Commercial Lease Status: Strict Interpretation

Extract

[...] For this reason, he is also subject to the obligation of registration so that the commercial lease status applies It is clear that this reasoning is based on a literal interpretation of the text. As pointed out by Arnaud Reygrobellet, the Court adheres to the idea that 'Article L. 145-1 requires the registration of the owner of the property, and the bare owner does not lose this quality even if the attributes of the right of ownership are exercised by the usufructuary' 1 This reasoning, which is coherent on a strictly legal level, reveals an objective conception of the right to renewal, based on the structure of property law rather than the economic reality of the business. [...]

[...] On the other hand, the economic logic is based on its effective exploitation. This formalism, which the legislator has indeed partially corrected a few months later with the law of August highlights the limits of a strictly textual reading in a field where the protective purpose of the status should prevail. II. A landmark ruling on the eve of a legislative evolution of the commercial lease status On the eve of a legislative reform, the ruling of 5 March 2008 illustrates a tension between openness to relaxation and persistence of judicial rigor A. [...]

[...] Now, the status of commercial leases was conceived as a public order regime intended to correct the structural inequality between the parties, by ensuring the lessee a stability essential to the amortization of his investment. By refusing this protection to the usufructuary operator for a purely administrative reason, the Court disarms the status of its social function. Unfortunately, the 2008 reform did not correct this imbalance. By omitting to address the issue of demerger, it left open an area of uncertainty where the logic of property continues to prevail over that of exploitation. [...]

[...] A jurisprudence imbued with excessive formalism This position of rigor is not a novelty. The Court had already estimated, with regard to indivision, that the benefit of the status could only be granted if each of the co-indivisaries was registered, as attested by the judgments of 24 May 2000 and 15 June In the judgment of 5 March 2008, the Court applies this jurisprudence by analogy to the division of property, considering that the division should not benefit from a more favorable regime than indivision. [...]

[...] The March judgment illustrates this tension. In this case, a commercial lease had been granted to a merchant for the exploitation of a property. Upon his death, the ownership of the property was divided between his wife, usufructuary and exploiting owner who was registered, and their son, bare owner who was not exploiting and not registered. The landlords, after having delivered a notice with an offer of renewal, retracted themselves by invoking the absence of registration of the bare owner. [...]