SET UP MEETING IN DUBLIN TO DO SOMETHING CONSTRUCTIVE ABOUT THIS SCAM

Hi Carol,

yes - I think the places to start are with EU consumer complaints process and getting an MEP on board.

You can search on the EU Parliament site for questions taken - search for 'french leaseback' to see questions and answers already brought on the subject by Irish/English MEPs:

http://www.europarl.europa.eu/portal/en

See this petition taken to the European Parliament back in 2008:

http://www.europarl.europa.eu/meetdocs/2004_2009/documents/cm/729/729685...

See EU Consumer site and process at http://www.eccireland.ie/

info@eccireland.ie

Directorate-General for Justice and Consumers postal address:

EUROPEAN COMMISSION
B-1049 BRUSSELS
DG Justice and Consumers

I think we need to be organised and have numbers and a common goal. We're all angry.

I have started building a site for this purpose - to survey to get statistics and to get owners to sign a petition - but it's still in build..

(it's started at www.frenchleaseback.info  and you can contact me by emailing 'sinead' at that domain.

Other Irish owners (at least 20) in my resort are each taking a legal case against 1) developer 2) notaire 3) bank. Their French lawyer advised they did not go down the political route as the French judge might react badly to any political interference.

But I have the details of the lawyer if anyone wants them - she's based in Toulouse and has perfect English.

see http://www.europarl.europa.eu/meps/en/search.html?country=IE for list of Irish MEPs - does anyone have any contacts ?

hi sinead @carol 

him hopping on this band wagon..

john

I think it will be a fruitless endeavour to sue the French government. France are a European super power and you will bury thousands of euros while they tie you up for years with their best barristers. I agree that it is better to go down the European route and let the EU Commissioners/MEPs who look after proper trading standards in Europe earn their money here. Inthe short term I think it would be wise for people to meet in Dublin to devise strategys to make life less nearable for the management companies. The starting point for anyone who is being currently offered a rent reduction is to refuse. Accepting this is buying into stage 1 of the scam.

If you search on 'leaseback' on http://www.europarl.europa.eu/portal/en you will see some questions taken by MEPs.

eg.

http://www.europarl.europa.eu/sides/getDoc.do?type=WQ&reference=E-2012-0...

I think you may have misunderstood me a little, I wasn't suggesting that anyone 'shouldn't' take any legal action, I was just trying to explain the experience of owners who have gone down that road and have taken legal advice in France.

A legal case is not the route I have decided to go down. If it was, then I would have joined the owners in my resort in their cases to cancel the sales contract from the very beginning.

I'm more interested in exploring the existing consumer and EU processes for dealing with these kind of issues.

And warning other owners and prosective owners.

There was recently, again, a piece in the Indo suggesting people invest in these properties (journalist Sinead Ryan). I think such pieces need a balancing perspective!

http://www.independent.ie/life/home-garden/5-alternative-ways-to-invest-...

apologies for typos in my last message, should read *strategies and *bearable. I agree with Sinead here.

Tried to give you a call yesterday Carol - I left my number if you want to give me a shout.

Absolutely, everyone is in a different situation.

Hello, I've come out the other end ie in leaseback on my own terms so below just personal view and individual owners setup and setup of resorts vary so no solution fits all needs.

Originally signed 12 year lease. Rent payments slowed down after 3 year but owners signed up to a 25% rent reduction which meant original rent paid for first 6 years and reduced for 18 months but then dropped to much lower level.

Lesson learnt: Never agree to a rent reduction as it lowers resale value of leaseback property ie value based on rental yield % written on lease so even if no or reduced rent only being paid in practice there is no point in amending lease if a new investor can buy at cheaper price based on lower rental yield written into lease.

