Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult qualified professionals before making decisions about your French property investments.
If you’ve ever had a tenant cling on past the end of their lease in France — or you’re worried about it — France’s Cour de cassation has just handed landlords some useful ammunition. In an arrêt dated 29 January 2026 (Civ. 3e, FS-B, n° 24-20.758), the Third Civil Chamber ruled that an indemnité d’occupation owed by a holding-over tenant can be deducted from the dépôt de garantie the landlord is legally required to return. And crucially, the tenant cannot block this deduction by arguing that the landlord’s own claim for the indemnity has become time-barred.
This sounds technical — and it is. But the practical upshot is meaningful, and the commentary is very clear in describing the decision as one that must be known by those operating in the sector.
A Quick Primer on the Players
French rental law, like most French law, loves specialist vocabulary. Three terms matter for this piece:
- Dépôt de garantie — the security deposit, intended (in the words of article 22 of loi n° 89-462 du 6 juillet 1989) to “garantir l’exécution de ses obligations locatives par le locataire” — to guarantee the tenant’s performance of their rental obligations.
- Indemnité d’occupation — the sum an ex-tenant owes if they stay in the premises beyond the end of the lease.
- Occupant sans droit ni titre — literally “occupant without right or title”. The legal label for an ex-tenant who has remained in the premises after the lease ended. (If that phrase rings a bell, it’s the same label attached to squatters — we dig into that separate regime in our guide to squatters’ rights and adverse possession in France.)
The Story: A Tenant, a Landlord, and a Month Too Many
The underlying dispute concerned a furnished residential rental — a bail meublé “résidence principale” (a detail that comes from the arrêt d’appel, Versailles, 23 janv. 2024, n° 21/06987). The tenant stayed one month beyond the contractual end of the lease, becoming, in the legal language, an occupant sans droit ni titre who had maintained themselves in the premises after l’échéance contractuelle.
After they eventually left, the tenant sued for the restitution du dépôt de garantie, plus pénalités de retard under article 22, al. 7 of the 1989 law. The landlord counter-claimed for the indemnité d’occupation covering that month of post-lease occupation.
The twist: more than three years had passed since the holdover by the time the dispute played out. The tenant argued the landlord’s claim for the indemnité was prescrite — time-barred — and that the deposit should be returned in full.
The Tenant’s Two Arguments
The tenant built their pourvoi (appeal to the Cour de cassation) around two axes:
- Only sums due under the bail can be deducted from the deposit. The indemnité d’occupation doesn’t arise from the lease contract — it arises from the fait juridique (a legal fact) of the tenant staying on after the end of their notice period. Therefore, the tenant said, it shouldn’t be deductible from the deposit.
- The cour d’appel had wrongly held that legal compensation (set-off) had taken place automatically between the two mutual debts. The tenant said the debts weren’t connexes — sufficiently connected — because one came from a fait juridique and the other from the lease itself. The reciprocal claims, the tenant argued, weren’t certaines, fongibles, liquides et exigibles. So compensation de plein droit couldn’t operate, and the landlord’s indemnité claim — brought more than three years after the holdover — was simply time-barred.
What the Court Decided
The Cour de cassation rejected the appeal “à bon droit” and sans ambiguïté — with full agreement and unambiguously. Translated, the holding reads: “The sums still owed to the landlord include the indemnité d’occupation payable by a tenant who maintains themselves in the premises beyond the end of the lease, with the result that a tenant suing for the return of the security deposit cannot invoke against the landlord the prescription of the landlord’s action for that indemnity” (Civ. 3e, 29 janv. 2026, FS-B, n° 24-20.758).
In plain English: if you sue for your deposit back, the landlord can carve out the occupation indemnity from what’s owed to you — and the fact that they might otherwise have been out of time to chase the indemnity directly doesn’t save you.
Why This Is a Big Deal
This is, to the commentary’s knowledge, the first time the Cour de cassation has extended this reasoning to a debt of indemnité d’occupation. In 2021, the same chamber had held that unpaid rent could be deducted from the deposit in the same way (Civ. 3e, 8 avr. 2021, n° 19-23.343). What had been left open was whether the same logic applied to debts born after the lease has ended — because the indemnité, on the tenant’s analysis, isn’t a lease debt at all.
The answer: it still counts. When article 22 of the 1989 law says the deposit secures the tenant’s “obligations locatives”, that phrase is to be understood as also including obligations born from the résiliation — the termination — of the lease.
