventory of condition is drawn up when the tenant takes possession of the premises and when they are returned, jointly and amicably by the landlord and the tenant or by a third party appointed by them.

This formality, long neglected in practice, determines the allocation of responsibility for the condition of the premises on return. Its absence deprives the landlord of the presumption that the tenant received the premises in good condition. The inventory of condition must be annexed to the contract or kept by each of the parties.

Automatic conversion into the statute at the end of the three years

This is the core of the mechanism and the main source of disputes. Article L. 145-5 provides for the automatic conversion of the short-term lease into a lease subject to the statute where the tenant remains in the premises at the expiry of the term.

The mechanism of Article L. 145-5

Two paragraphs govern this conversion. The first closes the door to a further derogatory lease:

At the expiry of this period, the parties may no longer enter into a new lease derogating from the provisions of this chapter in order to operate the same business in the same premises.

The second triggers the conversion:

If, at the expiry of this period, and at the latest at the end of a period of one month from the expiry date, the tenant remains and is left in possession, a new lease arises, the effect of which is governed by the provisions of this chapter.

The one-month period was introduced by Law No. 2015-990 of 6 August 2015, known as the Macron Act, to temper an automatic effect regarded as too harsh. Before that reform, the mere fact that the tenant remained in the premises the day after the term, without opposition from the landlord, was enough to give rise to a statutory lease. The landlord now has a window of one month after expiry in which to state its opposition and recover the premises.

The chronology that triggers the 3-6-9 lease

Conversion requires two elements to coincide. First, the tenant remains in the premises after the term, which reflects its intention to continue operating. Second, the landlord leaves it in possession, that is, expresses no opposition within the one-month period. If both conditions are met at the end of the one-month period, a new lease subject to the statute arises by operation of law, for a term of nine years, on terms corresponding to those of the short-term lease as regards rent and activity, but now carrying the full statutory protection.

In practical terms, a tenant that took possession on 1 January under a three-year short-term lease must have returned the premises by 31 December of the third year. If it remains beyond that date and the landlord does not object before the end of the following month of January, a 3-6-9 lease is deemed to have been entered into. A landlord who discovers its oversight too late cannot go back: it is bound for nine years and, to recover its property, will have to follow the notice procedure, or even pay eviction compensation.

The decisive importance of the landlord's opposition

A landlord that does not wish the lease to be converted must act. Opposition takes the form of a clear request to vacate the premises, addressed to the tenant before the one-month period expires, ideally by registered letter or by a deed served by a commissaire de justice (bailiff) so as to secure proof. The mere fact of continuing to collect rent after the term, without reservation or request to leave, is interpreted as leaving the tenant in possession, which amounts to acceptance of the conversion.

With a view to securing its position, it is better to plan ahead. A prudent landlord notifies the tenant, a few weeks before expiry, that the term is approaching and that the premises must be returned on the agreed date, stating that no continued occupation will be tolerated. This step avoids disputes and cuts short any claim by the tenant.

A short-term lease after a commercial lease and the risks of requalification

Can a short-term lease be entered into after a commercial lease?

The question of a short-term lease following a commercial lease arises frequently. The logic of the mechanism is that the short-term lease precedes the statute, not the other way round. In principle, a short-term lease cannot follow a 3-6-9 lease for the same premises and the same business in order to deprive the tenant of the statutory protection it enjoyed. Such an arrangement would empty the statute of its substance and would be requalified.

By contrast, nothing prevents a short-term lease being entered into where the tenant or the business genuinely changes, or where the premises are not the same. The distinction rests on the identity of three elements: same premises, same business, same tenant. A genuine break in any one of them may allow a new regime, provided that the transaction is not fictitious.

Exceeding the three-year ceiling

Exceeding the three-year duration, whether through a single lease exceeding the ceiling from the outset or through a succession of short-term leases whose total exceeds the limit, results in the application of the statute. Once the limit is crossed and the tenant remains in possession, a lease subject to the statute replaces the derogatory regime. The tenant then acquires commercial property rights, which are thus compromised for the landlord retroactively.

This sanction operates regardless of the intention stated by the parties. A contract that expressly stipulated a term of three and a half years while claiming to be derogatory would be requalified: the clause excluding the statute is deprived of effect as soon as the duration condition is not met.

Requalification of a disguised precarious occupation

The risk of requalification also affects precarious occupation agreements that are poorly characterised. Where an agreement presents itself as precarious but objective precariousness is lacking, because the occupation does not depend on any particular circumstance independent of the will of the parties, the court sets aside that characterisation. Depending on the actual duration of the occupation, it finds either a short-term lease or a statutory lease. An occupier who remains in the premises for several years, at a market rent and without any objective precariousness justifying the fragility of its right, will be regarded as the holder of a full commercial lease.

The practical consequences of requalification

Requalification as a lease subject to the statute changes the balance of the contract profoundly. The tenant benefits from the right to renewal, rent capping, the right to terminate at the end of each three-year period and, in the event of refusal of renewal, the right to eviction compensation intended to make good the loss resulting from the loss of the business. For the landlord, these consequences can represent a considerable cost and a lasting immobilisation of the property. This is why vigilance over the duration and over the management of the expiry date is decisive. The methods for assessing this compensation and the scales used in practice are dealt with separately in our article on calculating eviction compensation.

