Summary
A security deposit in a French commercial lease is not mandatory unless the lease provides for it. However, since Law No. 2026-403 of 26 May 2026 on the simplification of economic life, sums paid as security by the tenant of premises referred to in Article L. 145-32-1 of the French Commercial Code may not exceed the amount of rent due for one quarter. This cap also applies to the value of any assets, securities, commitments and guarantees of any kind requested to secure the proper performance of the lease.
The security deposit must be returned within a reasonable period, which may not exceed three months from the handover of the keys, either in person or by registered letter with acknowledgement of receipt, to the landlord or to the landlord's representative. Such return is made after deduction, where applicable, of any sums still owed to the landlord and any sums for which the landlord may be liable in place of the tenant, if they are duly justified.
The security deposit in a French commercial lease is one of the most sensitive issues in the relationship between the landlord and the tenant. Its amount, payment terms, conditions for return and possible deductions at the end of the lease are frequent sources of disputes.
A commercial lease is a contract under which an owner, referred to as the landlord, makes premises available to a tenant, referred to as the tenant or lessee, for the operation of a commercial, craft or industrial business. It is a synallagmatic contract: each party owes obligations to the other. The tenant's essential obligation is the payment of rent. Commercial leases are governed by Articles L. 145-1 et seq. of the French Commercial Code. They are characterized by a minimum term of nine years and by a right of renewal in favor of the tenant.
For most businesses, a commercial lease is a major asset: the premises determine the customer base, the business image and day-to-day operations. The legal stability of the lease enables the tenant to invest, build up a customer base and enhance the value of its business.
The security deposit is, in principle, paid when the lease is signed, at the same time as the first rent payment. Its purpose is to secure the tenant's performance of its lease obligations, including payment of rent, service charges and restoration of the premises. However, its return at the end of the lease is one of the most frequent sources of litigation.
It should be noted that the security deposit is not the only form of security available to the landlord. The landlord may also rely on the termination clause provided for under Article L. 145-41 of the French Commercial Code, on an ordinary claim for payment, or on the landlord's privilege over the movable assets located in the leased premises. This article focuses on the most common mechanism: the security deposit, its payment terms and, above all, the conditions governing its return.
The following points will be examined in turn: whether the security deposit is optional, its amount, alternative forms of security, the issue of interest, its relationship with the inventory of fixtures, the conditions and timeframe for return, authorized deductions, the fate of the deposit in the event of a change of party or insolvency proceedings, and finally disputes concerning its return.
Is There an Obligation to Pay a Security Deposit in a French Commercial Lease?
This is one of the first questions a tenant asks when signing a lease: am I really required to pay a security deposit in a French commercial lease? The answer is essential to understanding the entire legal framework, which is primarily based on what the parties have provided in the lease.
The payment of a security deposit is not mandatory in a commercial lease. It results from the parties' agreement. However, where the lease concerns premises referred to in Article L. 145-32-1 of the French Commercial Code, sums paid as security by the tenant may not exceed the amount of rent due for one quarter.
This cap applies not only to a cash security deposit, but also to the value of any assets, securities, commitments and guarantees of any kind requested to secure the proper performance of the lease. The landlord may therefore not circumvent the statutory cap by replacing the security deposit with another guarantee of a higher amount.
These new provisions relating to the cap on guarantees apply to leases entered or renewed as from the promulgation of Law No. 2026-403 of 26 May 2026.
The parties therefore retain contractual freedom, but that freedom must now be exercised within the limits set by Article L. 145-40 of the French Commercial Code for the premises concerned. This development reinforces the importance of drafting the security deposit clause in the commercial lease clearly and precisely.
What Is the Amount of the Security Deposit in a French Commercial Lease?
Once the principle of a security deposit has been accepted, two practical questions arise: how much must be paid, and under what terms? Since the entry into force of Law No. 2026-403 of 26 May 2026, the answer depends on the nature of the premises concerned.
In practice, the amount of the security deposit traditionally corresponded to one rent period when rent was payable in advance, or two rent periods when rent was payable in arrears. It was generally calculated on the amount of rent excluding VAT.
