Are you a non-essential business and were required to shut down your business during the pandemic? If so, you must nevertheless pay your rents during that time-period
In a series of rulings on June 30, 2022, the French Cour de Cassation indicated that as a non-essential business you must keep paying your commercial rent even if you were required to close your business during the pandemic due to government measures to attempt to contain the spread of the SARS-CoV-2. You cannot refuse to pay your rent supposedly because the government’s decision:
- Is a force majeure event.
- Constitutes a loss of your premises.
- Constitutes a default of your landlord to perform their obligations to deliver the premises.
- Is an exceptional circumstance that any landlord of a good faith should consider.
The Government’s measures to limit the spread of the SARS-CoV-2 do not preclude parties to a contract to abide by the usual contract law principles. The economic conditions and the public health crisis are just unusual circumstances.
A force majeure event
In a contractual relationship, a force majeure event is an unforeseeable event that is beyond your control as a tenant and that makes it impossible for you to pay your rents (Article 1218 of the French civil code).
In the landlord tenant disputes before the Cour de cassation, the tenant was not arguing that they have been placed in a situation that makes it impossible for them to pay their rent. They’re arguing that they’ve been placed in a situation that makes it impossible for them to use the premises. The Cour de cassation then concluded that there is no force majeure event. The fact that a party to a binding contract cannot take advantage of what they bargained for does not constitute a force majeure event.
A loss of your premises
The Cour de cassation stressed that the government stay-at-home measures and restrictions imposed on non-essential businesses aim at limiting the spread of the SARS-CoV-2. By limiting interpersonal interactions, public health care authorities wanted to safeguard public health.
Practical interpretation : these measures are general and temporary by nature and do not have any direct relationship with the premises that you’re renting as a tenant. Therefore, you cannot request the reduction of the rent or the termination of the lease agreement supposedly because you lost the premises due to irresistible and unforeseeable events in the meaning of Article 1722 of the French civil code.
A default of your landlord to perform their obligations to deliver the premises.
You cannot blame the government stay-at-home measures on your landlord. It wasn’t their decision to make. Therefore, they didn’t default on their obligation to deliver the premises for your business use. As a result, you cannot refuse to pay your rents on the ground of Article 1719 of the French civil code.
A bad faith whereas they precisely offer you to postpone the payment rent
Practical interpretation: in the landlord tenant rent payment disputes before the Cour de cassation, the landlord offered to postpone the rent payment for three months, and even for six months. Therefore, the landlord showed that they’re of a good faith by factoring into their decision the unusual circumstances that the public health crisis created. As a result, you cannot refuse to pay your rents supposedly because the landlord is of a bad faith.
To limit the spread of the virus SARS-CoV-2 that is responsible of the Covid-19 disease, the government has temporarily imposed restrictions on deemed non-essential businesses. As a result, they couldn’t operate as they normally would. Some of them didn’t want to keep paying their rents during the lockdown. However, there are commercial rent forgiveness tax incentives measures to encourage landlord to forgive all or part of their rents during the lockdown.