Good drafting and management practice

The security of a short-term lease depends as much on the drafting as on the expiry date. Several points deserve particular attention:

• expressly refer to Article L. 145-5 of the French Commercial Code and state unequivocally the intention to derogate from the commercial lease statute
• set a fixed term that complies with the three-year ceiling, taking into account any earlier short-term leases of the same premises
• draw up a joint entry inventory of condition and provide for the exit inventory, in accordance with the statutory obligation
• annex the inventory of charges, taxes and fees in accordance with Article L. 145-40-2
• plan the management of the expiry date from signature: reminder of the term to the tenant, notice of opposition if continued occupation is not wanted, within the one-month period

On the tenant's side, vigilance concerns the balance between flexibility and security. The short-term lease confers no right to renewal: at expiry, the landlord may take back the premises without compensation. A tenant that wishes to secure its presence in the premises has an interest, as the term approaches, either in negotiating a 3-6-9 lease or in allowing the conversion mechanism to operate if it expects to remain in the premises with the landlord's tacit agreement.

Conclusion

The short-term commercial lease is a valuable tool of flexibility, but it rests on an unalterable time limit: three years. Once that period has passed, the logic is reversed and the contract that was meant to remain outside the statute falls into it automatically, without any new signature, where the tenant remains and is left in possession beyond the one-month period of Article L. 145-5. The precarious occupation agreement offers no escape from this rigour, save where objective circumstances of precariousness are genuinely established. The real issue is therefore not so much the initial drafting, which is often careful, as the management of the expiry date, where most of the risk of requalification is concentrated.

For the landlord, the recommendation is clear: from signature of the short-term lease, record an alert on the expiry date and on the one-month opposition period, and formally notify the tenant, before the term, of the requirement to return the premises if continuation of the lease is not wanted. For the tenant, the task is to anticipate the end of the derogatory regime and to choose in full knowledge between leaving, conversion into a 3-6-9 lease or negotiation of a new lease. In both cases, a review of the contract and a precise calibration of the timetable with an adviser before the term approaches avoid a conversion that is endured and costly.

Frequently asked questions

What is the maximum duration of a short-term commercial lease?

The total duration of a short-term lease, or of several successive short-term leases relating to the same premises, may not exceed three years, under Article L. 145-5 of the French Commercial Code. This ceiling results from the Pinel Act of 18 June 2014, applicable to contracts entered into from 1 September 2014. Previously, the limit was two years. Any excess over this ceiling results in the application of the commercial lease statute.

What happens if the tenant remains in the premises at the end of the short-term lease?

If the tenant remains in the premises at the expiry of the term and the landlord does not object within one month from the expiry date, a new lease subject to the commercial lease statute arises by operation of law, for a term of nine years. This conversion is automatic and requires no new signature. A landlord who wishes to avoid it must state its opposition and request that the premises be vacated before that one-month period expires.

Can a short-term lease be entered into after a 3-6-9 commercial lease?

In principle no, where the premises, the business and the tenant are the same: such an arrangement would empty the statutory protection of its substance and would be requalified as a lease subject to the statute. A short-term lease may however be entered into if the tenant or the business genuinely changes, or if the premises differ, provided that the transaction is not fictitious. The logic of the mechanism is that the short-term lease precedes the statute, not that it follows it in order to escape its effects.

What is the difference between a short-term lease and a precarious occupation agreement?

The short-term lease is defined by its duration, capped at three years, with no particular justification required. The precarious occupation agreement, governed by Article L. 145-5-1, is by contrast characterised by the objective precariousness of the occupation, justified by particular circumstances independent of the will of the parties, such as a building in danger or earmarked for demolition. It may last beyond three years without falling within the statute, so long as the precariousness remains real. Where there is no objective precariousness, it is requalified.

Must a short-term lease be in writing?

No provision imposes a particular form for the validity of the short-term lease, but a written document is indispensable in practice. It is what proves the parties' common intention to derogate from the commercial lease statute and to set a fixed term. In the absence of a clear written document, the tenant may claim the application of the statute, which is more protective. A joint entry inventory of condition is, moreover, mandatory since the Pinel Act.

Is the tenant under a short-term lease entitled to renewal?

No. As long as the lease remains derogatory, the tenant has no right to renewal, no eviction compensation and no rent capping. At expiry, the landlord may take back the premises without compensation. It is only where the lease falls within the statute, through the tenant remaining in the premises beyond the term and the one-month period, that the tenant acquires commercial property rights and all of these protections.

How can the landlord avoid conversion into a 3-6-9 lease?

The landlord must object to the tenant remaining in the premises before the one-month period following the expiry of the short-term lease runs out. This opposition takes the form of a clear request to return the premises, preferably sent by registered letter or by a deed served by a commissaire de justice (bailiff) so that proof is kept. Continuing to collect rent without reservation after the term amounts to acceptance of the conversion. The best protection is to plan ahead for the expiry date and to notify the tenant, before the term, of the requirement to vacate the premises.