From now on, for premises referred to in Article L. 145-32-1 of the French Commercial Code, namely premises intended for the exercise of a retail or wholesale activity, or commercial or craft service activities, sums paid as security may not exceed the amount of rent due for one quarter.
The same applies to the value of any assets, securities, commitments and guarantees of any kind requested to secure the proper performance of the lease. The cap must therefore be assessed globally, considering all guarantees requested from the tenant.
The amount of the deposit may still be negotiated. It varies depending on the size and nature of the premises, the tenant's financial strength, the age of its business, the state of the local rental market and the scarcity of the location. However, this negotiation must now comply with the statutory cap applicable to the premises concerned.
The payment terms are also governed by contractual freedom. A commercial lease may provide for a single payment upon signing or payment by instalments. It may also provide for the deposit to be adjusted in line with rent, upon three-year rent review or lease renewal. However, any adjustment clause must be compatible with the statutory cap where it applies.
It should also be recalled that, where the deposit is paid by cheque, the landlord may cash it immediately, even if the parties had agreed to deferred payment, since a cheque remains a payment instrument, including when it is delivered "as security" (Cass. 1st Civ., 6 January 2011, No. 09-71.400). A tenant wishing to avoid immediate cashing should therefore arrange another form of security, such as a bank guarantee or an autonomous guarantee, within the limits of the applicable statutory cap.
The Third Civil Chamber of the French Court of Cassation has also clarified that a security deposit exceeding the statutory threshold does not have the effect of reducing the rental value and therefore cannot, by itself, justify a reduction in the renewed rent (Cass. 3rd Civ., 7 May 2025, No. 23-15.394). In other words, where the tenant has a right to interest on the excess amount, the tenant may claim such interest based on Article L. 145-40 of the French Commercial Code, but cannot also require a reduction in the renewed rent on that ground alone.
What Are the Alternatives to a Security Deposit in a French Commercial Lease?
A cash security deposit is not the only option. Other mechanisms may replace it or be added to it to provide the landlord with at least equivalent security without immediately tying up the tenant's cash. This issue is relevant both to tenants wishing to preserve their cash flow and to landlords wishing to strengthen their guarantees.
A cash security deposit, paid directly to the landlord, is the simplest and most generic form of security.
A bank guarantee, which must be distinguished from an autonomous first-demand guarantee, is an undertaking by a banking institution to guarantee, according to the terms of the instrument, payment of the sums owed by the tenant in the event of default. The conditions under which such guarantee may be called depend on its precise wording. It is particularly common for high-rent premises.
In practical terms, the tenant applies to its bank, which issues a written undertaking in favor of the landlord. In the event of the tenant's default, the landlord may call the guarantee in accordance with the terms of the instrument, and the bank may then, where applicable, have recourse against the tenant under the agreed terms. The advantage for the tenant is that it avoids tying up several months' rent. The cost lies in the annual bank commission and, most often, the pledge of an account or assets as security for the bank.
A personal suretyship, governed by Articles 2288 et seq. of the French Civil Code, is a mechanism whereby a natural or legal person, separate from the tenant, undertakes to the landlord to perform the tenant's obligations in the event of default, within the conditions and limits set out in the suretyship instrument.
This mechanism is quite common where the tenant company has just been incorporated and does not yet have sufficient financial substance: the landlord then requires the personal commitment of the manager or a shareholder. The implications of such an undertaking must be fully understood: a natural person acting as surety commits his or her personal assets and may, in the event of the tenant's unpaid debts, be sued by the landlord up to the guaranteed amount.
Since the reform of French security law resulting from Ordinance No. 2021-1192 of 15 September 2021, the formal requirements applicable to suretyship have provided greater protection to sureties. A natural person acting as surety must personally include the statement required by Article 2297 of the French Civil Code, indicating that he or she undertakes as surety within the limit of an amount expressed in figures and in words. A suretyship granted by a natural person to a professional creditor must also be proportionate to the surety's income and assets; if, at the time it was entered into, it was manifestly disproportionate, it may be reduced under the conditions set out in Article 2300 of the French Civil Code. The creditor is also subject to an annual information obligation under Article 2302 of the French Civil Code.
