Eviction indemnity: how what your landlord owes you is calculated

Article L. 145-14 of the French Commercial Code states the rule in two sentences. The landlord may refuse to renew the lease; it must then, save for the exceptions in articles L. 145-17 and following, pay the evicted tenant an indemnity known as the eviction indemnity, “equal to the loss caused by the failure to renew”.

The important word is “loss”. The indemnity does not compensate the loss of the premises, but what that loss does to the business established there. Hence the fact that two neighbouring shops, paying the same rent and evicted on the same day, do not obtain the same amount.

That obligation cannot be got round by the drafting of the lease. Article L. 145-15 treats as unwritten, in whatever form, clauses, stipulations and arrangements whose effect is to defeat the right of renewal. That is a difference in kind from ordinary contract law, where clauses capping in advance the cost of non-performance are valid in principle and are negotiated. Here, a clause in the lease excluding the eviction indemnity is worth nothing, even signed with full knowledge of the facts.

This is the point that decides everything else, and the one discovered too late.

The notice must be given by extrajudicial act, six months in advance. It must, on pain of nullity, state the reasons for which it is given and indicate that a tenant intending either to challenge it or to claim payment of an eviction indemnity must apply to the court before the expiry of a period of two years (article L. 145-9). Two points are regularly lost in the reading. That period runs from the date for which the notice was given — its effective date, not the day the process server handed it to you. And a notice lacking those statements is void, which is the first thing to check before arguing the merits.

The mechanism is symmetrical where the initiative was yours. A landlord served with a request to renew has three months to state its refusal, with reasons; after that period without a reply, it is deemed to have accepted the principle of renewal. If it refuses, that document must likewise mention, on pain of nullity, the two-year period, which this time runs from service of the refusal (article L. 145-10). That two-year period is the one in article L. 145-60, which bars all actions brought under the commercial leases regime.

Two years sounds comfortable. It is not: an expert valuation of a business is counted in months, and so is the negotiation that precedes it. That is the first point on which having your notice checked before you answer it changes the financial outcome.

Article L. 145-14 gives heads of loss and a method, never a scale. No standard percentage, no multiple of rent, no online calculator has any value here: the provision refers to the practices of the trade, which are not the same for a food business and for a services business.

The principal indemnity: loss of the business or mere relocation

Everything turns on a preliminary question, which governs the largest difference in amount in the whole file: can the business carry on elsewhere and keep its customers?

If the answer is no — customers tied to the location, a retail business dependent on passing trade, a licence tied to the premises — eviction destroys the business. The indemnity is then calculated on the market value of the business, determined according to the practices of the trade, in the very words of article L. 145-14.

If the answer is yes, the loss is no longer the destruction of the business but its relocation, and the indemnity is confined to the cost of that move. For the same premises, the two scenarios do not produce amounts of the same order: it is on that ground that most of the argument is concentrated, well before the ancillary costs.

The ancillary indemnities

The provision lists them: normal removal and reinstallation costs, together with the costs and transfer duties payable for a business of the same value. That last head is the one most often forgotten by those negotiating alone, although it appears in so many words in the statute: it corresponds to what acquiring an equivalent business would cost, registration duties included.

Other heads attach to the loss without being named in the provision, since the indemnity is “equal to the loss caused”. They are proved with documents, never by reference to a grid.

What brings the amount down

Article L. 145-14 expressly reserves to the owner the possibility of proving that the loss is smaller. The burden is on it, but it explains most of the low offers received at the start of a file: they anticipate that argument.

The principle admits exceptions, and they are exhaustive.

Article L. 145-17 allows the landlord to refuse without paying any indemnity if it shows a serious and legitimate reason against the outgoing tenant. The provision carries its own qualifying limb, and it is that limb which defeats most such refusals: where the reason relates to non-performance of an obligation or to ceasing to trade, the breach may be relied on only if it continued or recurred more than one month after a formal notice from the landlord. That formal notice must, on pain of nullity, be served by extrajudicial act, state the reason relied on and reproduce the terms of the article. An old breach that has been put right is therefore not enough. The same article covers a building due to be demolished as being in a state of unfitness recognised by the administrative authority.