We had a meeting with representative of French ambassador. Cordial but what can ambassador do? Main impact and involvement of the french government was the "back" in leaseback. The lease is part of commercial lease law but it was the fact that French government was paying "back" the purchase 19.6% TVA which made it attractive to buyers. Originally buyers had to sign a 9+ year commercial lease and in practice has to extend that lease to cover 20 years as TVA can be clawed back "pro rata" over that 20 year period.

In period 2008 - 2012 the French government came under pressure from European parliment petitions, legal cases etc and there is a "question mark" whether TVA(VAT) should ever have been charged on leaseback properties let alone claw back any of the TVA. For whatever reason government made law changes in 2010, 2012. The original requirement to sign a "commercial lease" was relaxed and you can now sign any rental contract once it contains 3 of the 4 "Residence de Tourisme" para-hotel requirements. These are 4 tourist-related serviecs "key handover", "meet + greet" "cleaning service" and "breakfast service". "Residence de Tourisme" status now just requires 55% of apartments in a complex to operate in a leaseback but owners signing rental contarcts yearly are still in leaseback and part of the 55%.

Although this may not suit every owner and not every resort setup, it in fact allows an owner to sign a yearly rental contract with anyone providing 3 of the 4 "Residence de Tourisme" para-hotel services and still comply with your accountant and french tax office requirements ie no need to pay back TVA as you are still in a leaseback but the lease renewed every year. Suits small local operators and owners themselves can market and rent if that suits. The beauty of that solution is you can sell "lease free". ie You can tell prospective buyer your 1 year lease expires in a few months so no need for buyer to take over any lease. This has a huge impact on resale value as you are selling freehold and new buyer does not have to take on a x year lease with reduced usage anbd fixed rent which just reduces resale value.

Ok big problem is still getting out of a lease but the tenant or operator may be willing to exit lease. Solutions above means this dosent need to trigger a TVA payback and could be a solution for many owners.

Bank defaults:
I know of 3-4 owners who have had to allow banks sell their apartments. The debt owed to bank by owner minus the sale price is not the final debt of owner in all cases. ie if you had an outstanding debt of 100k and was sold by bank for 50k, the bank will still charge all fee related to dealing with sales and could add their costs to debt. In one case bank tried to remaining charge debt via debt-collection agency but assume owner could ignore. Bank could issue a judgement which may mean owners credit worthiness in France is affected. Dont have much knowledge in area but one option is just to declare bankcuptcy in France but there are other posts on forums with more info in this area.

So my advice is to get out of lease if you can. This give you option to sell and group of owners could organise lettings. Alot of work involved and rent may be no better or worse than you are getting but you are in control and value not dragged down by a non-performing lease. All the Best

Macdara gives good advice here. I have been saying all long...NEVER accept a rent decrease, it is stage 1 of the scam. We didn't and the management company had no option but to fold.

I got out of my lease by forcing the management company into liquidation, a received was appointed and he cancelled the lease.

...that should be RECEIVER

Issued "commandement de payer" but counter sued by operator/tenant. Tenant wanted out anyway so most cancelled original lease. Some signed new commercial lease with new operator and some opted for yearly rental contracts and a few leases still with old operator. Major benefit as per first post is you can sell at full freehold value as new buyer not restricted by 9-12 year commercial lease as your 1 year rental contract will have expired by time your apartment sold. Getting out of lease and ability to sell freely of more benefit than protracted legal proceeding which may not have ended with a financial gain. Also made point in first post that no guarantee of increased rent outside commercial-lease but the ability to sell freehold when you want and have as much personal use as you want outweighs concerns re rental income for some owners.

Lesson No 2: Outside commercial-lease you are in full control with yearly rental-contracts but up to you or new smaller operator to generate rent. However you can always sell at market full value as buyer not taking on a commercial-lease and not lower value determined by rental yield on commercial-lease.

Carol, you can terminate any lease. The only question is, is it worth doing it for yours. It's a common sense issue. Most tourist leasebacks are significantly more valuable outside the lease. And for those that ant to manage personally they can still retain the LMNP/LMP status by providing 3 of the 4 leaseback services and not pay pack the VAT. For some leasebacks it does not make sense (retirement homes for example).

