The Guarantee Toolkit: An Overview
Neither the commercial lease statute nor the Civil Code imposes any particular guarantee on the tenant. The landlord is free to ask for as much or as little security as the negotiation allows. In practice, the two guarantees found in almost every commercial lease are the security deposit and the joint and several guarantee clause on assignment. Beyond these, landlords can also require a personal surety, a bank demand guarantee, or a letter of comfort from the tenant's parent company.
| Guarantee | What it is | Key constraint |
|---|---|---|
| Security deposit (dépôt de garantie) | Cash sum paid at entry, held by landlord, returned on exit less deductions | Exceeding 2 rent terms triggers interest at Banque de France rate (Art. L. 145-40 — mandatory) |
| Joint and several guarantee on assignment | Outgoing tenant guarantees obligations of the incoming tenant | Capped at 3 years from assignment date (Art. L. 145-16-2) — any longer clause is void |
| Personal surety (caution solidaire) | Individual or company guarantees all or part of the tenant's obligations | Consumer Code handwritten wording required for individuals — on pain of nullity |
| Demand guarantee (garantie à première demande) | Bank pays on first demand without invoking lease defences | Must not reference the tenant's own obligations or it will be recharacterised as a surety |
| Letter of comfort (lettre d'intention) | Parent company undertakes to support the tenant | Breach results in damages only, not direct payment; causation must be established |
| Landlord's lien (privilège du bailleur) | Statutory priority over proceeds of the tenant's movables on the premises | Does not extend to intangible assets or the fonds de commerce; reduced in insolvency |
The Security Deposit: Amount, Interest, and What Happens on Sale
The security deposit guarantees performance of all the tenant's obligations under the lease. It is held throughout the lease and any renewals and returned on departure after deducting unpaid rent, charges, repairs, or other amounts owed. The tenant cannot offset the deposit against their last rent payment.
The Two-Term Threshold and the Interest Rule (Art. L. 145-40)
Any advance payment exceeding two rent terms — in whatever form, including as security — bears interest in favour of the tenant at the Banque de France rate for advances on securities. This rule is mandatory: any clause excluding it is unwritten. The standard deposit is therefore calibrated to the payment terms:
| Rent payment terms | Standard deposit (interest-free ceiling) |
|---|---|
| Quarterly, in advance | One quarter |
| Quarterly, in arrears | Two quarters |
| Monthly, in advance | One month |
| Monthly, in arrears | Two months |
Where the lease includes key money (pas-de-porte) characterised as a rent supplement, the corresponding fraction must be added to each term when calculating the threshold (Cass. 3e civ., 2 December 1998). The deposit should be adjusted upward or downward to track rent reviews and renewals.
The deposit is a personal debt of the landlord who received it. If the building is sold, the deposit obligation does not automatically transfer to the new owner in a way binding on the tenant. The simplest solution is to include in the lease a clause by which the tenant expressly consents in advance to the transfer of the deposit to any future acquirer. This makes the transfer enforceable against the tenant and avoids disputes on exit when the original landlord has disappeared.
The Joint and Several Guarantee Clause on Assignment: Three-Year Cap
When a tenant assigns their lease, leases typically include a clause by which the assignor remains jointly and severally liable for the assignee's obligations. Since the Pinel Act, this guarantee is capped at three years from the date of assignment under Article L. 145-16-2 of the Code de commerce. The Court of Cassation has confirmed this provision is of mandatory application (Cass. 3e civ., 11 April 2019, n° 18-16.121): any clause extending the guarantee beyond three years is void. The landlord must also inform the assignor of any payment default by the assignee within one month of the due date (Art. L. 145-16-1).
The clause needs careful drafting to cover: all rent, arrears, charges, taxes, repairs, occupation indemnities, and all other amounts owed; successive assignees (failing that, the original assignor only guarantees the first assignee, not subsequent ones); and the reciprocal guarantee so that successive assignees are jointly and severally liable between themselves.
Any clause imposing joint liability on a buyer in a court-approved insolvency disposal plan (plan de cession) for the seller's existing lease debts is unwritten under Article L. 642-7 of the Code de commerce. The three-year guarantee clause revives its full effect for subsequent assignments made in the ordinary course after the insolvency plan (Cass. com., 15 November 2017, n° 16-19.131).
The Personal Surety (Caution Solidaire): Mandatory Wording on Pain of Nullity
The personal surety is one of the most effective guarantees available, particularly where the tenant is a company and the landlord can obtain a guarantee from its director or parent. The surety can guarantee all or part of the tenant's obligations, with or without a financial cap, for a fixed or unlimited term.
Consumer Code Handwritten Wording (Arts. L. 331-1 & L. 331-2)
Where the surety is an individual (including a company director acting in their personal capacity) and the beneficiary is a professional creditor, specific handwritten wording is required on pain of nullity (Arts. L. 343-1 and L. 343-2 Consumer Code). Both passages are required for a joint and several surety.
The professional creditor must also verify that the surety's commitment is not manifestly disproportionate to their assets and income; if it is, the creditor cannot enforce it unless the surety's means at the time of enforcement allow them to meet the obligation (Art. L. 332-1 Consumer Code).
