Life after Leaseback

If you read the forums here you will see that none of the above is likely to be possible...everything is an issue in leaseback. Pratcically all stories are horror stories and if not, they are horror stories in the making. You need to give a year's notice to terminate a lease and it needs to be done by a bailiff.

Trilson,

as per post from Juanazur it may be prudent to ensure current lease is cancelled using cancellation-notification from bailiff. Commercial leases usually need both parties to agree to cancel or terminate.

However if you exit the commercial lease you have options in my experience. If you bought mid-lease did you take over the previous owners TVA-purchase deal?

Original leasebacks meant owner could buy but received all the purchase-TVA(VAT) back once they signed a 9 to 12 year commercial lease. However they had to stay in a leaseback/lmnp setup for 20 years. If broken TVA had to paid back to french-tax-office pro rate ie If you got 20k TVA back at original purchase and you exited lease at year 10 then you paid 10k TVA back.

However laws surrounding leaseback/lmnp have changed so your options if you exited original lease and assuming you are liable to pay portion of purchase-TVA up to year 20 is as follows:

1. Just exit lease and stay outside leaseback/lmnp setup. You may be liable for TVA payback prorata but can sell your apartment freehold at market rates.

2. If others in complex signing new commercial leases then that is an option for you. Gain of guaranteed rent but difficult to sell as new buyer has to take over lease and hence value could be much less than selling without lease attached. No TVA issues

3. Sign yearly leaseback/lmnp contract with any entity such as small operator / cleaner who can provide 3 of the 4 hotel-services which were required in lease under original leaseback/lmnp scheme. The 4 services are 'meet+greet', 'provision of linen','cleaning on demand'.'breakfast'. Downside is that rent not guaranteed but you could generate your own rent using AirBnB. No issue with purchase-TVA payback once as you are signing a leaseback/lmnp compliant rental contract each year up to year 20 but not locked into a 9-12 year commercial lease where both parties need to agree to terminate

I'm currently in setup 3 above and sign rental contracts each yaer with someone who provides 3 of the 4 services which are the same that were provided in old lease. I find my own tourists using AirBnB and other channels and charge 10% TVA and pay in in CA12 TVA return each year. One other advantage of yearly contracts is you can still sell frehold as your yearly lease would have expired by time new buyer too over your apartment. 

Disadvantages may be way resort is setup . ie Are utilities split between all apartments? There is also a 55% requirement for resort to keep "Residence de Tourisme" status but apartments operating under 2 (commercial-lease) or 3(yearly 1 year leases up to year 20) are all part of the 55%.

Just quick addendum to previous post. 

Your position as a co-owners in the resort Syndicat de coprop does not change. Only criteria to being a member of Syndic of co-owners is you own an apartment in resort. You lease/ rental setup has no bearing on that and you have the same rights to shared pools etc but also have same responsibilies as per payments to syndic as before. Apartment utilities and how they are shared may be something to check. As per WiFi - if that was provided by the leaseback operator then you may not have access but if provided as a Syndicat de co-owners service, then you have access.

As per your comment "but all I'm seeing are horror stories of people being cajoled back into lengthy agreements." 

Yep that the kernel of the whole debackle - many owners still don't seem to realise they have choices. In my experience if you can get out of a commercial-lease - stay out as it is just a straight-jacket. Law change as per 3 in previous post is much more flexable while still meeting your leaseback/lmnp obligations. Takes a bit of work to find an operator but if you were planning to use AirBnB you would need a cleaner and someone to meet guests, provide linen so they are the perfect operator to sign your contract with as they are providing 3 of the 4 leaseback/lmnp compliant hotel-services. You then pass that contract to your accountant each year to ensure they give the green-light that it is a leaseback/lmnp compliant contract  so no purchase-TVA repayments.

They most certainly ask you for evidtion compensation upwarsd o 3 times their gross annual rent - so it is not a simple as described in the previous posts - were you made aware of this eviction indemnity when you purchased?

