Service Charges Checklist: Landlords and Tenants
Since the Pinel Act 2014 (Art. L. 145-40-2 and Art. R. 145-35 C. com.), there is a mandatory list of charges that can never be passed to the tenant: Art. 606 structural repairs and associated fees; rent management fees; contribution économique territoriale; and charges attributable to vacant units or other tenants. Any clause purporting to pass these is deemed unwritten.
Property tax (taxe foncière) can still be passed on as a specific exception; so can taxes linked to the tenant’s use of the premises (e.g. waste collection). The lease must say so explicitly — broad “all charges” language is no longer sufficient.
The landlord must send the annual charge reconciliation by 30 September of the year following the year concerned (Art. R. 145-36). Failure to reconcile means: obligation to repay all provisions received (less documented charges), and the forfeiture clause cannot be invoked for non-payment of those charges.
In multi-tenant buildings, charge allocation must be surface-area-based, not rent-proportional. A rent-based allocation key is no longer valid (CA Paris, 18 October 2017). The landlord cannot spread the cost of vacant units across occupied tenants.
Claims for charge repayment or recovery are subject to the five-year limitation period of Art. 2224 C. civ. (not the two-year commercial period of Art. L. 145-60). Time runs from the date of the final reconciliation, not from the date provisions were paid.

Before 2014: Almost Complete Freedom, With One Important Limit

Before 2014, the allocation of service charges in French commercial leases was almost entirely a matter for the parties’ agreement. Landlords could, and routinely did, pass virtually all charges to the tenant — including property tax, works costs, management fees, and even major structural repairs — provided the lease said so with sufficient clarity (Cass. 3e civ., 18 November 1998). The Court of Cassation confirmed that parties could validly transfer to the tenant even the major structural repairs listed in Art. 606 C. civ., provided they did so explicitly (Cass. 3e civ., 27 November 2002).

There was, however, one judicially developed limit: a charge transfer clause could not be applied to works that, by reason of their scale, amounted to complete reconstruction of part of the building. The total re-roofing of one building in a multi-building complex, for example, fell outside the scope of even the broadest charge clause (Cass. 3e civ., 29 September 2010). Nor could the landlord pass on the cost of works made necessary by structural defects, since to do so would exonerate them from their fundamental delivery obligation (Cass. 3e civ., 9 July 2008).

The Pinel Act: Charges That Can Never Be Passed On

Art. L. 145-40-2 C. com. (Loi n° 2014-626 of 18 June 2014) and Art. R. 145-35 (Décret n° 2014-1317 of 3 November 2014) introduced a mandatory list of charges that cannot be recovered from the tenant regardless of what the lease says. Any clause purporting to pass these charges to the tenant is deemed unwritten, as Art. L. 145-40-2 is a public-order provision under Art. L. 145-15.

Category Recoverable? Key conditions / notes
Major structural repairs (Art. 606 C. civ.) and associated fees NO Includes architects’, engineers’, and other professional fees. Courts apply an expansive definition of Art. 606 repairs (Cass. 3e civ., 17 February 2015). Clear, precise clause required for roof repair (Cass. 3e civ., 16 March 2023).
Works to remedy age-related deterioration or achieve regulatory compliance — where they qualify as Art. 606 repairs NO (with limits) Only excluded where these works rise to the level of major structural repairs. Compliance works that do not reach that threshold can still be passed on.
Beautification works costing more than identical replacement YES (exception) Works that go beyond like-for-like replacement and improve the building can be passed on. Key battleground in shopping centre leases.
Taxes where the landlord is the legal debtor NO in principle The contribution économique territoriale (CET) cannot be passed on. Property tax (taxe foncière) and its additions can be passed on as an exception. Taxes linked to the tenant’s use (e.g. waste collection) can also be passed on.
Landlord’s rent management fees NO Fees for managing rent collection on the leased premises. Building technical/administrative management fees may still be passed on if not “rent management” fees. Courts watch this distinction carefully (TJ Versailles, 28 June 2023).
Charges, taxes, and costs attributable to vacant units or other tenants NO In multi-tenant buildings, the landlord cannot dilute vacant unit costs by spreading them across occupied tenants.
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Warning — Ambiguity on Art. 606 and Compliance Works

The decree’s formulation on compliance and deterioration works has created real uncertainty. It excludes these works from the tenant only where they qualify as Art. 606 major structural repairs — but courts have long treated compliance and deterioration works as legally distinct categories that do not map neatly onto that divide. If courts maintain that position, the restriction may have limited practical effect. Charges clauses should be drafted explicitly and specifically; do not rely on broad “all charges” language.

Mandatory Disclosure: What the Landlord Must Provide

Art. L. 145-40-2 also introduced mandatory transparency obligations. At conclusion of the lease, and then every three years, the landlord must provide each tenant with:

  • A prospective works statement for the following three years with a provisional budget;
  • A retrospective works statement covering the preceding three years with costs.

The lease must contain a precise and exhaustive inventory of all categories of charges, taxes, and levies allocated between the parties. The landlord must also send each tenant an annual summary reconciliation statement. In a multi-tenant building, the landlord must inform tenants of any development that may affect the charge allocation between them.