Scope and Duration: Draft Carefully
The scope of the surety is defined strictly by its terms. A surety covering "rent" does not cover service charges, taxes, or repair costs. A surety covering "all sums owed under the lease" does not cover the occupation indemnity owed after lease expiry, since that obligation arises after the lease ends. Always draft scope to include: "all rent, arrears, charges, taxes and levies, occupation indemnities, repair costs, interest, and all other sums which the tenant may owe the landlord."
A surety given for the lease term without mention of tacit extension will likely continue through any tacit extension, but this should be stated expressly. At renewal, the lease is treated as a new lease: a surety given for the original lease term is released at renewal unless the deed expressly extends it to renewals. This is one of the most common traps in commercial lease guarantee drafting.
The Demand Guarantee: Maximum Protection, Strict Drafting
A demand guarantee (garantie autonome à première demande), governed by Article 2321 of the Civil Code, is the strongest guarantee a landlord can obtain. Unlike a surety, the demand guarantee is not accessory to the main obligation: the bank pays on first demand without being able to raise any defence based on the lease, the validity of the debt, or the tenant's financial position. The obligation is entirely detached from the underlying obligation it secures.
The drafting must be exact. A guarantee worded as covering "all sums owed by the tenant" references the tenant's own obligation and will be recharacterised as a surety, losing its autonomous character. The demand guarantee must be drafted by reference to the guarantor's own independent commitment, not to the lease. The same considerations on scope and duration that apply to sureties apply equally here.
The Letter of Comfort: A Weaker Instrument
A letter of comfort (lettre d'intention) from the tenant's parent company, governed by Article 2322 of the Civil Code, can take various forms: a simple declaration of awareness, an undertaking to maintain the tenant's solvency, an obligation to subscribe to a capital increase, or a commitment to support the tenant through a current account. Unlike a surety, breach of a letter of comfort results in damages only, not direct payment. The landlord must prove a causal link between the breach and their loss. We generally advise landlords to prefer a surety or demand guarantee over a letter of comfort where the parent is willing to provide one — but ensure the commitment is expressed as a result obligation, not merely a best-efforts undertaking.
The Landlord's Lien: A Statutory Safety Net
The landlord benefits from a statutory priority (privilège du bailleur) under Article 2332-1 of the Civil Code over the proceeds of all movables present on the leased premises — whether or not they belong to the tenant, provided the landlord was unaware they belonged to a third party. The lien covers rent, repair costs, and all sums owed under or in connection with the occupation. The lien does not extend to the intangible elements of the fonds de commerce. In insolvency proceedings, the scope of the privileged claim is restricted under Articles L. 622-16, L. 631-14, and L. 641-12 of the Code de commerce. In practice, the lien functions best as a protective measure preserved by a precautionary seizure (mesure conservatoire) while the landlord obtains a judgment.
- Security deposit (Art. L. 145-40): calibrate to the rent payment terms to stay within the 2-term interest-free threshold; include an adjustment clause tracking rent reviews; add a clause consenting in advance to deposit transfer on building sale.
- Assignment guarantee (Art. L. 145-16-2): mandatory 3-year cap from assignment date — any extension clause is void (Cass. 3e civ., 11 April 2019). Cover successive assignees and mutual solidarity; include obligation to notify assignor of default within 1 month (Art. L. 145-16-1).
- Individual surety — Consumer Code wording (Arts. L. 331-1, L. 331-2, L. 343-1, L. 343-2): both handwritten passages required for a joint and several surety — on pain of nullity. Check proportionality (Art. L. 332-1). Draft scope to expressly cover occupation indemnity and all sums. State the position on tacit extension and renewals — surety is released at renewal unless deed expressly extends it.
- Demand guarantee (Art. 2321 C. civ.): must not reference the tenant's own obligations or it will be recharacterised as a surety. Apply the same scope and duration care as for a surety. The strongest guarantee available — prefer it over a surety where a bank will provide it.
- Letter of comfort (Art. 2322 C. civ.): weaker instrument — breach = damages only. Ensure commitment is expressed as a result obligation, not a best-efforts undertaking. Prefer surety or demand guarantee where available.
- Landlord's lien (Art. 2332-1 C. civ.): statutory — does not require a lease clause. Does not extend to intangible assets or the fonds de commerce. Activate by precautionary seizure at the first sign of tenant insolvency before the insolvency filing. Scope restricted in insolvency proceedings.
A guarantee that fails on a technical ground at the moment the tenant defaults is worth nothing. We advise landlords on drafting security packages that hold up — from the Consumer Code wording in a personal surety to the autonomy requirement in a demand guarantee.
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 on the security and guarantee provisions of a French commercial lease.
Key Legal References
Security deposit: advance payments exceeding 2 rent terms bear interest at Banque de France rate in favour of the tenant (mandatory)
Assignment guarantee: mandatory 3-year cap from assignment date; any longer clause is void
Landlord must notify assignor of assignee’s payment default within 1 month of due date
Individual surety: mandatory handwritten wording for simple surety on pain of nullity
Individual surety: additional mandatory handwritten wording for joint and several surety on pain of nullity
Surety disproportionate to surety’s means: creditor cannot enforce unless means at time of enforcement allow it
Demand guarantee (garantie autonome à première demande): not accessory to the underlying obligation
Letter of comfort (lettre d’intention): breach results in damages, not direct payment
Landlord’s statutory lien: priority over proceeds of all movables on the leased premises
