French Supreme Court (Cour de cassation), 3rd Civil Chamber, 18 December 2025, no. 24-10.767
The judgment handed down by the Third Civil Chamber of the French Supreme Court (Cour de cassation) on 18 December 2025 provides a twofold clarification on the legal regime of the right of first refusal established by Article L. 145-46-1 of the French Commercial Code in favour of the tenant of premises used for commercial or craft purposes. This decision, which deserves to be published in the Bulletin given its normative contribution, comes more than a decade after this protective mechanism was introduced by the Law of 18 June 2014 on craft trades, commerce and very small enterprises, known as the Pinel Law. It allows the Supreme Court to settle two questions that had remained uncertain despite the gradual emergence of case law on the mechanism.
The case before the French Supreme Court presented a relatively classic set of facts. A non-trading real estate company (société civile immobilière) had sold, on 30 June 2017, a building housing a residential care home for dependent elderly people operated by Maison Molière under a commercial lease concluded in 2010. The sale had taken place without the tenant’s right of first refusal being respected, a circumstance that was only revealed to the lessee in June 2020 when the purchaser, now the owner, in turn notified it of its intention to sell the building pursuant to Article L. 145-46-1. Realising the breach of which it had been the victim, the tenant brought proceedings in July 2021 against the original landlord and the purchaser seeking the annulment of the sale concluded four years earlier, together with a claim for the return of the rent paid since that sale and a claim for damages.
The defence raised a plea of inadmissibility based on limitation, arguing that the two-year period laid down by Article L. 145-60 of the French Commercial Code for all actions brought under the commercial lease regime had expired since the date of the disputed sale. The Paris Court of Appeal, in its judgment of 24 November 2023, upheld this argument and declared the tenant’s claims inadmissible as time-barred. Challenging this outcome, Maison Molière lodged an appeal on points of law based on three grounds, two of which were of particular interest. The first ground argued that the penalty for breaching the right of first refusal should be the legal non-existence of the sale, by application of the “deemed unwritten” rule laid down in Article L. 145-15 of the French Commercial Code, which would have made the action imprescriptible. The third ground, raised in the alternative, argued that even if the penalty were nullity, it should be subject to the ordinary five-year limitation period rather than the special two-year period applicable to commercial leases.
The French Supreme Court dismisses the appeal with relatively concise reasoning but considerable normative significance. In a statement of principle, it first holds that the sale of leased premises concluded by an owner with a third party in disregard of the commercial tenant’s right of first refusal is penalised by nullity. It then holds that the action for annulment of that sale brought by the tenant, which is exercised under the commercial lease regime, is subject to the two-year limitation period of Article L. 145-60 of the same Code. This twofold holding calls for a detailed analysis both of the legal characterisation of the penalty and of the time limits governing the resulting action.
The first question raised by the judgment concerns the very nature of the penalty attached to the breach of the right of first refusal. The appellant argued that the sale concluded in disregard of that right should be deemed unwritten under Article L. 145-15 of the French Commercial Code, a provision under which any clauses, stipulations or arrangements that, directly or indirectly, have the effect of defeating the public policy provisions of the commercial lease regime are deemed absolutely null and void. This argument was based on the observation, indeed confirmed by case law since the Third Civil Chamber’s judgment of 28 June 2018, that the provisions of Article L. 145-46-1 are a matter of public policy. From this premise, the appeal drew the logical conclusion that a legal act infringing those provisions should be subject to the most radical penalty, that of being deemed unwritten, which has the particular feature of being imprescriptible, since it may be invoked at any time without any time limit.
The French Supreme Court rejects this intellectual construction and opts for a more orthodox characterisation. It holds that the applicable penalty is the nullity of the sale, which is consistent with the classic logic of contract law. This solution is justified by several considerations. First, the very wording of Article L. 145-46-1, in its first paragraph, expressly provides that notification of the proposed sale to the tenant must be made “on pain of nullity” where it does not state the price and the terms of the sale. This statutory penalty of nullity, although it explicitly covers only the case of a notification whose content is defective, reveals the legislature’s intention regarding the legal regime applicable to the mechanism. Second, the conceptual distinction between a clause deemed unwritten and the nullity of the contract corresponds to a fundamental summa divisio in contract law. The first penalty applies to contractual stipulations that infringe mandatory provisions, thereby purging the contract of its unlawful elements while preserving its overall balance. The second strikes the legal act itself where the conditions for its formation have not been met or where it suffers from a substantive defect.