Suppose Q is whether any compensation you may need to pay to exit lease is worth it. Not sure what rental yield is on extension to your lease but generally a property sold without lease easier to sell and has higher value.  Selling may not be on horizon but having the freedom in years to come could be of benefit. As you say, check with accountant re TVA and bank sale. TVA based on origial price but if bought at lower amount at bank sale it is possible that TVA no longer applies. However you can sign yearly contracts with your local immobilier. Small operator/cleaner also an option if they are the people doing the linen-provision cleaning so cuts out immobiler charge. Contract just needs to be leaseback/lmnp compliant with 3 clauses to retain your leaseback status so payback of purchase-TVA is avoidable.

Any resort has to have a syndic to share common costs. How are apartment utilites charged? If the leaseback operators is utilising their apartments more than yours then utility bills are divided equally unless apartments have sub-meters. In current setup, operator CGH may be paying utility on all apartments but this couldnt apply if some apartments under another operator or others with no rental-contracts/lease in years ahead. Possible in that scenario that syndic may take over collection of utility charges. Do you get Syndicat convocation documents before Annual General Meeting each year? May be worth chasing down as syndic insurance covers any structural issues and insurance on common areas.

Trilson - we also have an apartment in a complex managed by CGH.  It will be interesting to hear what happens in your meeting.  However, I would be cautious of anything that you are told.  There are a few CGH managed Residences which have already come to the end of their initial lease period.  As far as I know, in one development an agreement for the next lease period had all but been reached when at the eleventh hour CGH pulled out and I believe the Owners Syndicate are now in the process of taking legal action.  All extremely time consuming an frustrating.

Our Owners Syndicate have had several tense email exchanges and meetings with CGH reps.  We have 3 years to go before our lease expires and it already feels as though battle lines are being drawn.  I hope I'm wrong and by then there will be a precedent set that we can all benefit from.  

I find it hard to believe that MGM/CGH would want the adverse publicity that all of this end of initial lease negotiations may generate - especially as MGM are still building and marketing Leaseback developments all over the Alps as a 'dream arrangement'.  If they are trying to attract potential buyers they are going a funny way about it if they are found to be shafting existing owners.

Your Residence manager should be able to put you in touch with your Owners Syndicate.

Out of interest, how did you buy at auction -  Was this in France or U.K.?  I haven't come across this method of buying/selling Leaseback properties.

Best wishes

Macdara - thank you for providing such detailed

information. You may already have stated this elsewhere;

but how did you get out of your lease?  That is the

first major hurdle. 

Thanks, grateful for any further info.

A few owners issue commandement-de-payer for unpaid rent. Sued by tenant but negotiated cancellation of leases before reaching court.

The answer to previous post re auctions: Many leaseback apartments sold at bank auctions due to mortgage arrears due to unpaid rent.  Sold at special court-auctions but new owner takes over lease.

Everyone has to realise that if they pull out they will probably do so owing rents - this is how these companies operate - steal your money ie unpaid rents, makes them solvent againand provides funds for new developments - it is one of the most crooked roundabout scams I have ever come across and what do the French Governement do about - if you are lucky you might get a Gallic shrug!

suppose thats the conundrum many owners face. You can issue commandement-de-payer to collect an outstanding debt from anyone including leaseback operator-tenant. However if they dont pay then ends up in court with costs for owners. If operator can prove they are not generating enough revenue to pay full rent then possible judge will not force them to pay full rent but may force liquidation of operator. Others on forum may have more knowledge as I and others issued commandement-de-payer but leases cancelled before getting to court. 

Original laws to setup leaseback/lmnp regime had flaws but all government can do is amend. The need for a commercial-lease was removed 2010, need to pay back TVA in a leaseback sale 2012 and 70% Residence de Tourisme lowered to 55% in 2015. Probably alot of scope to further improve. I have even been to a meeting with rep of French ambassador. Cordial but governments response always that owners puchase at their own risk. Interpretation of law including tax laws can change over time so nothing set in stone and a legal judgement in any case means existing laws have to be re-interpreted. Commercial lease and TVA law highly complex and beyond my expertise and probably beyond most on these forums. Your accountant always good to check any new rental-contract as if they think ok then should be no issue but there is never a 100% guarantee. My take is that commercial-lease just too onerous and weighted in favour of operator as they need to run a business and lease is integral to that - owners needs seem secondary. If you can get out of a commercial-lease where rents not being paid or idemnity-compensation too high then go for it in my view but very difficult in most cases as you are dealing with large operators with legal teams.

