A commercial lease relating to an asset belonging to the public domain (domaine public) is void by absolute nullity (nullité absolue) on account of an unlawful subject matter (objet illicite). The parties cannot bring premises belonging to the public domain within the statutory commercial lease regime. The action for nullity is subject to a five-year limitation period (prescription) running from the day on which the claimant knew or should have known of that unlawfulness. The landlord retains a right to an occupation indemnity (indemnité d'occupation) for the enjoyment they procured.
The essentials
- A commercial lease whose site is an asset belonging to the public domain is void by absolute nullity on account of an unlawful subject matter.
- The parties cannot decide to place premises forming part of the public domain under the statutory commercial lease regime.
- An action for nullity based on an unlawful subject matter is subject to a five-year limitation period running from the day on which the claimant knew or should have known of the unlawfulness of the subject matter, and not from the day of signature.
- After annulment, each party may obtain restitution in value of the services it provided to the other.
- A landlord who procured effective enjoyment of the premises may claim an occupation indemnity, even if they were not the owner of the property.
Is a commercial lease on the public domain valid?
A commercial lease whose site belongs to the public domain is void by absolute nullity on account of an unlawful subject matter. The third civil chamber so holds (Civ. 3e, 21 May 2026, No. 24-16.483) in a case concerning premises located at the rear of a beach, let under a commercial lease on 12 December 2012 for the operation of a restaurant. The lessee continued that business through a company. In September 2021, the landlord served on the tenant company a notice to pay (commandement de payer) rent arrears.
The lessee and the tenant company then brought proceedings for nullity of the lease, arguing that the property belonged to the public domain. They sought restitution of the rent and compensation for the loss of the business assets (fonds de commerce). The decision under appeal (CA Basse Terre, 14 March 2024, No. 22/01225) held the action admissible, annulled the lease, ordered the landlord to return the rent and dismissed the claim for an occupation indemnity, on the ground that the landlord was not the owner of the premises.
The third civil chamber upholds the nullity of the lease and the starting point adopted for the limitation period. It does, however, quash the decision in part on one specific issue: the landlord could not be deprived of any occupation indemnity when they had procured effective enjoyment of the premises. Two limbs of the first ground of appeal did not give rise to a specially reasoned decision. The case returns to the court of appeal of Basse-Terre, sitting with a differently composed panel (free translation).
since the parties cannot choose to subject their leasing relations to the statutory commercial lease regime where those relations concern assets belonging to the public domain, a commercial lease whose site is such an asset is void by absolute nullity on account of an unlawful subject matter.
What must each party return after the lease is annulled?
After annulment, each party may claim the value of the services it provided to the other. The tenant obtains restitution of the rent it paid. The landlord may, for their part, claim an indemnity corresponding to the value of the enjoyment they procured. The unlawfulness of the subject matter of the contract does not stand in the way of these reciprocal restitutions.
It follows from these provisions that the parties must, after the annulment of their agreements, even for an unlawful cause or subject matter, be restored to their previous position, and that each may claim restitution in value of the services provided.
Ownership of the premises is not a condition of that indemnity. The third civil chamber notes that the landlord had provided the tenant company with effective enjoyment of premises used as a restaurant. That service calls for consideration in value, irrespective of the title the landlord held over the property. An occupant who obtains the annulment of the lease therefore does not recover the rent paid without themselves owing the value of their occupation.
What the decision settles on limitation and restitution
The decision resolves two questions: the starting point of the limitation period for an action for nullity based on an unlawful subject matter, and the irrelevance of ownership to the occupation indemnity. On the first, the third civil chamber holds that Article 2224 of the French Civil Code applies to actions for nullity based on an unlawful cause or subject matter. The five-year period runs from the day on which the party seeking nullity knew, or should have known, of the unlawfulness of the subject matter of the contract. The appeal to the Cour de cassation argued for a starting point on the date of the deed: that reading is rejected.
On the second question, the court of appeal had made the occupation indemnity conditional on the landlord being the owner. The third civil chamber rejects that reasoning: restitution is measured by the service actually provided, here the enjoyment of premises used as a restaurant. The assessment of that indemnity remains open and will fall to the court to which the case is remitted. The decision does not rule, however, on the criteria for land to belong to the public domain.
What precautions before signing a commercial lease?
Whether the site of the premises belongs to the public domain must be checked before signature, because the intention of the parties cannot cure the defect. A commercial lease entered into over a dependency of the public domain remains exposed to absolute nullity, which may in principle be invoked by any interested party. The length of performance does not secure the contract: here, the lease had been signed in 2012 and the action brought in 2021.
- Check the legal status of the land and of the buildings before signature, in particular for a business established by the sea.
- Keep the evidence establishing the enjoyment procured or received: it is the basis for restitution in value if the lease is annulled.
- Anticipate the symmetry of restitution: the rent paid is returned, but so is the value of the occupation.
- Bear in mind the starting point of the limitation period: five years from knowledge of the unlawfulness of the subject matter.
The checks to carry out on the site of the lease
A commercial lease whose site belongs to the public domain cannot be put right by agreement of the parties. Before signing, the legal status of the land and of the buildings must be checked, especially for a coastal business. During performance, the evidence establishing the enjoyment procured or received should be kept: it serves to quantify restitution if the lease falls. In the event of a challenge, the five-year period runs from knowledge of the unlawfulness of the subject matter, and not from the signature of the lease.
Frequently Asked Questions
Can premises located on a beach be let under a commercial lease?
No, not where the premises stand on an asset belonging to the public domain. According to the decision of 21 May 2026, the parties cannot choose to subject their leasing relations to the statutory commercial lease regime where those relations concern an asset of the public domain. The lease is then void by absolute nullity for an unlawful subject matter, whatever the period during which it was performed.
When does the five-year period to seek nullity of the lease start to run?
The period runs from the day on which the party seeking nullity knew, or should have known, of the unlawfulness of the subject matter of the contract. The third civil chamber applies Article 2224 of the French Civil Code to actions for nullity based on an unlawful cause or subject matter. The starting point is therefore not the date of signature of the deed, contrary to what the landlord argued in this case.
Can a landlord who is not the owner claim an occupation indemnity?
Yes, provided that they procured effective enjoyment of the premises for the tenant. The decision of 21 May 2026 quashes the ruling of the court of appeal, which had refused any indemnity on the ground that the landlord was not the owner of the property. After annulment, each party may obtain restitution in value of the services provided. The amount of the indemnity remains to be fixed by the court to which the case is remitted.
Must rent be repaid when a commercial lease is annulled?
Yes, in principle: annulment restores the parties to their previous position and the landlord returns the rent received. That restitution is not one-way, however. The tenant occupied the premises and received the benefit of enjoyment, the value of which may be claimed from them. The financial balance of the annulment is therefore struck by setting the rent returned against the value of the occupation.
Can a tenant rely on the nullity of the lease to avoid unpaid rent?
Annulment deprives the lease of effect and renders the notice to pay the rent devoid of purpose, but it does not wipe out all consideration. A tenant who has actually occupied the premises remains, in principle, liable for the value of that enjoyment. Nullity therefore shifts the debate from contractual rent to the occupation indemnity, without securing free occupation for the tenant over the period elapsed.