Art. R. 145-36 C. com. (Décret of 3 July 2015) specifies that the annual charge reconciliation must be sent by 30 September of the year following the year concerned. In a co-ownership building, the deadline is three months after the co-ownership accounts are settled. These provisions are of mandatory application.

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Practical Point — Drafting the Charge Inventory

The mandatory inventory must be precise and exhaustive, not a generic reference to “all charges of whatever nature.” In practice this means listing each category of charge explicitly (property tax, building insurance, elevator maintenance, etc.) and stating whether each is borne by the landlord or the tenant. For multi-tenant buildings, the allocation key for each shared cost should also be stated. A poorly drafted inventory creates disputes at every rent review and at lease end.

Charge Allocation in Multi-Tenant Buildings: Surface-Based, Not Rent-Based

Before 2014, landlords sometimes allocated charges between tenants in proportion to their respective rents rather than floor areas — a practice that produced perverse results where long-standing tenants on lower indexed rents bore a disproportionately smaller share than new tenants paying market rents.

Art. L. 145-40-2 now requires that charge allocation in multi-tenant buildings be based on occupied surface area, not rent levels. The amount of taxes attributable to any tenant corresponds strictly to that tenant’s unit and their proportionate share of the common areas necessary to operate the leased premises. A rent-based allocation key is now contrary to both Art. L. 145-40-2 (surface-based allocation required) and Art. R. 145-35 (no passing on of charges attributable to other tenants). For property tax, in the absence of any co-ownership arrangement, the allocation is made pro rata to occupied surface area (CA Paris, 18 October 2017, n° 15/22813).

Recovering Charges: Provisions and Annual Reconciliation

Actual Cost vs Flat Rate

The standard mechanism is reimbursement at actual cost, with the landlord advancing charges and recovering them on production of supporting documents. A flat-rate mechanism (a fixed percentage of rent representing charges) was historically valid under freedom of contract. Since 2014 it is difficult to justify: any flat rate risks incorporating non-recoverable charge components. Flat-rate arrangements should be renegotiated or audited to confirm every element is in the recoverable category.

Provisions and Annual Reconciliation: Consequences of Failing to Reconcile

The most common mechanism is the advance provision, with a formal annual reconciliation once actual costs are known. The Court of Cassation has held that a landlord who fails to produce an annual reconciliation must repay all provisions received, less only documented charges (Cass. 3e civ., 7 April 2010; Cass. 3e civ., 17 September 2020). The Paris Court of Appeal has gone further: absence of annual reconciliation renders the call for provisions without legal basis, and all provisions must be refunded (CA Paris, 1 June 2022). A Paris first instance court ordered provisional repayment of five years of unreconciled provisions in interim proceedings (TJ Paris, 28 December 2023).

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Warning — Non-Reconciliation Blocks the Forfeiture Clause

A landlord who has not complied with their obligation to justify charges annually cannot invoke the forfeiture clause against a tenant for non-payment of those charges. The Douai Court of Appeal held that the landlord’s failure to provide annual charge justification was a prior breach that blocked the forfeiture mechanism (CA Douai, 30 March 2023). Keep charge reconciliations up to date, or lose the main enforcement tool.

Prescription: How Long the Parties Have to Act

The action to recover unpaid charges, or to claim repayment of charges paid without justification, is subject to the five-year general limitation period of Art. 2224 C. civ. The two-year commercial limitation period of Art. L. 145-60 does not apply to charge claims. Time runs from the date the parties had knowledge of the final charge reconciliation, not from the date provisions were called or paid (CA Paris, 24 January 2018, n° 16/08577).

Practical Checklist: Reviewing a Charges Clause
Step 1 — Audit the charges clause against Art. R. 145-35: identify every charge category currently passed to the tenant. Check each against the non-recoverable list. Any clause passing Art. 606 repairs, rent management fees, CET, or vacant unit charges is unwritten. For property tax and use-linked taxes, confirm the lease says so explicitly.
Step 2 — Verify the charge inventory is precise and exhaustive: the lease must contain a specific, itemised list of charges borne by each party — not a generic “all charges” clause. For multi-tenant buildings, include the allocation key for each shared cost and confirm it is surface-area-based.
Step 3 — Check reconciliation compliance: confirm that annual charge reconciliation statements have been sent by 30 September each year. If one or more years are missing, the landlord is exposed to a repayment claim for all provisions for those years, and the forfeiture clause cannot be triggered for non-payment of those charges.
Step 4 — Review the three-year works statements: confirm that prospective and retrospective works statements were provided at lease commencement and at each three-year renewal or review. Missing statements are a breach of Art. L. 145-40-2 and may be raised in proceedings relating to the lease or to charges.
Step 5 — Assess limitation exposure: for tenants, if the landlord has not reconciled charges for several years, a repayment claim for all provisions (less documented charges) survives within five years of the last reconciliation. For landlords, unpaid charges can be recovered for the same five-year period running from the final reconciliation date.
Questions About Service Charges in Your Commercial Lease?

Charge disputes are one of the most common sources of commercial lease litigation in France — and one of the most avoidable with the right drafting. We advise landlords and tenants on charge allocation, compliance with Pinel Act obligations, and the recovery of overcharged or unjustified amounts.

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Legal Notice. This article is for general information and educational purposes only. It does not constitute legal advice. Laws and regulations may have changed since publication. Always seek qualified French legal advice on service charge allocation in a French commercial lease.