If you operator unlikely to liquidate think issuing commande-de-payer a definate option if rent owing. Have no knowledge re indemnity-compensation at end of lease term but other threads seem to cover that.

Our situation did not go the court, the liquidator cancelled the leases. I'd advise everyone to issue a CDP and insist that it is paid in full or have the lease cancelled legally. We didn't get as far as macdara as our entire building was bought at themarket price by an investor so we were lucky to escape with a minor loss. Macdara's feedback shows that you can use amemdments to the leaseback law to rent out the apartment yourself by providing services linen, meet and greet, cleaning etc. The biggest mistake many people make is accepting a rent reduction. We were offered the standard 50% reduction but we refused on mass...we then issued CDPs on mass at the same time ensuring that the full debt was due at the one time. We got the usual bullshit from the management company but we help firm. You have to play hardball with these guys.

Can we be sensible here - if you re not getting paid for God's put them out of business - doing nothing and living in hope will only cause you futher pain

also surely if you win your case against them all legal costs must be borne by the loser ie the fraudulent management company - lets all get real here get rid of them by fould means or fair - 

We did put them out of business, we had them liquidated...it didn't go to court.

This is my dream! We are going to attempt th esame thing in Jan

I've gone the same route as macdaras no 3 option taking control of the apartment myself and letting on airbnb. P&V decided not to renew and walked away. New company offered 50% rent reduction.

Count yourself as very, very lucky - there are many100's of owners out there who wish they were in teh same position

I think this is the way to go rather than selling at a loss...every owner in every development should try to find mechanisms to break the lease....people in the know will tell you that leasebacks are only valuable without the lease.

We have been sent a letter from.Goelia saying that our lease is due to terminate in oct 2017 and.we have to sign a form agreeing to this. As it is in french we are not completely sure whether they are looking for us to renew it again which we dont want to do or that they are not renewing and we need to find another management company. We intend to seek advice on this but we received an email today requesting the form back by friday 25th Nov we onlyreceived the document last week which is very short notice. They,seem to be pressurising us into answering them quickly but I have emailed them back and told them we are seeking professional advice.

Do not sign anything - email them that you are not renewing the lease follow this up by a regitsred letter, that has to be signed for, stating the same - if you sign this form you are probably committing yourself to another 9 years - you will then get a request 18 months after to accept a rent reduction - diplomatically tell them where to go

Joanne, pros and cons.

Option 1. Renew lease

Pros:

Advantage of renewing lease is you still get a guaranteed rental income but "operator" may push for a rent reduction

Cons: 

A commercial lease generates income for operator and both owner(you) and opertor need to agree at end lease term not to renew. Problem is if the operator wants to renew then owner has to pay the operator compensation (look at other posts but can be up to 3 years rent and may need to go before a judge to be set)

The "big stick" operators have always used to persuade owners to renew leases is that they make argument that purchase-TVA will have to be paid back if you do not renew lease. eg if you bought 10 years ago and got 30k TVA "back" on purchase then you are liable to pay 50% or 15k back if you exit commercial-lease in year 10.  So many owners renew 2nd commercial-lease to get to the 20 year TVA period but then may find that the operator wants to renew again and owner may be liable to pay compensation to operator at end of 2nd lease period in year 20.

However the french authorities rectified this situation in 2010 by removing the requirement for owners to sign commercial-lease(bail-commercial) with operators. Since 2010 you can sign any form of yearly rental contract once it include 3 of the original "leaseback" hotel services (cleaning,linen-provision,key-handover etc). That can be some with a tiny operator such as the person whi provides cleaning-service.

