Avoiding Pitfalls relating to furnished and unfurnished French apartments other rental issues
Relatively well-off individuals (often husband and wife) residing in North America, Asia and the U.K. may wish to rent a Paris or other French “pied à terre” or retirement home in or outside Paris. Others may wish to rent a Paris or other French furnished or unfurnished apartment.
Laws applicable to Paris Rentals and other French Rentals
Periodically this office is contacted by lessees who have not be able to recover their lease deposit. That specific issue is addressed below under the heading: “L’état des lieux“.
If the to-be-leased premises are (a) to be a primary residence of the lessee and (b) the premises are not adequately “furnished” (table chairs, bed, etc.) by the lessor, many of the respective rights and obligations of the lessor and the tenant are set forth in the French Civil Code and Law 89 462 of 6 July 1989, which law provides the lessee with significant protection. Thus, many rights and obligations may not be freely fixed by the parties, as the laws of France significantly limit the rights of the parties to decide certain important issue.
However, if the to-be leased premises are (a) not to be a primary residence or (b) are “furnished” and leased for specific period of time, the lessor is generally free to seek to impose far more onerous terms and conditions.
Until proven wrong, assume that the fine print of the lease is unfair and will eventually end up costing the lessee thousands of unbudgeted euros, unless the fine print is negotiated, possibly with the assistance of French legal counsel. It is also advisable to give such counsel 10 days to conduct the negotiations, sinve rushed negotiations usually lead to a less favorable and fair results.
There is a French maxim that “no one is excused from not knowing the law”. Such maxim is of course applicable even to a lessee who does not read French. The primary goal of this article is to sensitizes potential lessees to certain rights and obligations of lessees in France and also certain common the traps.
When a short or long-term French rental is contemplated, it may be important to seek counsel with respect to a number of threshold issues which do not relate to either the amount to be paid each month to rent the apartment or house.
Bank Guarantee of Payment of Rent
When an American other non-French person wishes to rent a French apartment and and such person does not legally reside in France and is not employed by a company in France, French landlords at times require the tenant to not only pay a security deposit but also to provide a French bank guarantee covering the timely payment of 1 to 2 years of rent.
Assuming that the prospective tenant can obtain a French bank guarantee by posting with the bank sufficient collateral, the tenant must take care that the form of guarantee is fair and reasonable. As the text is usually in French, particular care is required. For example, if the guarantee permits the landlord to draw-down the full amount by simply demanding payment from the French bank (a “first demand guarantee”), there is a real danger that the landlord may at some stage take the money without proper justification and leave the tenant with the unenviable task of suing in a French court to recover the guarantee amount.
A tenant should not agree to supply such a one-sided guarantee. Rather, draw-down under the guarantee should be subject to the lessor obtaining an immediately enforceable court order. Thus, if the demand is not justified, the tenant has an opportunity to resist before the funds are drawn-down.
Given the cost of a bank guarantee (bank fees and legal counsel), it may be cost-effective to offer to prepay 6 or more months of rent. But even this “generous” offer may not be accepted, as lessors fear that the tenant may hold over without paying rent and skip the country after having run up an additional years unpaid rent. This is legitimate area of concern for landlords, as it is difficult and costly to have a tenant removed by the French courts and the French police and the process can take a year or more.
L’état des lieux
At such time as the tenant takes possession of the apartment and the keys and again when he surrenders the apartment and the keys, the lessor and the lessee (or their representatives) physically inspect the premises to determine the physical status of the apartment. A person not fluent in French should not embark on such exercise without being assisted by a professional who know the tenant’s rights and the tricks that may be played on the tenant.
The French legal framework relating to such inspections (called an état des lieux) is principally set forth in Articles 1730 – 1732 of the French Civil Code and Article 2 of the above-mentioned Law 89 462 of 6 July 1989.
Civil Code Article
Article du Code Civil
|Art. 1730. Where an inventory of fixtures has been made between the lessor and the lessee, the latter must return the thing such as he received it, according to that inventory, except for what has perished or has been deteriorated through decay or force majeure.||Art. 1730. S’il a été fait un état des lieux entre le bailleur et le preneur, celui-ci doit rendre la chose telle qu’il l’a reçue, suivant cet état, excepté ce qui a péri ou a été dégradé par vétusté ou force majeure.|
|Art. 173.1 Where no inventory has been made, the lessee is presumed to have received the premises in a good state of repairs incumbent upon lessees, and must return them in the same state, except for proof to the contrary.||Art. 1731. S’il n’a pas été fait d’état des lieux, le preneur est présumé les avoir reçus en bon état de réparations locatives, et doit les rendre tels, sauf la preuve contraire.|
|Art. 1732. He is answerable for the deteriorations or losses occurring during his enjoyment, unless he proves that they took place without his fault.||Art. 1732. Il répond des dégradations ou des pertes qui arrivent pendant sa jouissance, à moins qu’il ne prouve qu’elles ont eu lieu sans sa faute|
|Law 89 462 of 6 July 1989||Loi 89 462 du 6 juillet 1989|
|The lease agreement must be in writing. It must specify:||Le contrat de location est établi par écrit. Il doit préciser :|
|A [written] état des lieux effected in the presence of the parties at the time of the taking of possession and [again] the surrender of the premises and the return of the keys or, in the absence of a huissier, at the initiative of the most diligent party and with the costs shared 50:50, shall be annexed to the lease agreement. When one of the parties wishes to have the état des lieux, to be make by as huissier, seven days prior notice must be given to the other party by registered mail – return receipt. In the absence of an état des lieux, the presumption set forth in Article 1731 of the Civil Code may not be invoked by the party who made it impracticable to effect the état des lieux.||Un état des lieux, établi contradictoirement par les parties lors de la remise et de la restitution des clés ou, à défaut, par huissier de justice, à l’initiative de la partie la plus diligente et à frais partagés par moitié, est joint au contrat. Lorsque l’état des lieux doit être établi par huissier de justice, les parties en sont avisées par lui au moins sept jours à l’avance par lettre recommandée avec demande d’avis de réception. A défaut d’état des lieux, la présomption établie par l’article 1731 du code civil ne peut être invoquée par celle des parties qui a fait obstacle à l’établissement de l’état des lieux.|
|During the first month of the period that heating of the premises is required by law, the tenant has the right to request an état des lieux with respect to the heating.,||Pendant le premier mois de la période de chauffe, le locataire peut demander que l’état des lieux soit complété par l’état des éléments de chauffage.|
The reader will have noted that Art. 173.1 provides that ” Where no inventory has been made, the lessee is presumed to have received the premises in a good state of repairs”. Thus, may be important that the future tenant insist upon there being a professionally established état des lieux.
