Termionation of Lease by Management Comp

Thanks Laura  We are in same position as you.  Can anyone advise pls.  Monica O'Brien

I'm not experienced in this issue but I would think that your co-proprietors association should have seen this coming and have already started sourcing another manager offers.

Contact them and see what their strategy is as you will be stronger to negotiate as a group then as individuals.

I have read that several of the larger management firms are putting forth offers 25% less than previous terms in order to renew their leases.

It might be worth you contacting this solicitor.  Some of us owners at Les Alberes used him when Odalys/ SGIT Gestion were trying to push some changes through at a previous AGM which would have been detrimental to us.  He helped us out and speaks fluent English

Fabien Cordiez

Avocat à la Cour, Solicitor

_____________________________

19 rue de Montigny, 13100 Aix-en-Provence, France

UK Tel: 0207-148-5563   IRL: (01)-431-1301   FR: + 33(0)486-688-968 

fabien.cordiez@solicitor.fr   www.solicitor.fr

Member of the Law Society of England & Wales – n° 331485 - practising law as  Avocat member of the French Bar Association

New regulations came into force in 2010 whereby leaseback companies can no longer break the lease every three years. This however does not apply retrospectively thus if your leaseback was set up prior to 2010, the old rule still applies - subject to what your lease states however. I would need to see a copy of your lease and the break notice to advise whether you have grounds to challenge termination by the leaseback company.

Termination of the lease can have tax consequences for leaseback owners. VAT may be due on a pro-rate basis unless another company takes over from the existing one. Minimum ratios of owners joining in the new scheme apply though.

If no other mamagement company takes over, then this not only causes investors financial problems, but in addition the property's leaseback status and the condo's articles can sometimes be an obstacle to owners selling their former leasebacks as a second home.

Quite often, another management company ends up offering new rental terms, but these may be a lot less advantageous for property owners. Hence the reason any cancellation or break notice should be carefully reviewed, to find out whether in the first place the leaseback company is or not entitled to walk away after only 3 years.

Hi Fabien,

I would like to sell one of my leasebacks, our new management company wish to cancell our lease and renegogate a new one. Our agent has said this is a opportunity to sell without a lease and the property may sell quicker as a second home. I notice from your post that you mention "leaseback status and condo's articles can be sometimes an abstalce to sell a second home"what do you mean by this ? Thanks

You are correct in saying this can be an opportunity to sell without a lease and the property will probably sell quicker as a second home.

Part of the VAT saved on the purchase price may be due however, as the VAT exemption is subject to the property being leased for at least 20 years. Many leaseback properties are, under a planning angle, classified as 'holiday letting property', as opposed to residential property. This sometimes means the local planning officer will object to such property being turning into a straightforward second home.

Moreover, the articles of incorporation of the building's condominium - the 'reglement de copropriete' can set out the same restriction preventing leaseback properties from becoming standard residential property. This, where it happens, can put off a prospective buyer and is aggravated by the fact the notaire will no doubt draw the buyer's attention to the issue. This is the notaire's role!

I hope I do not sound too negative here. I just wish leaseback owners to be fully aware of all potential legal and tax implications.