Option 2. Do not renew lease and sign yearly rental contract with small operator up to year 20

Pros:

You are in 100% control and can use apartment when you wish. Can find your own tourists for bookings. No TVA issues once you keep signing with small operator up to year 20.

Easy to sell freehold as contract end each year so new buyer is not taking over a "lease" which may devalue property

Cons:

No guaranteed rent. May be difficult to find small operator to sign contracts with. May be difficult to find tourists to generate rent.

Operator may look for compensation if you do not renew the original lease.

If most owners renew lease and you and a small number do not, then you may be at a disadvantage re sharing apartment utility bills in syndic etc.

Only other advice I have is there is very little professional advice available. Leaseback is a niche and info re "yearly contracts" being leaseback/lmnp compliant is a niche within a niche. Owners themselves and other owners and a handful of avocats who have fought these specific cases about the only advice availabe.

What I have noticed is owners continually belittle their own knowledge and fall for advice from "operators". Operators are running business and to maximise their earning they will always put owners at a disadvantage. 

Use OCR software or transcribe letter and translate using translate.google.com to understand letter initially. If they are not proposing a rent reduction then lease may have some merit but be mindful that you will likely have to pay compensation to operator at end if 2nd lease period if you do not want to renew then.  Always good to get in contact with as many owners in resort as possible.

I had opertunity to exit commercial-lease with no compensation to operator so I and a few others in our resort grabbed opertunity and now just sign yearly contracts wth a smal operator. No issue with TVA but no guaranteed rent either. Also had issue re utility charges. Some of those owners sold freehold also but remainder will hang on and have advantage or more personal use and alot of flexibility.

What was the nature of the opportunity of exiting the lease without having to pay compensation?

Sounds too good to be true!

You can have the lease cancelled by a judge if the company fails to pay your rent after a CDP is issued. This doesn't happen very often for a number of reasons:

1. The French system give management companies too much leeway

2. Many owners take the rent reduction offered by the management company because of the pressure to pay mortgages and get some money flowing into their accounts from Francce. This plays into the hands of the management companies and allows them to screw you in perpetuity. Leases could be exited on mass if every owner said no to a rent reduction as the company would have to pull out...you could then look at macdara's solution.

We said no in our development and the liquidator eventually cancelled our leases because we continuously said no (on mass) to any rent reduction. The small management company was liquidated and in the midst of looking for self-managed solutions (as described by macdara) an investor made an offer for the entire residence that we all accepted as we didn't want any more hassle. Fortunately the offer reflected decent market value.

Well said the situation in a nutshell - be strong do not give in

Very interesting thread but some pouints I'm unclear on

Macdara -as usual  you have given great info'. Maybe you've answered this already so forgive me....

QUESTION 1 If one breaks away from the main operator and operates solo D.I.Y. booking  what about the services  (e.g. reception, laundry,breakfast etc)that must be provided in order to remain qualified as a leaseback property with the VAT-free thing. ?  Who will provide the breakfast or any of the other services that are required  (I know you only have tto provide three so I use breakfast as an example).

If one does manage to divorce from the operator would not that operator be a bit peeved and say - you've gone solo so arrange your own stuff.

I have an apt in Residence du Parc nr Disney,Paris. Our proposed new lease is not as bad as others - 30% reduction but the company will pay full refurb of apt,furniture etc.

If I told the operator I'm going out on my own  I'm unsure how ,as an independent my guests would be treated by  the staff e.g. the reception who are employed by the operator. Who'd clean or provide laundry service? Even worse, would there be subtle sabotage from the company's staff on the premises?

It makes D.I.Y. renting seem a bit risky if one wants to operate short-term lettings as per the leaseback laws

I suppose I could return the ever decreasing VAT portion and go instead for easier and more proftable long term rentals, thus forgetting about the supposed services that I should provide -but I'd still be worried that the company managing the complex could be difficult.