Two other situations reduce the indemnity rather than remove it. A landlord refusing in order to build or rebuild the property owes the indemnity, but may avoid it by offering premises matching the tenant's needs and means (article L. 145-18); and the right of renewal cannot be relied on against an owner that has obtained planning permission for residential premises in the cases covered by article L. 145-24.

This is the regime's most effective protection, and the least well used. Article L. 145-28 states it without reservation: “no tenant entitled to an eviction indemnity may be compelled to leave the premises before receiving it”. Until payment, the tenant is entitled to remain in the premises on the terms and conditions of the expired lease.

The other side of it often comes as a surprise. What is owed is no longer rent but an occupation indemnity, determined in the light of all relevant factors: it may exceed the last rent paid, sometimes considerably. Staying put is not free, and that cost is budgeted from the first month.

A single exception appears in the last paragraph of the same article: where the landlord offers replacement premises under article L. 145-18, the tenant must leave as soon as an interim indemnity, fixed in the light of an expert report, has been paid.

The file is not closed by the decision fixing the indemnity. Article L. 145-58 gives the landlord a right of retraction: until the expiry of a period of fifteen days from the date on which the decision became final, it may avoid payment, provided it bears the costs of the proceedings and agrees to renew the lease. Its decision is then irrevocable (article L. 145-59).

The consequence is brutal, and it is prepared for in advance: a tenant who has organised its departure, signed elsewhere and started fitting-out works may find renewal imposed on it when it no longer wants it. For as long as those fifteen days run, an offer of indemnity, however high, remains reversible.

In most files, nobody other than the parties. The landlord makes an offer, the tenant disputes it, and a settlement agreement ends the discussion without proceedings — the quickest route, provided you know what the business is worth before entering the negotiation.

Failing agreement, the amount is fixed by the tribunal judiciaire for the place where the property is situated, under the procedural rules specific to the regime. An expert is appointed in almost every case: the expert reports on the value of the business in the light of the practices of the trade and on the possibility of relocation — the two questions that decide the amount. Payment may be made into the hands of an escrow holder.

A word on recent developments, because the regime has moved: Law no. 2026-403 of 26 May 2026 on simplifying economic life amended several points of the commercial leases regime — monthly payment of rent, limits on the security deposit. Its article 62 does not touch the eviction indemnity, whose regime remains as described here.

In files of this kind the difficulty almost never comes from the law, which is written down. It comes from three decisions taken in the first few weeks, often alone.

1. Check the validity of the notice before answering it. Reasons, mention of the two-year period, form of the document, effective date: each of those requirements is prescribed on pain of nullity by article L. 145-9. Answering a void document on the merits means giving up the cheapest argument in the file.
2. Do not hand back the keys. Article L. 145-28 makes staying in the premises the lever of the negotiation. A tenant who has left voluntarily has lost that lever, and then argues about an amount with nothing to support it.
3. Have the business valued early. The relocation question is documented with trading figures, the nature of the customer base and the characteristics of the location — material that is easier to gather while trading than after leaving.

Composite example, for illustration only. No real case. A restaurant trading for eleven years in a shopping street receives a notice refusing renewal, on the ground of a rebuilding project. Two questions govern the file, and neither concerns the rent. Does the notice state the reasons and the two-year period, failing which it is void? And would the customers follow two hundred metres away? If they are tied to the location and to passing trade, the indemnity is calculated on the value of the business; if the activity rests on a transferable reputation and a booking-based clientele, the landlord will argue mere relocation. Between those two answers the amount is not of the same order — and the restaurateur stays in the premises, against an occupation indemnity, until payment.

We act on both sides: for the evicted tenant, and for the landlord preparing a refusal. The same provisions, read from two opposite positions.

In practice: checking the notice or the refusal within days of its receipt, quantifying what is at stake under both calculation scenarios, negotiating the settlement, and running the proceedings to fix the amount, with oversight of the expert report, if no agreement is reached.

The scope and the amount are announced and accepted before the work begins — the budget is announced before the expert report, including for the mere checking of a notice. We give no undertaking as to the outcome of a dispute: our professional rules forbid it.

If a notice has arrived and its effective date is approaching, that is what a first conversation frames.