Farming Licence Requalified as Tenancy
Tuesday 05 July 2016
Agricultural land licenced without charge to a local farmer has been requalified as a tenancy by a French court.
In past articles in the Newsletter we have pointed out the risks of allowing a farmer in France use of your land, on whatever informal basis. (See links below).
This is because a farm tenancy in France (bail rural) effectively grants the farmer a tenancy for life. Indeed, he can even pass it on to his family successors.
There are ways to allow a farmer use of your land short of a formal tenancy, but as a recent case in the French Supreme Court, the Cour de Cassation, amply demonstrates, it can come unstuck.
In the case a land owner agreed a licence with a farmer on several parcels on land for an indeterminate period.
The licence agreement was entitled a prêt à usage to distinguish it from a formal tenancy.
Such a licence grants the farmer free use of the land, without any sort of compensation payable to the owner.
Under the terms of the licence, it could be terminated by the landlord on one month's notice.
Although no fee or rental was payable, the agreement stated that the farmer would be responsible for the payment of any taxes due on the land.
However, the owners never implemented this aspect of the agreement, themselves taking full responsibility for the taxes payable.
They also benefited from a reduction in taxes, by virtue of the agricultural use of the land.
In due course the land owner duly served one month's notice on the farmer, who contested that the agreement was a licence, claiming that a formal tenancy was in place.
The fact that the licence made the farmer responsible for the taxes was a problem for the court, as this violated the principle that no compensation for use should be paid.
However, the Court of Appeal decided that as the taxes had never been reclaimed from the farmer, this aspect of the agreement had never been executed and the agreement could therefore be considered a mere licence.
This decision was overuled by the Cour de Cassation, on appeal by the farmer, who ruled that the mere fact the clause had not been implemented was irrelevent.
Accordingly, the licence agreement was judged to be a formal agricultural tenancy and the owners ordered to pay compensation of €3,000 to the farmer.