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Assignment of the commercial lease

Verified 28 October 2022 - Directorate of Legal and Administrative Information (Prime Minister), Ministry of Justice

When the lessee of a commercial premises (assignor) transmits his lease contract to another person (assignee), he assigns his right to the lease. This transmission may also take place at the same time as the transfer of the goodwill. The lease contract often includes clauses that specify the terms of the assignment (for example, the need for a notarial deed or the owner's agreement).

Assignment of the right to lease or assignment of the commercial lease: what is it?

Assignment of the right to lease (or assignment of the commercial lease) is a contract by which the tenant (called transferor ) transfers to another person (called assignee (b) the benefit of the lease.

The tenant gives in to a new tenant ( assignee (b) the use of premises, the obligation to pay the rent and to comply with the terms of the rental. The original commercial lease remains, but with a change of tenant.

In practice, most landlords prohibit their tenant from assigning their right to the lease by inserting a clause in the commercial lease agreement. However, the landlord cannot prohibit the tenant from assigning the commercial lease when he wants to sell his business. Nor can it prohibit the assignment of a lease that is transferred in the course of a merger, division, partial transfer of assets or universal transfer of assets

Assignment of commercial lease only (or assignment of lease right)

The lessee may assign his right to the lease alone , i.e. without selling its goodwill . It must then verify that the lease agreement authorizes this assignment of the sole right to the lease. It's called “no door”.

In practice, the commercial lease contract often provides for the agreement of the landlord for the assignment of the sole right to the lease.

The tenant must also inquire at the city hall to know if the lease is located in an area called perimeter for safeguarding local trade and crafts . In such cases, the municipality may use its right of first refusal , which means that it has a priority to acquire the right to the lease.

When the lease is transferred, the new tenant (called assignee ) takes the place of the original tenant (called transferor ) for the remainder of the lease term.

Assignment of commercial lease on sale of goodwill

In case of sale of the goodwill , the right to lease is obligatorily included. The purchaser of a goodwill buys all the elements of this fund (notably the brand, the equipment, the clientele, the right to lease). The customer base is the most important element: when there is no customer base, the goodwill cannot exist. In the absence of goodwill, the assignment does not constitute a sale of goodwill but a mere assignment of the right to the lease.

The owner can't object the sale of the lease on the sale of the goodwill. Indeed, the clauses contained in the lease contract which forbid the assignment of the lease upon the transfer of the goodwill is not valid.

However, the assignment may be subject to certain conditions. For example, a approval clause or a clause authorizing the assignment of the lease only in the event of the total sale of the land.

Where there is a transfer of the goodwill in a specific area called perimeter for safeguarding local trade and crafts , the town hall may exercise its right of first refusal , which means that it has a priority to acquire the right to the lease.

Transfer of the commercial lease in the event of a merger, division, transfer of part of the assets or universal transfer of assets

In this case, a business, a lessee of a commercial lease, is absorbed in the context of a melting , a split or is the subject of partial contribution of assets or a universal transfer of assets . At this point, the acquiring or receiving business of the contribution immediately becomes the owner of the right to the lease and has no formalities to perform. The owner cannot object to this transfer.

Any clause in the commercial lease that prohibits the assignment of the commercial lease in these situations is invalid.

Can the retiring tenant give up their lease?

The tenant who applied for his pension rights e is authorized to assign his right to the lease for an activity different from that normally carried out. The owner cannot prohibit this assignment.

To carry out this assignment, the tenant must meet the following 2 conditions:

  • The tenant must be a single partner of a EURL : titleContent or majority manager for at least 2 years of the SARL : titleContent who holds the lease.
  • The new activity must be compatible with the destination, characteristics and location of the building.

The tenant uses a change of activity procedure (called de-specialization ) specific at the time of the lease assignment at the time of retirement.

The creation of a commercial fund for automatic laundry that requires the installation of multiple noise-generating machines is incompatible with the characteristics of a residential building.