An autonomous guarantee, provided for by Article 2321 of the French Civil Code, is an undertaking whereby "the guarantor undertakes, in consideration of an obligation entered into by a third party, to pay a sum either on first demand or in accordance with agreed terms". It is an undertaking independent from the main contract. In practical terms, unlike a suretyship, the guarantor may not invoke against the beneficiary defences arising from the lease: the guarantor must pay once the formal conditions for calling the guarantee are met, except in cases of fraud or manifest abuse. It is a highly effective tool for the landlord, but burdensome for the guarantor, which explains why it is mainly used between sophisticated economic operators.
Since Law No. 2026-403 of 26 May 2026, where the lease concerns premises referred to in Article L. 145-32-1 of the French Commercial Code, the cap does not apply only to a cash security deposit. It also applies to the value of any assets, securities, commitments and guarantees of any kind requested to secure the proper performance of the lease. The landlord may therefore not circumvent the statutory cap simply by replacing the security deposit with an equivalent guarantee of a higher amount.
These forms of security are not mutually exclusive, but they must remain proportionate to the overall economics of the transaction and comply with the statutory cap where it applies. They must not be confused with a key money payment, or entry fee, which is not a guarantee but a sum definitively acquired by the landlord, most often in consideration of the conclusion or renewal of the lease.
Does the Security Deposit Bear Interest for the Tenant?
The issue of interest must now be addressed precisely, since Article L. 145-40 of the French Commercial Code distinguishes between several situations.
On the one hand, rents paid in advance, in any form whatsoever, and even as security, continue to bear interest in favor of the tenant, at the rate applied by the Banque de France for advances on securities, for any sums exceeding the amount corresponding to more than two rent periods.
In practical terms, this means that the landlord may hold, without paying interest, the equivalent of two rent periods paid in advance. Beyond that threshold, the excess portion bears interest in favor of the tenant, calculated at the rate applied by the Banque de France for advances on securities. This rule is mandatory: the lease may not exclude it.
It should nevertheless be noted that the "rate applied by the Banque de France for advances on securities", to which Article L. 145-40 of the French Commercial Code refers, has not been published as such by the Banque de France for several years. This obsolescence of the statutory reference criterion creates a genuine practical difficulty, regularly raised in legal commentary and litigation, without any clear normative solution having been established to date.
The concept of a "rent period" should be clarified. A rent period corresponds to the period for which the rent is due. If rent is paid quarterly, one period corresponds to one quarter's rent; if it is paid monthly, one period corresponds to one month's rent. Practical example: for premises with quarterly rent excluding VAT of €3,000, the threshold of two periods corresponds to €6,000. If the lease provides for a security deposit of €8,000, the excess amount of €2,000 above the €6,000 threshold must in principle bear interest in favor of the tenant until the deposit is returned, subject to the application of the new provisions specific to capped guarantees.
On the other hand, since Law No. 2026-403 of 26 May 2026, sums paid as security by the tenant of premises referred to in Article L. 145-32-1 of the French Commercial Code are capped at the amount of rent due for one quarter and do not bear interest in favor of the tenant.
It is therefore necessary to distinguish between rents paid in advance falling under the first paragraph of Article L. 145-40 of the French Commercial Code and sums paid as security for premises covered by the new statutory framework. This distinction is essential to avoid any confusion when drafting commercial leases.
What Protections Does the Landlord Have in the Absence of a Security Deposit?
This question is particularly relevant for landlords who agree, during negotiations, to waive a deposit, or for tenants who wish to understand what remedies remain available to the owner in the event of unpaid sums.
The absence of a security deposit does not deprive the landlord of all protection. The landlord has several complementary mechanisms available.
The termination clause, provided for by Article L. 145-41 of the French Commercial Code when stipulated in the lease, allows the landlord, after an unsuccessful formal demand, to have the lease terminated automatically. In practical terms, if the tenant fails to pay a sum due, such as rent, service charges or any other contractually payable sum, the landlord has a formal demand served by a commissioner of justice referring to the termination clause. If the tenant fails to comply within one month, the landlord may apply to the court for a finding that the termination clause has taken effect, opening the way to termination of the lease and, where applicable, eviction.
