The Key Distinction: Public Domain vs Private Domain
When the State, a local authority (collectivité territoriale), or a public institution is the landlord, the starting question is always the same: does the property belong to the domaine public or the domaine privé of that public body?
The answer is decisive. Property in the domaine public cannot be the subject of a commercial lease at all — the commercial lease statute is fundamentally incompatible with permanent public ownership and the inalienability of public domain assets. Property in the domaine privé, by contrast, can be let under a commercial lease subject to the statute, in the same way as a privately-owned building.
A property belongs to the domaine public when it is assigned to public use (open to the public at large) or when there is a special arrangement for the exploitation of a public service. Everything else — including land and buildings held by public bodies without any public use or public service assignment — forms part of their domaine privé. The qualification depends on the nature of the property, the general purpose of the public body, the configuration of the premises, and whether they are physically separable from public domain assets.
When Public Body Property Is in the Private Domain
Commercial premises situated in a building belonging to the State or a local authority can benefit from the commercial lease statute provided they display no characteristics of the domaine public — no assignment to public use, no special public service arrangement — and provided they do not form an indivisible whole with public domain assets in the same building.
Several categories of public property are well established as falling within the domaine privé: zones d'aménagement concerté (ZAC), zones d'activité économique (ZAE), and foncier reserves (réserves foncières) acquired by a local authority for future development under Article L. 221-1 of the Urban Planning Code, not yet assigned to public use or a public service.
Where premises are in the domaine privé and satisfy the general conditions of Article L. 145-1 of the Code de commerce, Article L. 145-2, I, 4° extends the benefit of the commercial lease statute to leases of premises or buildings belonging to the State, local authorities, and public institutions.
A commercial unit located within a building that is partly public domain and partly private domain may be affected by the dominant character of the overall building. If the public domain assets are physically indivisible from the unit in question — for example, because the commercial space shares structural elements, corridors, or access with a public service facility — the public domain character of the building as a whole will irradiate the commercial unit, making a commercial lease impossible. The separability of the unit must be verified concretely before any conclusion is drawn.
How to Tell Which Domain Applies: The Practical Criteria
The qualification as domaine public or domaine privé depends on several criteria applied concurrently. Importantly, the parties cannot change the domain classification by contract — a clause describing domaine public property as private does not change the legal nature of the property. The qualification is a matter of law, not of contract.
| Criterion | Points toward domaine public | Points toward domaine privé |
|---|---|---|
| Assignment to public use | Open to the public at large; used by citizens generally | Not assigned to public use; reserved for a specific private purpose |
| Public service arrangement | Special arrangement for a public service (hospital, school, administrative offices) | No public service assignment; property held as an ordinary asset |
| General vocation of the building | Building as a whole serves a public function | Building serves a commercial or mixed function without a dominant public use |
| Physical divisibility | Commercial unit not physically separable from public domain elements | Commercial unit physically separate and independently operable |
| Classification | Expressly classified as public domain by statute or by administrative act | No classification; or expressly classified as private domain |
Foncier Reserves: Only Precarious Occupancy Is Possible
Where a local authority has acquired land under Article L. 221-1 of the Urban Planning Code to constitute a réserve foncière — land set aside for a future development whose use has not yet been determined — it is prohibited from assigning the land to uses contrary to the objective underlying the acquisition (C. urb., Art. L. 221-2). The authority cannot grant a commercial lease on such land. The only occupancy arrangement possible is a temporary, precarious concession without renewal rights.
Where the Statute Applies: Article L. 145-2 and Article L. 145-26
When all conditions are met — the property is in the domaine privé, the premises satisfy Article L. 145-1, and the tenant operates a fonds de commerce or fonds artisanal there — the commercial lease statute applies in full. The tenant benefits from all statutory protections: the nine-year minimum term, the right to renewal, and the right to an eviction indemnity.
Article L. 145-26 of the Code de commerce (as amended by the Law of 4 August 2008) provides a specific rule on refusal of renewal: the renewal of leases covering property belonging to the State, local authorities, and public institutions cannot be refused without the public body landlord being required to pay the eviction indemnity provided for in Article L. 145-14 — even if the refusal is justified by a reason of public interest (utilité publique).
Which Court Has Jurisdiction?
Disputes arising from commercial leases on domaine privé property of a public body are subject to the jurisdiction of the civil courts (juridictions judiciaires), not the administrative courts. This is the standard rule for private law disputes involving public body property that falls outside the public domain.
The boundary is not always straightforward. A convention that is formally a private law lease but contains clauses that are exorbitantes du droit commun — conditions going beyond anything a private party could agree to, typically reflecting the exercise of public authority — may be requalified as an administrative contract, shifting jurisdiction to the administrative courts. For a commercial tenant, the practical rule is: if the lease genuinely concerns domaine privé property and contains no exorbitant clauses, the tribunal judiciaire (commercial lease division) has jurisdiction.
Where a public body landlord carries out public works in or around the leased premises during the term, and those works arise from the municipality's public functions rather than from the commercial lease itself, any resulting damage to the tenant is not a breach of the lease obligation of peaceful enjoyment. The claim falls within the jurisdiction of the administrative courts on the basis of travaux publics liability — not the commercial lease courts (Cass. 3e civ., 14 March 2024, n° 22-24.222).
- Establish the domain classification first: before signing, verify whether the property belongs to the domaine public or the domaine privé of the public body. A commercial lease is only possible on the domaine privé. The qualification is a matter of law, not contract — a clause labelling public domain property as private has no effect.
- Check physical separability: a commercial unit within a mixed public/private building may be irradiated by the public domain character of the building as a whole if the unit is not physically separable from public domain elements. Verify separability concretely — shared corridors, access, or structural elements can be decisive.
- Foncier reserves (Arts. L. 221-1 & L. 221-2 C. urb.): if the property is a réserve foncière, only a precarious occupancy without renewal rights is possible. A commercial lease is not available on such land regardless of the parties' intentions.
- Article L. 145-26 protection: where the statute applies, the public body landlord is bound by Art. L. 145-26 — it cannot refuse renewal without paying the full eviction indemnity (Art. L. 145-14), even for reasons of public interest. This is a stronger protection than tenants have in purely private leases where certain grounds for refusal do not trigger an indemnity obligation.
- Jurisdiction: disputes over commercial leases on domaine privé property go to the civil courts, not the administrative courts. Exception: if the lease contains exorbitant-of-common-law clauses reflecting the exercise of public authority, it may be requalified as an administrative contract. Public works damage during the lease is a claim for the administrative courts regardless (Cass. 3e civ., 14 March 2024).
Whether you are a business tenant negotiating with a municipality, or an investor assessing a portfolio that includes public body landlords, our team advises on the specific rules and risks of commercial leases on public property.
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 concluding a commercial lease with a public body.
Key Legal References
Extension of commercial lease statute to State, local authority and public institution property on the domaine privé
Public body landlord must always pay the eviction indemnity on refusal of renewal — even for reasons of public interest
Public domain general rule: property assigned to public use or special arrangement for a public service belongs to the domaine public
Féves foncières: land acquired for future development under Art. L. 221-1 cannot be commercially leased — precarious occupancy only
Public works damage during a commercial lease: claim falls to administrative courts, not commercial lease courts (travaux publics liability)