Furnished or Unfurnished — It Doesn’t Matter
The case itself concerned a furnished residential lease, but the commentary is explicit that this is incidental. Article 25-3 of the 1989 law expressly makes the deposit rules of article 22 applicable to the bail meublé regime. The only practical difference sits in the deposit cap:
- Unfurnished (bail vide): one month (article 22).
- Furnished (bail meublé): two months hors charges — excluding charges (article 25-6).
If you’re running a long-term meublé — for example, for LMNP tax purposes, which we cover in detail in our LMNP guide for English-speaking investors — the 1989 law applies, and so does this ruling.
The Secret Weapon: Compensation and Prescription
The court didn’t use the word, but the concept underpinning its reasoning is compensation — the French term for legal set-off. Under the Code civil in the articles applicable at the time of the facts (articles 1289, 1290 and 1291, in their drafting before the ordonnance n° 2016-131 of 10 February 2016, and now articles 1348 to 1348-2), two people owing each other certaines, fongibles, liquides et exigibles reciprocal claims — certain, fungible, liquid, and currently due — see those debts extinguished automatically.
Since a 2005 revirement by the Chambre commerciale (Com. 30 mars 2005, n° 04-10.407), the rule is that legal compensation operates “de plein droit par la seule force de la loi même à l’insu du débiteur” — automatically, by the force of law alone, even without the debtor being aware of it. Its benefit can be invoked at any time. Crucially: prescription of l’excédent de la dette la plus élevée — the excess of the larger debt — is interrupted on the date of legal compensation, and the balance of the claim is not defeated by prescription at that date. Before the 2005 reversal, the position was stricter: a request for compensation had to intervene before the prescription period expired (Com. 6 févr. 1996, n° 93-21.627).
Applied here: by the time the tenant sued for the deposit, legal compensation had already taken place. Prescription had been interrupted at that date. The landlord’s claim survives.
What This Means for British Landlords
Two clean takeaways, drawn straight from the ruling and commentary — both particularly useful if you’re running things from abroad (see our guide to managing French property remotely):
- The indemnité d’occupation sits within the sums the deposit secures. If your tenant holds over and you eventually find yourself on the wrong side of a deposit-restitution claim, you can raise the occupation indemnity as a deduction — even if you would be time-barred from pursuing that indemnity directly.
- It applies to both unfurnished and furnished residential tenancies. The commentary is explicit that the bail meublé flavour of the underlying case is incidental. Article 25-3 of the 1989 law extends the deposit regime across both; the main practical difference is the cap (one month vs two months hors charges).
The commentary puts it bluntly: cette décision est très importante et doit être connue des acteurs du secteur — this decision is very important and must be known by practitioners in the sector.
The Bottom Line
For British investors holding residential rental property in France, this ruling is small-print but welcome. The Cour de cassation has extended to post-lease occupation the same logic it applied in 2021 to unpaid rent: what the deposit secures includes obligations born from the lease ending, not just those born during it. And thanks to the doctrine of legal compensation, the prescription clock can’t be run down in the meantime.
File it under “useful things the notaire doesn’t volunteer.” If you’re still in the buying phase rather than the landlord phase, our step-by-step guide to buying property in France covers how the bail and deposit machinery slots in from day one; and if you’re eyeing short-term lets instead, our complete Airbnb-in-France guide is the companion piece.
Frequently Asked Questions
Which court issued this decision and when?
The Third Civil Chamber of the Cour de cassation, on 29 January 2026 (Civ. 3e, FS-B, n° 24-20.758).
Is this the first ruling of its kind?
According to the commentary, this is the first time the Cour de cassation has extended to an indemnité d’occupation the reasoning it first applied to unpaid rent in 2021 (Civ. 3e, 8 avr. 2021, n° 19-23.343).
Does it apply to furnished tenancies?
Yes. The case itself concerned a bail meublé résidence principale, and article 25-3 of loi n° 89-462 du 6 juillet 1989 expressly extends the deposit rules of article 22 to furnished leases. The only practical difference is the deposit cap: two months hors charges for a meublé (article 25-6), against one month for a bail vide.
Why couldn’t the tenant rely on prescription?
Because legal compensation had already operated. Under the doctrine confirmed by the Chambre commerciale in 2005 (Com. 30 mars 2005, n° 04-10.407), compensation takes effect automatically, by the force of law, even without the debtor being aware of it — and prescription of the excess of the larger debt is interrupted on the date of legal compensation. The tenant suing for the deposit therefore cannot oppose prescription of the landlord’s claim for the indemnity.