However, the right of first refusal established by Article L. 145-46-1 is not a contractual clause but a statutory right of non-contractual origin that is binding on the landlord regardless of any stipulation. Its breach does not result from an unlawful stipulation inserted in the lease or in the deed of sale, but from the failure to follow a procedure required by law prior to the conclusion of the sale. The appropriate penalty is therefore indeed the nullity of the act concluded in disregard of that procedure, and not the neutralisation of a clause that does not exist.
This analysis is, moreover, consistent with the characterisation adopted for contractual pre-emption agreements, the breach of which by the grantor who concludes the promised contract with a third party traditionally leads to the nullity of the contract concluded with that third party or to specific performance of the agreement, both penalties presupposing an act flawed in its formation rather than an unlawful clause.
The significance of this clarification should not be underestimated. By opting for nullity rather than for the “deemed unwritten” characterisation, the French Supreme Court places litigation concerning the right of first refusal within the general regime of nullity, with all the consequences that follow in terms of burden of proof, possible ratification of the void act and, above all, limitation of the action. It also unifies the treatment of the various scenarios in which the right of first refusal may be breached. Article L. 145-46-1 provides for two distinct points at which the landlord must inform the tenant: when it intends to sell the leased property (initial notification) and, secondarily, where it decides to sell on terms or at a price more favourable to the purchaser than those initially notified (corrective notification). The text expressly provides for the nullity of the sale only where the second notification is not made, leaving implicit the penalty for failing to give the initial notification. The judgment of 18 December 2025 removes this uncertainty by unifying the regime: whichever stage of the procedure has not been complied with, the penalty is the same, namely the nullity of the sale concluded in breach of the right of first refusal.
This characterisation has significant practical consequences. Contrary to the appellant’s argument, the action for annulment is not imprescriptible but subject to a limitation period, which leads to the second question decided by the judgment: identifying the applicable period. The Supreme Court states unambiguously that the action for annulment of the sale brought by the tenant is subject to the two-year limitation period laid down by Article L. 145-60 of the French Commercial Code, which provides that all actions brought under the chapter on commercial leases are time-barred after two years. This solution, which may seem harsh for the aggrieved tenant, is nonetheless consistent with the overall logic of the system.
The contrary argument set out in the third ground of appeal deserves examination because it reveals the complexity of characterising this action. The appellant argued that the action for annulment of the sale based on failure to respect the right of first refusal was not an action brought “under the commercial lease” within the meaning of Article L. 145-60, but an ordinary contractual action directed against the sale itself, which should therefore be subject to the five-year limitation period of Article 2224 of the French Civil Code. This construction rested on the observation that the action for annulment does not seek performance of an obligation arising from the commercial lease but challenges a separate legal act, the sale of the leased building, which involves relations between the selling landlord and the purchaser, a third party to the lease.
The French Supreme Court declines to draw this distinction and adopts a broad interpretation of the phrase “actions brought under” the commercial lease regime. This interpretation is justified by the very nature of the right of first refusal. Although this right is not an obligation arising directly from the performance of the lease, it is a statutory right granted to the tenant precisely because of its status as a commercial lessee. Article L. 145-46-1 falls within Chapter IV of Title IV of Book I of the French Commercial Code, which is devoted to the commercial lease regime, and is one of the components of the protective framework enjoyed by the commercial tenant in return for the relative precariousness of its legal position. The action for annulment of the sale based on the breach of this right is therefore indeed founded on the special commercial lease regime, even though it results in challenging an act concluded between the landlord and a third party.
This solution reflects a functional understanding of the notion of actions brought “under” the commercial lease regime, which covers not only actions seeking performance of the obligations arising from the lease itself, but also those that give effect to the statutory rights attached to the status of commercial tenant. Case law had already adopted a broad interpretation of Article L. 145-60 by applying the two-year limitation period to various actions derived from the commercial lease regime, such as the action to determine the compensation for eviction or the action challenging the validity of a notice to quit. The judgment of 18 December 2025 extends this line of case law by including the action for annulment of a sale made in breach of the right of first refusal.
