It is probably true to say that the majority of British buyers who purchase French real estate do so for their own use, either as a permanent or a holiday home, or for renting out for holiday lets (location saisonnière). Nevertheless there will be those who may wish to consider letting out their properties for a longer period or who may wish to rent a property to live in for a while before committing themselves to a purchase and a permanent move to France.
It is therefore worth considering the rules which apply to this type of residential lease. French law is generally very protective of the rights of tenants (both residential and commercial) and this can sometimes seem to be to the detriment of the landlord or lessor. In particular those who do choose to let out their properties in this way need to be very aware of the provisions of the law otherwise they may find that they are not able to take possession of their own property when they wish to do so.
The main body of law relating to the contract between landlords and tenants is contained in a law of 6 July 1989 which was most recently amended in March of this year. The provisions of the law are stated to be d’ordre public, that is to say that even if the lease contains a provision which is contrary to that which is set out in the law, the legal provision will override this and will still apply.
The lease for a residential letting must be in writing and must contain certain information including the name and address of the landlord, a description of the property being let, the date on which the lease will take effect, the amount of any deposit required and the amount of the rental, the method of payment and the rules relating to any future revision of the amount. A landlord may not benefit from the failure to comply with these requirements – a landlord cannot terminate a lease because it has not been properly drawn up, but a tenant may well be able to do so.
In addition to the lease, the parties should also agree an inventory known as the état des lieux and if this cannot be done by agreement, one or other of the parties is entitled to appoint a bailiff to draw up the état with the cost being split equally between the parties. The état des lieux will set out the state of the property and its furniture and fittings, and the tenant will be expected to return it in a similar state, subject to normal use.
As with property sales, the landlord is required to provide the tenant with a diagnostic technique. With effect from 1 July 2007 this must include an energy efficiency survey (similar to that required for the much-publicised home information packs here) and from 1 August 2007 a lead survey as provided by the public health code. It is also likely to have to contain a report relating to natural and technological risks.
Article 4 of the law contains a whole list of clauses which, even if they appear in the lease signed by both parties, will be considered non-écrite and will therefore be invalid. There is not scope to list all of these clauses here but they include any clause which would impose an obligation on the tenant to allow the landlord to be paid by direct debit or by a direct deduction from the tenant’s salary.
The article also limits the circumstances under which the landlord may terminate a lease because the tenant has failed to observe its terms. Although the law does allow a landlord to terminate the lease because the tenant has failed to pay the rent, this can only be done once the tenant has been given formal notice to pay and a period of two months during which to settle any amounts due.
The legal provisions of which a landlord will probably need to be most wary are those which relate to the duration and termination of a lease. A residential lease must be granted for a period of at least three years (six years if the landlord is a company). If neither party terminates the lease at the end of its term by serving the appropriate notice the lease will automatically renew for a further three (or six) -year period.
The tenant may terminate a lease at any point by giving notice to the landlord either by recorded delivery post or by bailiff service. Generally the tenant is required to give three months’ notice to the landlord but this may be reduced to one month in certain circumstances, notably if the tenant changes or loses his job or if the tenant is aged over sixty and needs to move for health reasons.
The landlord, on the other hand, may only terminate the lease at the end of the three-year period and must give the tenant at least six months’ notice of this. Furthermore the notice must give the reason why the lease is to be terminated. Unless there has been some serious breach of the terms of the lease by the tenant this may only be because the landlord wishes to reclaim the property for his own use or that of his immediate family or because he wishes to sell the property. If the reason given is the former, the notice must give the name and address of the person or persons who will have the use of the property.
If notice is given to the tenant because the landlord wishes to sell the property, the notice must give the price at which the landlord wishes to sell. The notice thereby effectively constitutes an offer to sell to the tenant at that price and the tenant has a pre-emptive right to purchase in preference to any other purchaser. The tenant has a period of two months from being served notice in which to exercise this right.
Exceptionally if the landlord knows that for professional or family reasons he will need to take possession of the property within three years then a lease may be granted for a shorter period but this cannot be less than one year. In this case, the lease must stipulate the ‘event’ which will entail the termination of the lease and when this occurs the landlord must give the tenant at least two months’ notice before the expiry of the lease.
This article contains only a brief summary of some of the main points of the law which can be a minefield for the unwary landlord. Whilst it is certainly the case that many more informal arrangements are entered into and terminated perfectly amicably, there is always the risk that, in the case of a disagreement, the tenant may invoke the very considerable protection which the law affords.