The legal context
When renewing a commercial lease, the rental value (the basis for calculating the new rent) takes into account the respective obligations of the lessor and lessee.
The French Commercial Code allows additional obligations imposed on the lessee, without consideration, to reduce this rental value.
The facts
The tenant wanted a rent reduction when renewing the lease, citing two factors:
1. Quarterly prepayment of rent.
2. A security deposit equivalent to six months’ rent including VAT – or more than nine months excluding VAT.
He felt that these guarantees went beyond normal practice, without sufficient consideration.
The Grenoble Court of Appeal and the French Supreme Court rejected this claim.
The decision of the Cour de cassation
The Court confirms that a high security deposit is not, in itself, a legal factor for reducing the rental value.
Concerning advance payments: in excess of two terms, the lessee is entitled to statutory interest, as stipulated in article L. 145-40 of the French Commercial Code.
Both the security deposit and the rent advance are acceptable only if they are reasonable or accompanied by real consideration.
Scope and practical implications
For the lessor :
You can ask for high guarantees (security deposit and rental advance) if they are cashable or customary in the context of the lease.
As long as they are contractually defined and do not give rise to a manifest economic imbalance, they do not justify a rent reduction.
For the tenant :
To justify a reduced rent, he must demonstrate that these guarantees are :
1. clearly excessive,
2. not compensated by any financial or contractual consideration.
Conclusion
The decision of May 7, 2025 reinforces the consistency of the case law, ruling that contractual precautions are not supposed to reduce rental value, provided they are justified or compensated for.
To sum up: the guarantees required in a commercial lease, however high, do not ipso facto constitute grounds for rent reduction, unless an imbalance without tangible consideration can be demonstrated.