QUESTION 2   I understand that a commercial tenant company is entitled to compensation if the owner refuses to renew the lease. This is part of French commercial law which gives security of tenure to the tenant.  Fair enough. But if that tenant wants a whopping 50% reduction in the rent which results in owner geting peanuts do the courts really award much compensation ,if any?  Does anyone know if there really has been compensation given to the leaseback tenants ? -or is it the case that we owners have been bullied into believeing they can be sued for large amounts and hence capitulate.  So, should one worry about being sued ?

Very interesting thread but some pouints I'm unclear on

Macdara -as usual  you have given great info'. Maybe you've answered this already so forgive me....

QUESTION 1 If one breaks away from the main operator and operates solo D.I.Y. booking  what about the services  (e.g. reception, laundry,breakfast etc)that must be provided in order to remain qualified as a leaseback property with the VAT-free thing. ?  Who will provide the breakfast or any of the other services that are required  (I know you only have tto provide three so I use breakfast as an example).

If one does manage to divorce from the operator would not that operator be a bit peeved and say - you've gone solo so arrange your own stuff.

I have an apt in Residence du Parc nr Disney,Paris. Our proposed new lease is not as bad as others - 30% reduction but the company will pay full refurb of apt,furniture etc.

If I told the operator I'm going out on my own  I'm unsure how ,as an independent my guests would be treated by  the staff e.g. the reception who are employed by the operator. Who'd clean or provide laundry service? Even worse, would there be subtle sabotage from the company's staff on the premises?

It makes D.I.Y. renting seem a bit risky if one wants to operate short-term lettings as per the leaseback laws

I suppose I could return the ever decreasing VAT portion and go instead for easier and more proftable long term rentals, thus forgetting about the supposed services that I should provide -but I'd still be worried that the company managing the complex could be difficult.

QUESTION 2   I understand that a commercial tenant company is entitled to compensation if the owner refuses to renew the lease. This is part of French commercial law which gives security of tenure to the tenant.  Fair enough. But if that tenant wants a whopping 50% reduction in the rent which results in owner geting peanuts do the courts really award much compensation ,if any?  Does anyone know if there really has been compensation given to the leaseback tenants ? -or is it the case that we owners have been bullied into believeing they can be sued for large amounts and hence capitulate.  So, should one worry about being sued ?

If you say no to a rent reduction the company has no choice but to pay you or else you can apply to the courts for a lease cancellation. They cannot look for compensation because you cancelled the lease was cancelled legally on the basis of non-payment or rent as per contract. The only way you will have to pay compensation is if you cancel the lease because you want to exit the leaseback scheme and the management company has paid all agreed rent up to date.

The law is crooked but you have to see where you can use it to your advantage. Why do you think a 30% reduction is not bad? It effectively reduces the value of your property by 30% with the stroke of a pen.

I never said a 30% reduction was not bad (except compared to other companies demands over the last few years).

Of course it's bloody bad ,even with free refurb of apartment/furniture thrown in.  Even though I know we've been offered a better deal than many leaseback owners elswhere I'm considering DIY . Hence my questions asking about ease of going solo in a complex where other owners (majority French) are going along with the company.

Basically I'm asking same question as OP, Trilson, but not sure he/she got an answer as regards the questions about how available/costly would be certain facilities.

Incidentally, has anyone come across a case of  owners who have actually won a case against rent reduction and the company went along with the court decison and carried on paying full rent?

Or, has anyone come across a case where another company stepped in and agreed to pay the full rent to the owners ?

From what I've read the usual story is that  those owners who are united and strong enough to resist a rent decrease can obtain "freedom" from the company, (usually by the company folding) but don't obtain a full victory as regards as retaining full rent.. 

Unless one is lucky enough to sell out at a decent price,  it seems that DIY renting is the usual alternative to accepting a rent decrease. (DIY meaning going solo or in conjunction with other owners to operate the business - neither option appealing to everyone).