The reader will also have noted the reference to a huissier (bailiff). The participation of such a legal representative during the état des lieux can be most helpful in establish the physical facts, as he can take numeric pictures and note in his report the contemporaneous observations of the parties during the exercise. Such report is given significant weight in any French legal proceeding. But, the physical presence of huissier (bailiff) does not mean that the a tenant who is not fluent in French should forgo the assistance of a knowledge person at the time of the état des lieux..
Improvements Made by the Tennant
Unless the tenant has the prior written approval of the lessor, the tenant should not make structural changes or deform the premises. Too often, the desire of Anglo-Saxon tenants to upgrade the premises exposes them to unanticipated financial consequences. The following statutory provision is most illustrative. A written letter exchange should be envisioned before changing the carpet or embarking on more major changes.
Law 89 462 of 6 July 1989
Loi n° 89 462 du 6 juillet 1989
|The tenant is obligated||Le locataire est obligé :|
|Art. 7 f) not to transform the leased premises or the utilities [stove, sink, washing machines, etc.] of the lease premises without the written agreement of the owner. In the absence of such written consent, when the tenant returns the premises and the keys, the owner may at his election keep the improvements without paying any compensation or require the tenant to return the eased premises and the utilities to their original condition||Art. 7 f) De ne pas transformer les locaux et équipements loués sans l’accord écrit du propriétaire ; à défaut de cet accord, ce dernier peut exiger du locataire, à son départ des lieux, leur remise en l’état ou conserver à son bénéfice les transformations effectuées sans que le locataire puisse réclamer une indemnisation des frais engagés ; le bailleur a toutefois la faculté d’exiger aux frais du locataire la remise immédiate des lieux en l’état lorsque les transformations mettent en péril le bon fonctionnement des équipements ou la sécurité du local ;|
Disadvantage of Having a Person as the Lessor
If the lessor is a person (not a corporation), she/he has the right to force the tenant to vacate the apartment to provide lodging for himself or a member of his immediate family, provided that the landlord gives 6 month notice prior to the 3rd, 6th, 9th. 12th, etc. anniversary of the date that the lease. A commercial (corporate) landlord would have more difficulty exercising such option as it would need to meet a heavier “legitimate need” burden of proof standard to successfully exercise such an option.
Otherwise, the tenant has the right to renew the lease at the end of each lease term, subject to escalation in rent issues discussed below. A copy of the applicable law in French, Law 89 462 of 6 July 1989 can be consulted on line: http://www.legifrance.gouv.fr/texteconsolide/ACECQ.htm. The relevant Article is 15 I.l
Lessor decides to sell the appartment tenant’s right of first refusal
A lessor can sell a leased apartment even during the lease term. The lessor by formal notice delivered by a huissier (bailiff) notifies the tenant that the lease is being terminated, the lessor specifies the purchase price already negotiated with the third-party purchaser and advises the tenant of his right of first refusal. A tenant receiving such a notice who wishes to possibly exercise the option of first refusal should obtain counsel from a professional, as the law imposes are strict time limits and and formalities if the tenant wishes to exercise his right of first refusal.
The tenant has two (2) months to exercise his right of first refusal, which period is extended to four (4) months under certain conditions relating to a bank loan financing condition of purchase in favor of the third party purchaser. A tenant who fails to exercise his rights in within the time frames and in full respect of the other applicable formalities will irrevocably lose his rights of first refusal.
Notwithstanding the forgoing, if the lessor then proceed to effect the sale upon terms more advantageous to the third party purchaser than those previously notified to the tenant, the notaire is obligated to nullify the sale. (As the lessor may decide to notify the tenant of a revised offer, it is very important that the tenant notifies the lessor of the address to which a revised offer should be addressed, thus assuring the tenant maximum time to make and implement his next decision.
This article is scheduled to be revised to address a number of other important issue, including the following:
- Term of leases (furnished and unfurnished apartments),
- Taxe d’habitation”,
- Rental Increase,
- “Copropriété” (building expenses and improvements to be borne by the tenant ),
- Avoiding Prejudicial Default Judgments when Absent.