The landlord may also bring an ordinary action for payment of unpaid rent and charges, and rely on the landlord's privilege over the movable assets located in the leased premises. This privilege gives the landlord priority over certain other creditors in the event of seizure or sale of the tenant's movable assets located in the premises.
However, the absence of a deposit makes recovery later and more uncertain. In practice, it justifies strengthening the drafting of the termination clause and, where appropriate, requiring an alternative guarantee, within the limits of the statutory cap applicable where the lease concerns premises referred to in Article L. 145-32-1 of the French Commercial Code.
Why Is the Inventory of Fixtures Important for the Security Deposit?
Before discussing the return of the security deposit, it is necessary to address the inventory of fixtures: it is the reference point for assessing the condition of the premises upon exit and, consequently, whether any deductions from the deposit are justified. It is a formality that is sometimes neglected when the tenant takes possession, but which can be decisive when the tenant leaves.
Two moments must be distinguished. The entry inventory records the condition of the premises when the tenant takes possession: it is the "starting point" photograph, which will later make it possible to assess wear and tear or damage attributable to the tenant. The exit inventory is drawn up when the premises are returned to the landlord: by comparison with the entry inventory, it makes it possible to identify any breaches of the obligation to return the premises in the required condition.
Since 2014, Article L. 145-40-1 of the French Commercial Code has required a contradictory inventory of fixtures to be drawn up when the tenant takes possession of the premises, in particular upon conclusion of the lease, assignment of the leasehold right, assignment or transfer of the business, and upon return of the premises.
What Are the Risks If There Is No Inventory of Fixtures?
In the absence of an inventory of fixtures, the presumption laid down by Article 1731 of the French Civil Code, according to which "if no inventory of fixtures has been drawn up, the tenant is presumed to have received the premises in good tenantable repair and must return them as such, unless proven otherwise", cannot be invoked by the party that obstructed the drawing up of the inventory.
In practice, if the landlord has failed to take the necessary steps to draw up an inventory of fixtures, it will not be able to rely on the presumption of the initial good condition of the premises to justify deductions from the security deposit. Conversely, a tenant who obstructed the drawing up of the inventory will not be able to rely on its absence to escape its obligations.
In the event of disagreement when the inventory is drawn up, it may be established by a commissioner of justice, with costs shared between the parties.
Under What Conditions Must the Landlord Return the Security Deposit?
Once the lease has ended, the tenant naturally expects to recover its deposit. However, the return of the deposit is not automatically due the moment the lease ends: the security must first have lost its purpose.
Return of the deposit presupposes that the lease relationship has effectively ended. In practice, three cumulative conditions are required: the end of the lease, whether by expiry of the contract, amicable termination or judicial termination; the physical vacation of the premises; and the handover of the keys to the landlord or its agent, either in person or by registered letter with acknowledgement of receipt.
Since Law No. 2026-403 of 26 May 2026, Article L. 145-40 of the French Commercial Code provides that sums paid as security by the tenant must be returned within a reasonable period, which may not exceed three months from the handover of the keys to the landlord or to the landlord's representative, either in person or by registered letter with acknowledgement of receipt. Such return is made after deduction, where applicable, of any sums still owed to the landlord and any sums for which the landlord may be liable in place of the tenant, if they are duly justified.
Where the landlord has received guarantees of any kind falling within the scope of the statutory cap, the landlord has a period of six months to return them to the tenant. For this purpose, the landlord must carry out the necessary releases and return to the tenant all documents relating to those guarantees.
As regards transitional rules, the provisions relating to the return period apply to leases already in force on the date of promulgation of the law where the keys to the leased premises are handed over after the expiry of a period of three months following such promulgation.
Where the lease was granted to several co-tenants and only one of them gives notice, no reimbursement, even partial, may be required if the premises have not been effectively vacated (Cass. 3rd Civ., 21 November 1990, No. 89-14.827).
