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Resolutory Clause of Commercial Lease in France: Complete Guide

The resolution clause in a commercial lease is an essential contractual mechanism that makes it possible to punish the tenant for breaches of his obligations. By providing for the early termination of the contract, this clause ensures the protection of the interests of the lessor in the event of non-payment or non-compliance with the terms of the lease. This article explores in depth the principles, conditions of implementation, available remedies, and consequences of applying the resolutory clause, offering a comprehensive guide for landlords and tenants.
Written on
19.6.24

Principle of the Resolutory Clause of Commercial Lease

The resolutory clause in a commercial lease is a contractual provision that allows the lease to be automatically terminated in the event of a breach by the tenant of his obligations. In particular, it aims to punish:

  • Unpaid rent/rental charges.
  • The deterioration of the premises.
  • The use of the building contrary to its intended purpose.
  • Any other non-compliance with the substantial provisions of the lease.

The inclusion of this clause in the lease gives the owner the right to terminate the contract by operation of law if the tenant does not fulfill his obligations. It is a powerful tool to protect the lessor, but it requires careful drafting to be valid and effective.

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The conditions for implementing the Resolutory Clause in a Commercial Lease

To implement the resolution clause, several substantive conditions must be met:

  • Identification of breaches: The clause should clearly specify the contractual breaches justifying the termination. Any fault not explicitly mentioned cannot be invoked to activate the clause.
  • Absence of renunciation: The lessor must not have tacitly or explicitly renounced the application of the resolutory clause.
  • Good faith: The clause must be applied in good faith. If the lessor acts in bad faith, the resolution clause could be declared unwritten.

Form requirements, governed by article L145-41 of the Commercial Code, are just as crucial:

  • Command to Pay or Summons to Perform: The implementation of the clause must be preceded by the service of an order to pay or a summons to execute by a commissioner of justice. This command should include:
    • The breaches alleged by the tenant.
    • The mention that these breaches are provided for in the resolutory clause.
    • A period of one month to allow the tenant to regularize the situation.

If the tenant does not comply with the requests within the specified period, the cancellation becomes automatic.

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The Consequences of the Application of the Resolutory Clause

About the Owner

For the owner, the application of the resolutory clause makes it possible to:

  • Terminate the lease by operation of law.
  • Obtain the eviction of the tenant via an interim order.
  • Keep the security deposit and prepaid rent.
  • Claim damages for the damages suffered.

About the Tenant

For the tenant, the resolution clause involves:

  • The obligation to leave the premises after a period of one month following the order to pay.
  • The loss of the security deposit and the rent in advance.
  • A possible entry in the register of payment incidents, affecting its credibility for other rentals.

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Example of a Resolutory Clause in a Commercial Lease

Here is a typical example of a resolutory clause to be inserted in a commercial lease:

“In the absence of payment of a single term of rent on its due date or its accessories or in the event of non-execution of any of the provisions of this lease, and one month after an order to pay or a summons to perform remained ineffective, this lease will be automatically terminated, if the lessor sees fit, and without there being any need to complete any judicial formality. A simple summary order will suffice to obtain the eviction of the rented premises and, in this case, the security deposit and the prepaid rent, if any, will remain with the lessor without prejudice to any damages. Any offer of payment or execution after the expiration of the above period will be deemed null and void and cannot prevent the cancellation acquired except for the application of article L.145-41 of the Commercial Code.”

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Limits to the Automaticity of the Termination of a Commercial Lease

There are limits to the automatic application of the resolutory clause:

  • Reorganization or Liquidation: The receivership or judicial liquidation of the tenant does not, de facto, authorize the termination of the lease.
  • Appeal to the Tribunal: In the absence of a resolution clause, or if it is not applicable, the lessor may request the judicial termination of the lease. The judge will assess the seriousness of the breaches and may, if necessary, grant the tenant additional time to regularize his situation.

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Resolutory Clause - Tenant Remedies

The tenant has certain remedies to challenge or suspend the application of the resolutory clause in a commercial lease. According to the Commercial Code, judges may suspend the effects of termination clauses if the request is presented in accordance with the forms and conditions provided for in article 1343-5 of the Civil Code (article L. 145-41 paragraph 2). This suspension is possible when the termination has not been established or pronounced by a final court decision.

Thus, the tenant can refer to the judge to request an additional period during which the effects of the resolutory clause will be suspended, thus making it possible to avoid the automatic termination of the commercial lease. For example, in the case of an order to pay late rent, the tenant may request payment terms of up to two years.

Suspension and Consequences: If the judge grants additional time and the tenant complies with the obligations within this period, the effect of the command or summons is canceled, thus preventing the termination of the lease. On the other hand, if the tenant does not comply with the obligations within the specified period, the cancellation clause automatically applies after the expiration of the period of one month stipulated in the formal notice, leading to the automatic termination of the commercial lease. Once this termination is effective, the tenant can no longer request new deadlines from the judge.

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What remedies are there in the absence of a Resolutory Clause?

If the commercial lease does not contain a resolution clause, the lessor can still take certain steps:

  • Amicable Resolution Attempt: Send regular reminders or a formal notice by registered letter with acknowledgement of receipt.
  • Information from the Guarantor: In the presence of a guarantor, inform the guarantor of the tenant's contractual breaches
  • Judicial remedy: As a last resort, the lessor may refer the matter to the High Court to request the judicial termination of the lease. The judge will assess the seriousness of the breaches and may grant the tenant a period of time to regularize his situation before terminating the lease.

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Conclusion

The resolution clause is a crucial element in the management of commercial leases. It protects the rights of landlords in the event of tenant breaches while imposing rigor in its implementation. Precise drafting and good faith application are essential to guarantee its validity.

At IPGS Immobilier, we support professionals in their real estate strategy and are committed to providing the best possible advice to our lessor and tenant clients.
For more information and to benefit from our expertise, do not hesitate to make an appointment.