You can only end a lease within the lease if the mgt company breaks the conditions of the lease and only then if you follow the legal process i,e, issue a CDP etc.

Seamus

Listen to Seamus' advice here. We broke our lease by issuing a CDP and forcing the management company into liquidation via the proper legal route. We refused a rent reduction.

Macdara,

thanks so much for that - I was aware that owners without a lease were able to rent themselves (if providing 3 of the 4 services) and have not had to re-pay the VAT on purchase, but I was not aware that there was a change in the law in that regard. I thought the French revenue were just not pursuing people as long as they were continuing to rent and continuing to pay VAT on the rent. It's an area that has not been very clear and operators have taken advantage of this.

  "In period 2008 - 2012 the French government came under pressure from European parliment petitions, legal cases etc and there is a "question mark" whether TVA(VAT) should ever have been charged on leaseback properties let alone claw back any of the TVA. For whatever reason government made law changes in 2010, 2012. The original requirement to sign a "commercial lease" was relaxed and you can now sign any rental contract once it contains 3 of the 4 "Residence de Tourisme" para-hotel requirements. "

If you have any more information on the change in the law I would be very interested in it.

I totally agree, signing a new lease with a reduction in the rent is the worst thing to do. But many of us have done it (and in my case, an owners group was formed consisting of owners with business consultancy /accountancy backgrounds who advised on signing it - go figure!).

My goal is to get out of the lease. But they are paying rent according to the lease, but not paying the SYNDIC maintenance - so not as straight forward as issuing a Commandement de Payer for rent not paid.

Hi Sinead,
"commandement de payer" are issued when you want to collect any debt owed to you. Banks issue to owners before default proceeding etc. You probably could issue a commandement for unpaid syndic fee if your tenant was obliged to pay as per your lease. Using that strategy may depend on who your tenant is ie are they a big nationwide operator who are unlikely to go bust etc. If they are big then they may pay the syndic money owed so you could stay in lease and keep issuing commandements for money owed each year if operator unlikely to cancel lease.

Old links to page re 2010 budget not working but google "loi de finances 2010 france". Laws are set/amended as per budget each year so TVA rules related to LMNP leasebacks changed in 2010. If you find info my notes list relevant articles as 23, 85, 86, 87.

However in practice, I and others just ensure that our accountants OK with yearly rental-contracts signed. We have to make apartments available for tourist lets and collect 10% TVA and pay that TVA in CA-12 return but can claim TVA back on any related expenses also. So I am renting to tourists, collecting TVA from tourists, paying to French government but only difference is contract where operator providing me with 3 para-hotel services is under a yearly rental contract rather than a 9-12 year commercial lease. Reason I can sell without lease is the duration of rental-contarcts are just 1 year so new buyer is not taking over any rental contract. However a buyer buying an apartment with a commercial lease has to take over that lease for the duration of years remaining on lease. One difference between 2 is that owner selling freehold has to pay back purchase TVA pro-rata where as owners selling on commercial lease does not. However depending on rental yield on lease the sale with lease may be at a value much less than freehold. PM for more info

Does anyone know if the landlord (property owner) can increase the rent at any stage e.g. If renewing after 9 years etc?

Your rent increases are usually tied to some French INSEE index.

my property in le chant de oiseaux and in lease till 2021 -time is ticking -i have asked p&v for a list of my fellow neighbour and contact details with no avail -as ive said before ,im the only member on thus from my complex-anybody have any ideas how i could get this imformation -im sure they would be shocked if the new the extent of whats coming down the road-

john

P&V are know for the huge refurbishment bills they hit you with at the end of the lease. If I were in your boat I'd pay a solicitor to get the info if I was getting no joy, but as far as I know you are entitled to get a list of fellow members of the syndic de coproprietaires.