What Sums May the Landlord Deduct from the Security Deposit?
If the tenant has not fully performed its obligations, the landlord may be tempted to retain all or part of the deposit. However, this right is not unlimited: the deduction must correspond to an identified, justified debt attributable to the tenant. Most disputes arise precisely on this issue.
The lease should precisely list the sums that may be deducted from the security deposit. Commonly accepted deductions include unpaid rent, charges and rechargeable taxes, occupation indemnities due after the end of the lease, tenant repairs, restoration costs, as well as taxes, levies, fees or contributions expressly charged to the tenant under the lease, within the limits authorized by applicable law and subject to supporting documents.
Since Law No. 2026-403 of 26 May 2026, Article L. 145-40 of the French Commercial Code expressly states that the return of the deposit is made after deduction, where applicable, of any sums still owed to the landlord and any sums for which the landlord may be liable in place of the tenant, provided that they are duly justified.
These deductions are therefore not lump-sum in nature: they must correspond to the actual loss suffered or to sums due, and must be supported by documents such as invoices, estimates, reports or detailed statements. A lump-sum deduction made without supporting evidence is, in principle, open to challenge.
As regards the burden of proof, it is for the landlord to establish that the premises were not returned in the contractually required condition. It is then for the tenant to show, where applicable, that it is not responsible for the alleged damage (Cass. 3rd Civ., 28 January 2004, Nos. 02-11.814 and 02-14.429).
In addition, in the event of rescission or termination of the commercial lease attributable to the tenant's breach, the landlord is not required to return the security deposit immediately and in full. It may set off against the deposit any certain, liquid and due claims resulting from the tenant's default. It is also common for the contract to provide that, in the event of termination due to the tenant's fault, the landlord may retain the deposit as damages. Such a clause must nevertheless be handled with care: where it amounts to a penalty clause, it may be reduced or increased by the court if it appears manifestly excessive or derisory, in accordance with Article 1231-5 of the French Civil Code.
What If the Security Deposit Is Not Enough to Cover the Landlord's Loss?
The security deposit is not a cap on compensation. It merely facilitates immediate payment of part of the sums due, without extinguishing the landlord's other remedies. Where unpaid rent or restoration costs exceed the amount of the deposit, the landlord retains its ordinary legal remedies.
The security deposit is an instrument enabling the landlord to set off the sums owed to it. It does not limit the tenant's liability. Where the landlord's loss exceeds the amount of the deposit, the landlord may claim the balance from the tenant, by formal notice and then, if necessary, by legal action for payment. It may also call upon a surety or bank guarantee if one has been provided, or bring a contractual liability claim based on Article 1231-1 of the French Civil Code in order to obtain full compensation for the loss caused by the contractual breach.
The landlord therefore has every interest in quickly compiling evidence, including the inventory of fixtures, estimates, invoices, reports by a commissioner of justice and detailed statements, in order to quantify the loss accurately and properly support its claim.
What Is the Timeframe for Returning the Security Deposit in a French Commercial Lease?
Together with deductions, the timeframe for returning the security deposit is one of the most common sources of friction between landlord and tenant. Commercial leases differ significantly from residential leases on this point.
Since the entry into force of Law No. 2026-403 of 26 May 2026, Article L. 145-40 of the French Commercial Code provides that sums paid as security by the tenant must be returned within a reasonable period, which may not exceed three months from the handover of the keys to the landlord or to the landlord's representative, either in person or by registered letter with acknowledgement of receipt, after deduction of any duly justified sums still owed.
Where the landlord has received guarantees of any kind falling within the scope of the second paragraph of Article L. 145-40 of the French Commercial Code, the landlord has a period of six months to return them to the tenant. For this purpose, the landlord must carry out the necessary releases and return to the tenant all documents relating to those guarantees.
The provisions relating to the return period apply to leases already in force on the date of promulgation of Law No. 2026-403 of 26 May 2026 where the keys to the leased premises are handed over after the expiry of a period of three months following such promulgation.
This timeframe is generally explained by the landlord's need to inspect the premises, settle accounts, including service charge accounts, and assess any repairs. However, an excessive delay, not justified by serious checks or a genuine disagreement between the parties, may be challenged by the tenant.