The tenant notifies by act of commissioner of justice to the owner and preferred creditors (i.e., receiving a guarantee on the goodwill) its intention to assign the lease.

The instrument issued by the Commissioner of Justice shall specify the nature of the future activity envisaged and the price of the transfer.

Within 2 months of receiving the document, the owner has one of the following possibilities:

  • Accept the change of business and agree to the assignment of the lease
  • Exercise the statutory priority of redemption of the lease entitlement
  • Challenge the new activities and bring the matter before the court

Who shall I contact

  • Judicial Tribunal

Can the landlord object to the sale of the commercial lease?

The lease may provide that the owner has the right to refuse the assignment of the commercial lease or that its authorization is necessary. Other clauses may be included in the lease agreement to specify the terms of the assignment.

Clause prohibiting the assignment of the lease alone

The parties may include in the commercial lease agreement a clause which prohibits any assignment only on the right to lease .

On the other hand, the contract may not prohibit the tenant from assigning the commercial lease in connection with the sale of the goodwill. The lessee must be able to transfer the lease to the purchaser of his land.

Clause requiring owner's authorization or approval clause

An approval clause requires the tenant to obtain the landlord's agreement before any transfer.

This clause allows the landlord to accept or reject the proposed acquisition of the lease.

The lease generally requires that the owner's authorization be given in writing.

Joint and several guarantee

This clause allows the tenant ( transferor ) of the commercial lease to commit in solidarity with the new tenant of the lease (called assignee (b) the payment of rents and the execution of the lease.

The landlord can claim the rent from the lessee, i.e. the former tenant, for a period of 3 years from the time of the lease assignment. This 3-year term applies to assignments of lease rights entered into after 19 June 2014.

This joint and several guarantee clause ceases when the lease expires. It has no effect in the event of renewal from the lease.

In case of extension tacitly, there is no formation of a new contract: the solidarity clause then continues to apply until the expiry of the lease.

Please note

This clause does not apply in the event of the tenant being safeguarded, reformed or wound up by the court.

Where the transferee ( assignee ) does not pay the rent, the landlord must inform its former tenant ( transferor ) of default within 1 month from the date the rent should have been paid.

It is preferable to inform the transferor of the non-payment by registered letter with AR for reasons of proof.

If the new tenant has not paid the rent as of September 15, 2020, the lessor must inform the transferor of the default before October 15, 2020.

However, the lessor may apply the joint and several guarantee until 15 September 2023. After that date, he will no longer be able to use it.

Clause providing for an appeal by the lessor to participate in the deed of assignment

The purpose of this clause is to notify the owner of the assignment of the commercial lease. In this case, the transfer takes place in the presence of the owner. He is informed of the identity of the buyer but does not have to give his authorization.

What are the formalities to be carried out to assign the commercial lease?

The sale of the commercial lease requires the following steps:

1. Drafting a contract for the assignment of the commercial lease

The lease assignment is established as a written contract signed between the parties or in the form of a notarial deed .

The lease assignment may also take the form of a agreeable to the contract of commercial lease .

2. Stocktaking

An inventory must be drawn up by the owner and the outgoing tenant or by a third party authorized by them (for example, a real estate agency). The state of play is maintained by each of the parties.

3. Information to the lessor

The assignment of the commercial lease shall be notified to the owner by act of commissioner of justice . This document must mention the identity of the assignee (i.e. the lessee) and his/her contact details, the date of the assignment in order to know when he/she is liable for payment of the rent, etc. ).

Such notification is not necessary if the owner has accepted the assignment of the right to the lease by notarial act.

Assignment of the right to the commercial lease shall also be notified by Commissioner of Justice to creditors registered on the goodwill.

4. Registration and publicity of the assignment

The registration of the deed of assignment of the right to the lease must be done at the company tax office (SIE) of the location of the property.

  • Company Tax Service (SIE)

If it is a notarial act, it is registered with the notary's tax department.

