The different cases of termination of the rural lease at the initiative of the sitting tenant

Certain situations, particularly periods of economic uncertainty, may lead the current tenant to wish to terminate their agricultural lease before the agreed term.

 

 

A. Amicable termination of the agricultural lease: the importance of negotiation

The first way to terminate a rural lease before its term is to terminate it amicably by mutual agreement with the lessor.

In this case, the tenant who takes the initiative for this termination may request the landlord's agreement to terminate the lease.

This termination may occur at any time during the term of the lease.

The law does not require any specific formalities for this option; however, it is strongly recommended to record this event in writing, clearly and unequivocally stating the parties' agreement to avoid any future disputes.

Our firm can of course assist you with these procedures and with drafting a termination deed.

 

 

B. Grounds for termination of the lease by the tenant provided by law and case law

The tenant cannot in theory request the unilateral termination of the rural lease before its term.

Nevertheless, there are certain grounds provided by law and specified by case law that allow the tenant to terminate the current agricultural lease.

 

 

1. The grounds for termination provided by law

Article L. 411-33 of the Rural and Maritime Fishing Code provides for a few legal grounds on which the tenant may rely to request the termination of the agricultural lease from the landlord.

Termination will first be possible in the case of a work incapacity, serious and lasting more than two years.

Termination is also possible after the occurrence of a death.

The law provides that this incapacity for work or the occurrence of a death may affect the tenant directly or one of the members of his family whose work is essential for the operation of the agricultural holding.

In these two cases, termination is permitted when the operating conditions are significantly modified and raise concerns about impossible enhancement of the property in the future.

Also, when the tenant acquires a farm that they must operate themselves, they are entitled to request the termination of the lease from the lessor. Furthermore, a tenant who has reached retirement age is entitled to decide to terminate the lease.

The law of July 9, 1999[1], also allows the lessee, to whom the administration has opposed a refusal of operating authorization within the framework of the control of structures, to request the termination of the rural lease from the lessor to allow the lessee to bring their farm into compliance with the regional master plan for agricultural holdings.

Furthermore, Article L.411-30 of the Rural Code, I, also provides for the termination of the lease as of right when all the property subject to the lease has been destroyed.

Finally, case law has already allowed the termination of a rural lease when the partial destruction of the property compromises the economic balance of the farm. (Cass 3rd civ Oct 12, 2011, No. 10-24338: in the case of destruction of vine stocks).

 

 

2. On what date will the termination of the rural lease occur?

If the event justifying the tenant's termination of the lease occurs 9 months before the end of the crop year, the termination will take place, at the tenant's choice, either:

• at the end of the current crop year,
• at the end of the following crop year.

If the event justifying the termination of the lease occurs less than 9 months before the end of the crop year, the termination will only take effect at the end of the following crop year.

It should be noted that the tenant who reaches the retirement age used for agricultural workers' old-age insurance must give notice at the end of one of their annual periods following the date on which they reach the required age. This notice must be given to the landlord at least 12 months in advance.

 

 

3. What future for the rural lease of a farm placed in collective proceedings?

If the agricultural holding experiences major economic difficulties and is subject to a judicial liquidation procedure, Article L. 622-13 of the Commercial Code governs the termination of the lease under certain conditions.

Case law has however had the opportunity to specify that "the existence of financial difficulties cannot be considered a serious and legitimate reason justifying non-payment of rent" (Court of Cassation, September 7, 2022, No. 21-16.667).

It is therefore important to be cautious and to seek advice in case of difficulties.

It should also be noted that in the event of judicial liquidation, Article L. 642-1 paragraph 3 of the Commercial Code provides that: "When an asset package essentially consists of the right to a rural lease, the court may, subject to the outgoing tenant's rights to compensation and notwithstanding the other provisions of the farm lease status, either authorize the lessor, their spouse, or one of their descendants to take back the land for farming, or assign the rural lease to another tenant proposed by the lessor or, failing that, to any buyer whose offer has been collected under the conditions set out in Articles L. 642-2, L. 642-4, and L. 642-5"

 

A very recent ruling by the Court of Cassation on October 23, 2024, specifies that now, in the case of multiple leases, the court has the power to arbitrate between an allocation:

– to the proposed tenant by the landlord

– to the buyer who submitted an offer

The criteria for allocation are the maintenance of activities capable of autonomous operation, all or part of the jobs, and the settlement of liabilities.

However, if the transferred property consists of a single lease, priority is maintained in favor of the tenant designated by the lessor.

Do not hesitate to contact us if you encounter any difficulty or if you need your offer to be defended before the Tribunal.

 

 

4. Other possible cases of lease termination by the sitting tenant

The list in Article L 411-33 of the Rural Code is not exhaustive as the tenant is recognized other grounds for unilateral termination, such as the consolidation of the leased property (Art. L. 123-15 of the Rural Code), expropriation of the leased property, destruction without reconstruction of the leased property (Art. L. 411-30 of the Rural Code).

Also, pursuant to certain provisions of the Urban Planning Code, the tenant may request the unilateral termination of the agricultural lease from the holder of the urban pre-emption right who exercises their right (Art. L. 213-10 of the Urban Planning Code).

 

 

5. Can the tenant abandon the cultivation of the leased plots?

Warning! The tenant who abandons the operation without justifying a legal reason or their current economic difficulties is required to compensate the landlord for the damages resulting from the lack of maintenance of the plots.

Communication with your landlord is therefore essential and the judge may take it into account in case of difficulties.

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Do not hesitate to contact our specialized teams in rural law to advise you on the best strategy to adopt depending on each situation to request the termination of the rural lease. We will be by your side to support you throughout the negotiation and the termination request.

[1] Law No. 99-574 of July 9, 1999

 

Written by Henri VERCASSON and Raoul SEBASTIEN