Two Types of Assignment: Fundamentally Different Rules
French law distinguishes sharply between two types of lease assignment, and the rules for each are fundamentally different.
Void Clauses: What the Landlord Cannot Do
The protection in Article L. 145-16 is interpreted strictly — only absolute and general prohibitions on assignment with the business are void. The following have been held void by the courts:
- A clause requiring the tenant to operate the business personally for the last three years of the lease, effectively making assignment impossible during that period (Cass. 3e civ., 23 July 1986)
- A clause prohibiting assignment to a company, eliminating an entire category of potential buyers (Cass. 3e civ., 29 February 1972)
- A clause imposing a single, fixed brand name on the tenant, treated as incompatible with the right to assign and to add complementary activities (Cass. 3e civ., 12 July 2000)
- A clause prohibiting pledging the lease (nantissement) without any possibility of authorisation, effectively making sale impossible if a creditor needed to realise the pledge (Cass. 3e civ., 11 May 1982)
Valid Restriction Clauses: What the Landlord Can Require
Clauses that make assignment more difficult — without prohibiting it outright — are valid. The range of permissible restrictions is wide:
| Restriction clause | Valid? | Key authority |
|---|---|---|
| Landlord's prior written approval required | Yes | Cass. 3e civ., 2 Oct. 2002, n° 01-02.035 |
| Assignment by notarial deed only | Yes | Cass. 3e civ., 1 Apr. 1998; Cass. 3e civ., 7 Sept. 2022, n° 21-17.750 |
| Assignment to be drafted by the landlord's lawyer or notary | Yes | Cass. 3e civ., 24 June 1998; CA Paris, 27 Sept. 2002 |
| Landlord to participate in the assignment deed | Yes | Cass. com., 6 March 1957 |
| Assignor remains jointly and severally liable after assignment | Yes — capped at 3 years (Art. L. 145-16-2) | C. com. Art. L. 145-16-2 |
| Landlord's contractual right of pre-emption on any sale of the business | Yes | Cass. 3e civ., 12 July 2000, n° 98-21.671 |
| Landlord entitled to a share of the sale price (e.g. 25%) | Yes | CA Paris, 27 June 2007 |
A landlord who uses a valid consent or approval clause is not free to refuse without reason. Where the refusal is unjustified, courts can authorise the assignment judicially (habilitation judiciaire), and the landlord may be liable in damages for the loss suffered by the tenant as a result of the blocked sale. Passive silence — simply failing to respond to an authorisation request — also exposes the landlord to liability (CA Pau, 29 August 1991; CA Paris, 17 January 2005).
Sham Sales of Business: How Courts See Through Them
The temptation exists for a tenant who cannot get the landlord's agreement to a standalone lease assignment to dress the transaction up as a business sale. Courts are alert to this — they look at the economic and legal reality, not the contractual label. An assignment has been recharacterised as a sham — with the lease terminated or the assignment declared unenforceable against the landlord — in the following situations:
- Where the "sale of business" excluded the clientele, or transferred only a token clientele (CA Paris, 13 September 2006; CA Paris, 22 November 2007)
- Where the business had ceased trading and the sale price reflected only the value of the lease, not of a going concern (Cass. 3e civ., 21 November 1990)
- Where the assignor immediately reopened under the same brand at the same location, demonstrating no genuine transfer of goodwill (CA Paris, 17 January 2003)
A sale of shares in the company that holds the lease is not a lease assignment at all — not even a sham one. Restrictions in the lease on assignment simply do not apply to a share sale (Cass. 3e civ., 22 June 1988). This distinction is important in structuring commercial real estate transactions: where the landlord has imposed restrictive assignment clauses, a share sale may be the route of least resistance — provided the parties understand the distinct risks (including hidden liabilities in the target company).
Consequences of a Defective Assignment
Bypassing a valid restriction clause is serious. The consequences fall on both the assignor and the assignee, and in most cases cannot be remedied after the fact.
For the assignor: the landlord can invoke the forfeiture clause, seek judicial termination, or serve a notice refusing renewal without paying an eviction indemnity (Art. L. 145-17, I-1° C. com.). The fault is treated as irreparable — the landlord does not need to give the tenant a month to remedy before proceeding.
For the assignee: the assignment is unenforceable against the landlord. The assignee is in occupation without any legal title, exposed to eviction with no right to renewal or eviction indemnity. They will then need to pursue the assignor for the warranty against eviction under Civil Code Articles 1626 and 1630, recovering the price but potentially not their full commercial loss.
A subsequent regularisation is generally impossible without the landlord's express agreement. Re-executing the deed in the correct form does not cure a prior defective assignment (Cass. 3e civ., 16 February 1982; Cass. 3e civ., 17 July 1996). The lease drafter who fails to check and apply the restriction clauses in the lease faces personal liability: a notary who omitted to observe the formalities was held liable to indemnify the buyer for the financial consequences of the lease termination (Cass. 3e civ., 18 May 2005; Cass. 3e civ., 3 May 2006).
