Tourist residences: “subrogation” clauses in commercial leases do not deprive the owners’ association of its right to act

In a published decision dated 22 May 2025, the French High Court confirmed an important principle regarding tourist residences operated under commercial lease structures: clauses inserted in favour of the operator do not deprive the owners’ association of its independent right to bring claims relating to common areas of the building.

In this case, several tourist residences operated by Pierre & Vacances were affected by construction defects, notably involving external emergency staircases.

The owners’ associations initiated proceedings and sought a judicial expert appointment in order to obtain compensation for defects affecting the common parts of the properties.

However, the Chambéry Court of Appeal had declared the claims inadmissible.

The Court of Appeal considered that the co-owners had, through the commercial leases, subrogated the operator to their rights and claims against the developers and insurers, thereby preventing the owners’ associations from acting directly.

The French Supreme Court overturned this decision.

The Court recalled that a co-owner cannot transfer more rights than he or she actually owns and held that:

• neither the existence of a single mandatory operator under French tourism regulations;
• nor the subrogation clauses contained in the commercial leases;
  could deprive the owners’ association of its own right to act in order to protect the building and seek compensation for damage affecting the common areas.

In other words, even in French leaseback and operated residence structures, the owners’ association retains an independent right of action regarding common parts of the property.

This decision is particularly important in current tourist residence disputes, where operators sometimes attempt to rely on commercial lease clauses in order to restrict claims brought by co-owners or owners’ associations against developers, contractors or insurers.

The French High Court clearly confirmed that contractual mechanisms contained in commercial leases cannot override the statutory rights attached to co-ownership law.

(French High Court (3rd Civil Chamber), 22 May 2025, No. 23-19.544.)