It should nevertheless be noted that this solution raises a significant practical difficulty concerning the starting point of the limitation period. In the present case, the question posed little difficulty, since more than four years had elapsed between the disputed sale in June 2017 and the summons in July 2021, which clearly exceeded the two-year period. In other situations, however, determining the starting point (dies a quo) of the limitation period could prove more delicate. Under general principles, the limitation period for an action for annulment runs from the day on which the holder of the action knew or ought to have known the facts enabling it to bring its action. Yet it is not certain that the tenant will necessarily be informed of a sale made in breach of its right of first refusal, particularly if that sale does not bring about any immediate change in its relationship with its landlord.
In particular, the question arises whether the mere fact that the tenant continues to pay rent to the new owner amounts to sufficient knowledge of the sale to start the limitation period running. In the case decided, it was the notification of a new proposed sale by the purchaser in June 2020 that revealed to the tenant the existence of the earlier 2017 sale. However, the French Supreme Court did not have to rule on this specific point since, even if the period were deemed to run from that disclosure in June 2020, the action brought in July 2021 fell within the two-year period. One may nonetheless consider the scenario in which a tenant discovers by chance, several years after its conclusion, a sale of which it was unaware and which had been concluded without respecting its right of first refusal. The strictness of the two-year limitation period could then deprive the right of first refusal of any effectiveness if the period were considered to run from the sale itself, regardless of the tenant’s knowledge of it.
More generally, this difficulty reveals the tension inherent in the right of first refusal between the aim of protecting the tenant, which justifies the very existence of the mechanism and its public policy nature, and the requirement of legal certainty, which calls for limiting in time the possibility of challenging a sale concluded between the landlord and a purchaser in good faith. Applying the two-year limitation period strikes a balance between these two imperatives, one that ultimately favours the stability of established situations over absolute protection of the tenant’s right. This balance is not without justification, since the right of first refusal, however important, should not indefinitely weaken the position of a purchaser who acquired the building in good faith and who could be compelled to return it following an action brought many years after the acquisition.
Finally, this judgment should be placed within the broader development of case law on the commercial tenant’s right of first refusal. Since its introduction by the Law of 18 June 2014, the mechanism has given rise to a relatively abundant body of case law that has gradually defined the contours of this new right. In particular, the French Supreme Court has delimited the scope of the mechanism by excluding court-ordered sales and sales made in the context of judicial liquidation (liquidation judiciaire), considering that these are sales “made by authority of the court” which fall outside the right of first refusal. It has also precisely defined the notion of premises used for industrial purposes, which are excluded from the right of first refusal, adopting a functional approach centred on the nature of the activity carried on and the role of the technical installations. The decision of 18 December 2025 forms part of this judge-made construction by adding two further building blocks: the clarification of the nature of the penalty and the determination of the limitation regime.
This development in case law reflects the vitality of commercial lease litigation and the need to constantly adapt legal solutions to the factual situations encountered in practice. It also illustrates the approach of the French Supreme Court when faced with a statutory text some of whose implications were not fully anticipated by the legislature. In the absence of any express statutory provision on the penalty applicable where no initial notification is given and on the limitation regime for the action for annulment, the Supreme Court constructs a coherent solution by drawing on the general principles of contract law and by articulating the various provisions of the commercial lease regime. This interpretative approach, which combines textual analysis, systematic legal reasoning and the search for a balance between the interests at stake, is a remarkable example of the normative function of case law in the grey areas of legislation.
The practical implications of this judgment are significant for commercial tenants and their advisers. On the one hand, the recognition that a sale concluded in breach of the right of first refusal is void confirms the effectiveness of this protective mechanism and the existence of a genuine remedy for the aggrieved tenant. On the other hand, the application of the two-year limitation period requires particular vigilance on the part of the tenant, who must act promptly as soon as it becomes aware of a sale made without respecting its right of first refusal. The brevity of the limitation period may prove formidable where the tenant is not immediately informed of the change of owner, particularly where property management continues to be handled by the same contacts or where rent continues to be paid in the same way.
The solution adopted by the French Supreme Court also calls for reflection on the litigation strategies available to a tenant whose right of first refusal has been breached. The action for annulment of the sale, as established by the judgment of 18 December 2025, is the main avenue, but it does not necessarily exhaust all possible remedies. One may in particular consider how this action for annulment interacts with any liability claims that the tenant might bring against the landlord for breach of its right of first refusal. Although such damages claims, based on contractual or non-contractual liability, are also subject to the two-year limitation period as actions brought under the commercial lease regime, they could nonetheless be of value where the action for annulment is time-barred but the loss caused to the tenant remains established.