What Happens to the Security Deposit in the Event of an Assignment of the Business?
A commercial lease is not necessarily fixed for its entire term. The tenant may assign its business, and the landlord may sell the property: in both cases, the question arises as to who must ultimately return the deposit to the final tenant. The rules differ depending on the nature of the transaction.
In the event of an assignment of the business by the tenant, the lease is transferred to the assignee under the conditions of Article L. 145-16 of the French Commercial Code, which deems unwritten any clauses prohibiting the tenant from assigning its lease to the purchaser of its business or undertaking.
In practice, the landlord keeps the deposit paid by the assignor, while the assignee takes over the tenant's contractual position under the lease. The economic reimbursement of the deposit must therefore be organized between the assignor and the assignee upon signing of the transfer deed: the assignee reimburses the assignor for the amount of the deposit initially paid to the landlord, which the assignee will then be entitled to recover from the landlord at the end of the lease, subject to any legitimate deductions. This mechanism should be expressly provided for in the transfer deed in order to avoid any subsequent difficulty.
What Happens to the Security Deposit If the Landlord Sells the Property?
The sale of the leased property raises an important question: must the security deposit be returned by the former landlord or by the new landlord?
Before the reform, case law considered that the original landlord remained, in principle, required to return the security deposit, unless an express stipulation provided for the transfer of that obligation to the purchaser (Cass. 3rd Civ., 28 June 2018, No. 17-18.100). This solution required particular vigilance when drafting the lease and the sale deed.
Since Law No. 2026-403 of 26 May 2026, Article L. 145-40 of the French Commercial Code now provides that, in the event of a transfer for consideration or without consideration of the leased premises, the obligation to return to the tenant the sums paid as security is transferred to the new landlord.
Where applicable, the transfer automatically renders void the guarantees of any kind requested to secure the proper performance of the lease. It also entails an obligation for the transferor to return to the tenant the related documents and to carry out the necessary releases within a period of six months.
This new rule relating to the transfer of premises applies to transfers occurring after the expiry of a period of three months following the promulgation of Law No. 2026-403 of 26 May 2026.
In practice, despite this new rule, it remains advisable to clearly organize in the sale deed the fate of the security deposit, the transmission of information to the new landlord and the information to be given to the tenant. This precaution helps avoid any difficulty when the deposit is returned.
What Happens to the Security Deposit If the Tenant Is Subject to Rehabilitation or Liquidation Proceedings?
The opening of insolvency proceedings against the tenant significantly changes the legal analysis: the traditional rules of the French Civil Code partly give way to insolvency law. The landlord and the tenant, represented by the relevant insolvency officer, must be aware of the main principles in order to avoid procedural errors.
The opening of insolvency proceedings, whether safeguard proceedings, judicial rehabilitation or judicial liquidation, does not automatically terminate the lease. In principle, the commercial lease continues, with the administrator, in safeguard or rehabilitation proceedings, or the liquidator, in liquidation proceedings, having the option to continue or terminate it under the conditions laid down by the French Commercial Code.
As regards the security deposit, two principles structure the analysis.
The Security Deposit Becomes a Contingent Restitution Claim
First, a security deposit paid before the opening of insolvency proceedings gives rise, in favor of the tenant, to a contingent restitution claim against the landlord, subject to any sums that may lawfully be set off against the deposit. At the end of the lease, this claim is exercised, as the case may be, by the administrator, the creditors' representative or the liquidator.
Set-Off Remains Possible Under Certain Conditions
Second, the landlord may, subject to the specific rules governing insolvency proceedings, seek set-off between the sum it must return and the claims it holds against the tenant under the lease, including rent, charges or indemnities, where those claims are connected with the obligation to return the deposit. Set-off of connected debts is admitted in insolvency proceedings, but it must be handled with care and is exercised under the supervision of the insolvency bodies and, where applicable, the supervising judge.
In practice, the landlord has every interest in declaring its claims within two months of publication of the opening judgment in the BODACC, in order to preserve all its rights. Where set-off is admitted, it is carried out under the supervision of the creditors' representative and, where applicable, the supervising judge.