The act is registered within 1 month as of his signature.

Registration fees are paid by the purchaser (assignee). The deed of assignment may provide that this is not the case. They are calculated on the transfer price as follows:

  • 0%   Up to  €23,000
  • 3%   between  €23,001   to  €200,000
  • And  5%   beyond  €200,000

A fixed minimum duty of €25 is perceived.

If the formalities are not complied with, the sale of the commercial lease cannot take place.

In addition, this may also result in the termination and/or non-renewal of the original commercial lease.

Statute and miscellaneous references

Commercial Code: Articles L145-1 to L145-3

Commercial lease

Commercial Code: Article L145-16

Commercial Code: Article L145-40-1

State of play for assignment of lease rights or goodwill

Commercial Code: Article L145-51

Assignment of the lease by the tenant retiring or applying for a disability pension

What is the municipality's commercial pre-emption right? 

Additional topics

Individual business Transfer of the

Adding or changing business in a commercial lease

Procedure for safeguarding the individual contractor and the micro-contractor

How to Save a business

Judicial redress for individual and micro-entrepreneurs

Judicial Redress of a business

single-member company with limited liability

Limited liability company

All the elements necessary for the exercise of the activity: customer, brand, commercial name, materials and equipment, right to lease (commercial premises), property rights, current employment and insurance contracts.

A clause in the articles of association that controls the entry of new shareholders or partners into the business. It provides that members must give their consent to each transfer of shares.

An operation in which two or more businesses or companies are brought together to form a single one.

An operation by which a business disappears by transmitting its assets to 2 other businesses that already exist or are set up for the occasion. These businesses are called businesses beneficiaries.

An operation in which a business transfers part of its assets to another business, known as a beneficiary, in exchange for securities in the capital of the latter.

Document prepared by a Commissioner of Justice (former bailiff and judicial auctioneer). The act of Commissioner of Justice (formerly act of bailiff) may be used in particular to establish a fact, to carry out a procedural formality or to initiate an enforcement procedure (seizure, expulsion, etc.). Examples of acts of Commissioner of Justice: finding, notification ...

A creditor who has a guarantee (pledge, pledge, mortgage, lien, etc.) giving him priority of payment over the other creditors of his debtor, called simple creditors

A person who is linked to one or more other debtors by a legal link which commits each of them to pay all the sums due. Solidarity can result from the law (for example, payment of inheritance tax) or from a contract (for example, security for a lease).

Supplementary document of the contract stating that the two parties have agreed to amend, adapt or supplement the contract

Person to whom money or the provision of a benefit is owed

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▾ dictionary english-french, lease noun —, contrat de location m, lease verb ( leased , leased ) —, lease agreement n —, finance lease n —, lease contract n —, lease term n —, lease payments pl —, mining lease n —, operational lease n —, lease period n —, residential lease n —, finance lease liabilities pl —, lease of land n —, lease deposit n —, lease transfer n —, lease maturity n —, lease model n —, original lease n —, lease housing n —, lease interval n —, lease contracts pl —, lease-purchase n —, renewed lease n —, rural lease n —, lease terms pl —, simple lease n —, oil lease n —, terms of lease pl —, lease payment n —, ▾ external sources (not reviewed).

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▾ dictionnaire anglais-français, lease nom —, contrat de location m, lease verbe ( leased , leased ) —, exemples :, lease agreement n —, finance lease n —, lease contract n —, lease term n —, lease payments pl —, mining lease n —, operational lease n —, lease period n —, residential lease n —, finance lease liabilities pl —, lease of land n —, lease deposit n —, lease transfer n —, lease maturity n —, lease model n —, original lease n —, lease housing n —, lease interval n —, lease contracts pl —, lease-purchase n —, renewed lease n —, rural lease n —, lease terms pl —, simple lease n —, oil lease n —, terms of lease pl —, lease payment n —, ▾ sources externes (non révisées).

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