Mergers and Partial Asset Contributions: Automatic Transfer
Article L. 145-16, al. 2 of the Code de commerce provides a distinct regime for corporate restructurings. Where the lease is transferred as a result of a company merger, a demerger, or a partial asset contribution subject to the demerger regime (apport partiel d'actif soumis au régime des scissions), the transfer operates automatically by operation of law. No lease clause — including an approval clause — can block it.
The Court of Cassation confirmed in 2023 that a landlord may still invoke an approval clause where a court-approved insolvency disposal involves only the lease (Cass. com., 19 April 2023, n° 21-20.655), but the automatic transfer rule applies in all non-insolvency corporate restructurings. The contribution of the lease to a company by the tenant is assimilated to an assignment and benefits from the Art. L. 145-16, al. 1 protection (Cass. 3e civ., 10 April 1973). A sale of shares does not.
The automatic transfer rule does not apply in all insolvency contexts. Following Cass. com., 19 April 2023 (n° 21-20.655), a landlord can invoke a contractual approval clause where a court-supervised insolvency plan involves a standalone disposal of the lease. Buyers of businesses in procédures collectives should verify whether an approval clause applies and, if so, obtain the landlord's consent as part of the acquisition process.
Formalities: The Steps That Cannot Be Skipped
Municipal Pre-Emption: The Step That Is Easy to Miss
Since 2005, municipalities have had an optional right of pre-emption over sales of commercial businesses, artisanal businesses, and commercial leases within a declared safeguard perimeter (périmètre de sauvegarde, C. urb. Art. L. 214-1). Where the perimeter exists and the transaction falls within it, the seller must file the declaration of intent to transfer before the sale can proceed. If the municipality pre-empts, the sale goes to the municipality at the declared price (or at a judicially fixed price if contested). The municipality must re-sell to a commercial or artisanal operator within three years.
The Conseil d'État has confirmed that the municipality must be able to demonstrate a sufficient general interest in pre-empting — citing vague "threats to commercial diversity" without analysis is not enough (CE, 15 December 2023, n° 470167). A sale made without filing the declaration can be annulled within five years.
- Identify the type of assignment: assignment with the business (Art. L. 145-16 — cannot be absolutely prohibited) vs standalone lease assignment (can be banned entirely). Courts recharacterise sham business sales — there must be a genuine transfer of clientele and goodwill, not just a label.
- Read the lease restriction clauses: approval, notarial deed, drafting by landlord's counsel, participation in the deed, solidarity, price-sharing — any one of these may apply. A landlord with a valid approval clause cannot refuse without justification (risk of judicial authorisation and damages).
- A defective assignment cannot be regularised: re-executing the deed does not cure a prior defect (Cass. 3e civ., 16 Feb. 1982; 17 July 1996). The assignee is left without title, exposed to eviction with no renewal rights. The drafter is personally liable for the resulting loss (Cass. 3e civ., 18 May 2005).
- Check the municipal pre-emption register before signing: if the premises are in a declared safeguard perimeter (C. urb. Art. L. 214-1), file the CERFA declaration and wait two months. A sale made without filing can be annulled within five years. The municipality must demonstrate sufficient general interest to pre-empt (CE, 15 Dec. 2023, n° 470167).
- Automatic transfer for corporate restructurings: mergers, demergers, and qualifying partial asset contributions transfer the lease automatically — no lease clause can block this (Art. L. 145-16, al. 2). But note the 2023 insolvency exception: approval clauses can apply in court-supervised insolvency disposals (Cass. com., 19 Apr. 2023).
- Post-execution obligations: register within one month (0% on first €23,000; 3% to €200,000; 5% above); serve the assignment on the landlord under Art. 1690 C. civ.; for business sales, publish in BODACC and a legal gazette; retain proceeds in escrow until creditor oppositions and tax solidarity period have cleared.
Assignment transactions involve simultaneous obligations to the landlord, the municipality, secured creditors, and the tax authority. We advise buyers and sellers on structuring, documenting, and completing commercial lease assignments in compliance with all applicable requirements.
Book a ConsultationThis article is for general information and educational purposes only. It does not constitute legal advice and does not create a lawyer-client relationship. Laws and regulations may have changed since publication. Always seek qualified French legal advice before assigning or acquiring a French commercial lease.
Key Legal References
Absolute prohibition on assignment with the business is void; restrictions are valid. Automatic transfer on merger/apport.
Landlord notification right when assignee defaults on rent or charges
3-year cap on assignor’s continuing guarantee after assignment
Refusal of renewal without eviction indemnity available for defective assignment
Only absolute prohibition on assignment with business is void — restrictions (approval, notarial form, participation, price-sharing) are valid
Notarial deed clause: non-compliance renders assignment unenforceable against landlord
Share sale is not a lease assignment; restriction clauses do not apply
Landlord approval clause can apply in court-supervised insolvency disposal (2023)
Drafter personally liable for failure to observe assignment formalities
Art. 1690 notification to landlord required to make assignment enforceable; serve even after consent obtained
Municipal pre-emption right over commercial business and lease sales in safeguard perimeter
Municipal pre-emption must be justified by sufficient general interest — vague diversity arguments insufficient (CE, 15 déc. 2023, n° 470167)