What Can the Tenant Do in the Event of Wrongful Retention of the Security Deposit?
Where the landlord fails to return the deposit within the applicable timeframe and does not justify legitimate deductions, the tenant has several graduated remedies. The progressive use of these remedies is essential, both for procedural reasons and to establish compensable loss.
A formal notice is the essential legal prerequisite. It causes default interest to accrue on the sum due, pursuant to Article 1231-6 of the French Civil Code, which provides that damages due for delay in the payment of a monetary obligation consist of interest at the statutory rate from the date of formal notice. It also provides a useful starting point for establishing wrongful retention and preparing any legal action.
The formal notice must precisely identify the amount claimed, recall the date on which the keys were handed over, mention the disputed deductions, if any, and set a deadline for performance.
An action for return of the deposit is subject to a five-year limitation period, pursuant to Article 2224 of the French Civil Code, which lays down the general five-year limitation period for personal or movable actions. The starting point is generally the date on which the restitution becomes due, most often linked to the effective handover of the keys and the end of the lease relationship.
The Paris Court of Appeal recently recalled that wrongful retention entitles the tenant to interest on the retained amount from the date of formal notice and to damages for non-performance or delayed performance of the obligation to return the deposit (Paris Court of Appeal, 3 April 2025, No. 21/15834). The compensable loss may include, in particular, the cost of substitute financing borne by the tenant or damage to its cash flow, provided that such loss is proven.
Which Court Has Jurisdiction in a Dispute Concerning the Security Deposit in a Commercial Lease?
Before bringing a claim, it is necessary to identify the competent court. This seemingly technical question affects both the admissibility and effectiveness of the proceedings.
Article R. 211-4, 2° of the French Judicial Organization Code gives the judicial court jurisdiction over actions relating to commercial leases based on Articles L. 145-1 to L. 145-60 of the French Commercial Code. This jurisdiction is intended to apply to disputes concerning a security deposit where they arise directly from the performance or termination of a commercial lease governed by the commercial lease regime.
As regards territorial jurisdiction, the competent court is, in principle, the judicial court of the place where the leased property is located. In summary proceedings, an interim payment may be obtained where the obligation to return the deposit is not seriously disputed. Since subject-matter jurisdiction is a matter of public policy, the court may raise it of its own motion.
Conclusion
The legal regime governing security deposits in commercial leases has been substantially clarified by Law No. 2026-403 of 26 May 2026 on the simplification of economic life. Whereas this issue was previously governed to an exceptionally large extent by contractual freedom, Article L. 145-40 of the French Commercial Code now provides a stricter framework for guarantees requested from the tenant, their return and their fate in the event of a transfer of the leased premises.
For premises referred to in Article L. 145-32-1 of the French Commercial Code, sums paid as security may not exceed the amount of rent due for one quarter. This cap also applies to the value of any assets, securities, commitments and guarantees of any kind requested to secure the proper performance of the lease. Sums paid as security must be returned within a reasonable period, which may not exceed three months from the handover of the keys, subject to duly justified deductions.
The reform also secures the tenant's position in the event of a transfer of the premises by providing that the obligation to return the security deposit is transferred to the new landlord. However, the transitional rules must be considered, depending on the date on which the lease was entered into or renewed, the date of transfer of the premises and the date on which the keys are handed over.
For the landlord, a well-drafted clause makes it possible to deduct sums due from the deposit and limits the risk of having to compensate the tenant for unjustified delay in returning it. For the tenant, a precise clause ensures foreseeability as to the fate of the deposit and limits the landlord's unilateral discretion.
Mastering these issues requires, upstream, careful drafting of the lease and, downstream, a rapid and structured response in the event of difficulty. For both reasons, assistance from a commercial lease lawyer remains strongly recommended, both to anticipate risks and to effectively defend the interests of either party.
Article written on 1 June 2026 by Maître Tarek TERAS, avocat au Barreau de Paris and Doctor of Law, with the assistance of Célia AGNIER, holder of a Master's degree in law.