The head that holds is the one that was documented. The leasehold right is proved with market evidence; relocation costs are proved with invoices. Everything else is assertion.
1. The principle: refusal of renewal, and an indemnity
The commercial tenant's status rests on one strong right: the right to renewal of the lease. Where the landlord refuses that renewal, Article 7 of Law 49-16 lays down the rule of principle — the refusal opens the right to an eviction indemnity intended to make good the loss suffered by a tenant deprived of trading premises. It is the logical counterpart of a statute designed to keep a business in place over time.
The conditions of the protective statute still have to be met. For the detail — a commercial, industrial or craft activity actually carried on, entry on the commercial register, effective occupation, tacit renewal — see our guide to commercial leases under Law 49-16. Without the benefit of the statute, there is no eviction indemnity within the meaning of the law.
2. Who is entitled — and who is not
The indemnity is not automatic. Law 49-16 provides for cases in which the landlord may refuse renewal without having to indemnify. The line is drawn by the ground given for the refusal.
- Indemnity due — the landlord refuses renewal without being able to invoke a ground of exclusion: he would rather take the premises back for another use, re-let them at a higher rent, or simply stop letting. Here the indemnity of Article 7 is the rule.
- Refusal without indemnity — serious and legitimate ground (Art. 8): repeated non-payment, failure to operate the premises, unauthorised change of activity, breach of the terms of the lease — generally after formal notice that has gone unanswered.
- Refusal without indemnity — repossession, demolition, unfitness (Arts. 9 and 10): the landlord takes the premises back on the statutory conditions, demolishes for reconstruction, or the building is declared unfit. Depending on the case, counterparts may exist (priority right, rehousing) — to be checked against the texts.
One warning: invoking a ground of exclusion is not the same as establishing it. The eviction decision we analyse elsewhere on this blog shows that an uncertain regulatory project — a published development plan, for instance — does not release the landlord from the obligation to indemnify so long as no administrative act of dispossession has been made. The ground has to be real, documented and given effect.
3. The three heads of loss to be quantified
The eviction indemnity is meant to make good, in full, the loss arising from the loss of the premises. Law 49-16 structures the analysis around three cumulative heads, which the valuer has to cost separately:
- The value of the business, or of the leasehold right alone. This is the principal head — usually the heaviest part of the indemnity. The leasehold right is the tenant's proprietary right to remain in the premises; its value turns largely on the gap between the rent paid and the market rent, and on the pull of the pitch.
- Relocation costs. Removal, fitting out the new unit, new signage, and the transitional loss of trade while activity returns to normal.
- Commercial disturbance. Custom that does not travel, the loss of the reputation attached to a location, and the costs the break brings with it — depending on the situation, staff-related charges, for example.
How the total splits between these heads is never theoretical: it depends on the trade, on how deeply it is anchored locally, and on the nature of its custom. Which is why a lump sum expressed in « X years of rent » is, at best, an order of magnitude for framing a conversation — never a defensible valuation.
4. Why the leasehold right concentrates the stakes
In most files it is the value of the leasehold right that makes or breaks the indemnity. It is also the hardest head to put beyond argument, because it rests on market parameters: the level of the passing rent compared with the market rent, the time the lease still has to run, the quality of the pitch, the depth of the catchment. We set out how that value is built in our note on valuing a leasehold right and key money.
The logic is the same one that governs the valuation of any let asset, treated in our note on over-rented and under-rented property: a lease whose passing rent sits appreciably below the market rent creates, for the tenant, a leasehold value that is correspondingly larger. That is the value the eviction indemnity has to reconstruct — hence the need for a fine-grained analysis rather than a multiple applied mechanically.
5. The method: crossing two approaches
To quantify the loss defensibly, an appraisal consistent with RICS standards does not settle for a single method. VPS 3 of the Red Book requires the choice of method to be justified and, for an eviction indemnity, at least two approaches to be crossed with the weighting stated.
- The market approach. The valuer collects assignments of leasehold rights and of businesses observed in the sector, then adjusts them for pitch, floor area and the residual term of the lease. This is what anchors the valuation in the market.
- The income approach. The valuer applies a multiple to the earnings of the business. It comes to the fore where the business is inseparable from the premises — catering, hospitality, clinics — situations covered by VPGA 4 of the Red Book, which deals with trade-related property.
A useful distinction: the property valuer values the premises and the leasehold right; the value of the business as a going concern generally belongs to a separate assignment, often carried out by an accountant. The two pieces of work frequently run in parallel. For the general framework of our assignments, see our valuation methodology page.
6. What a decided case teaches about the quantum
The decisions analysed on this blog show concretely how the amounts are built — and how they come apart. In the Casablanca Commercial Court of Appeal decision of 2019, two lessons stand out:
- The leasehold right holds. It was the best-supported head and the one that was upheld; it made up the bulk of the indemnity retained. Once the value of the leasehold right is solidly documented, it withstands challenge.
- Relocation costs collapse without vouchers. Claimed at a high level, they were sharply reduced for want of probative material on the new premises. The lesson is direct: this head is not presumed — it is proved, invoice by invoice.
The conclusion is methodological. An eviction file is only as solid as its heads, taken one at a time. The value of the leasehold right must rest on comparables and a market analysis; relocation costs and commercial disturbance must be supported by concrete evidence. A report that folds everything into a single lump sum invites the quantum to be cut.
7. Settling the figure between the parties
Most eviction files are settled by the parties themselves, and that is where an independent appraisal obtained early earns its keep: it frames the negotiationand gives your position a costed, reasoned base. On the tenant's side it puts the real loss on the table; on the landlord's side it avoids both over-indemnifying and building a defence on fragile figures. Either way, the decision is better taken with a documented report than with an order of magnitude.
The scope of such a report should be stated plainly: it is documented and verifiable line by line, and it imposes itself on nobody — each party remains free to contest it, which is precisely what a line-by-line document allows. Where the disagreement is not resolved and the matter reaches court, the court appoints its own expert; the private report prepares the file rather than replacing that appointment. Cost: from 3,500 MAD excluding tax, report compliant with Red Book standards in 5 to 8 days (48-72 hours on the express service).
8. Instructing a valuation
Bring the lease and its addenda, the rent receipts, the notice refusing renewal, proof of entry on the commercial register and of the duration of operation, the accounts of the business, and — for the relocation head — every quotation and invoice relating to the new premises. The rest, market rent, comparable assignments, analysis of the pitch, we establish ourselves. Assignments are handled by RICS-certified experts in Casablanca, Rabat, Marrakech, Tangier, Fès and Agadir, and elsewhere in the country from our network. Reports comply with Red Book standards and are delivered in 5 to 8 days, 48-72 hours on the express service, with a firm quote within 24 hours, from 3,500 MAD excl. tax. What we cover on trading premises is set out on our retail property valuation page. ReaConsult has been advising owners, tenants and institutional clients since 2019, with more than 5,000 valuations completed, offices in 6 cities and a rating of 4.9/5 across 47 reviews.
A notice, a refusal to renew? Quantify the loss head by head before you negotiate.
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Note:the framework is set by Law 49-16 on leases of commercial, industrial and craft premises. The conditions on which the right to an indemnity arises, the cases of exclusion and the way the amount is settled are governed by the texts in force and their interpretation: confirm your own position with a specialist lawyer. No percentage, multiple or scale is quoted here — an eviction indemnity is built head by head, on the evidence of the file. A private appraisal informs a decision and an arm's-length negotiation; it is documented and verifiable line by line and imposes itself on nobody, and where a matter reaches court the court appoints its own expert. To instruct us, see our contact page or the property blog.