I'm hoping someone can come up with a few examples of where, after a demand for rent reduction,  full rent has been reyained at little cost or hassle

Even if the majority of owners accept a rent reduction you don't have to...everyone has an individual lease. You won't find another company stepping in and offering to pay you full rent if your existing company can't. Accepting a rent reduction is the start of the slippery slope. What are your co-owners doing as a matter of interest? 

Owners split and/or undecided. Many, led by French owners council  (two-thirds owners French) say they'll fight it in court.  Others, mainly Irish/Brits,  split between accepting  or looking for ways out as I am (I've told my group to follow this site for info'/advice).  But many owners, whilst reluctant to accept offer, have no desire to D.I.Y .

I have apts in Ireland and USA  where I self-manage both long-term and holiday-lets . And I've been in travel business for decades. So I know, perhaps betetr than most of my co-owners how to get guests and can process everything .

What worries the few of us that are willing to D.I.Y. is how  to do so when our apartments are inside a block managed by the company with all staff employed by the company.

I could  say to the company - "look,Froggy,you can feck off with your new deal -from now on I'll look after guests in my apt and expect your staff to treat them like your own guests with no hassle- and I want you to tell me exactly the cost of providing me with such-and-such a service- oh, and I'm fitting my own electricty connection."  Frankly, I expect them to reply "Merde ,no chance."

It's the modus operandi running one or a few "rebel" apts in a complex that concerns us.  There may be more money in it - but there's a risk of stress and hassle.

That's why, increasingly, owners are looking to take a 30% reduction ,have their apts/furniture done up at no charge.

The alternatives that I've seen:- please,  anybody correct me if I am wrong or have missed something ...

1. Owners resist -insist on full rent - go thru the steps mentioned in many threads - matter goes to court OR company gives up/folds before going to court.

2. If it goes to court -and I gather it rarely does, or it doesn't go far into proceedings -the court may decide a compromise (or the company or guest may setle on a compromise.)

3.If it goes all the way through proceedings and the court tells company they must pay full rent - great, victory - but then the company goes broke.

4. In many cases where the owners resist the most they achieve is getting rid of the company. What then? They manage it themselves or get a company to do so . There is NO guarantee that the owners will make more money and maybe a chance they'll lose more than the crappy reduced offer.

5.And ,yes, there is the chance that they can sell out altogether to another company and recoup their investment. That would be great ,except we have tried to sell our complex  both on a complete sell-out basis or to other leaseback mangement companies - and none will offer more than the present company, that is at least very punctual in paying ,looks after the place ,provides full tax accouns service and gives us deals in their various oher properties.

My personal preference is to pay back VAT and make the apts normal long-term apts for French residents. I think we'd get far more rent and increase the value of the property.

However,at this stage I reckon most owners will decide that 70% and a few grand worth of refurb is easier than fighting this for uncertain vistory.

Sorry for blarney..

There's no issue with the DIY approach. You will still be a co-owner. The company currently managing the building will continue to currently manage the building and you will receive a co-ownership bill as normal. The only services your guests will not get is reception (I get by this by putting the key in a key safe at the apartment). Your local management company will look after your apartment. The only issue I see is with the electricity. You will either install your own meter or continue to pay the co-owners share. If you install your own meter you will pay a reduced co-owner's bill (you'll just have to struggle through the admin for this and ensure the building mgt company deducts your apartment cost).

You also state that the mgt company "provides a full tax accounts service". Do you mean that they actually prepare and send your tax return and if so do they charge you for this?

Seamus

The company won't go broke if you are the only one they have to pay full rent to (after everyone else has taken the 30% reduction). Listen to Seamus, he is the expert here...if he says it can be done then this is the case.

SORRY - unclear on a couple of points...

1,.. "you will continue to receive a co-owners bill as normal "

Like all owners I'm responsible for a share of the capital expenditure - basically repairs and replacement of things- structural, window frames, lifts etc whilst the tenant -the lessee pays for  maintaining premises in a good state of rental repair and small repairs within the meaning of sections 1720/1754 of the French Civil code (which i read every night in bed). 

Whilst as a co-owner I continue to pay those usual costs surely I should now also pay a contribution to the compamy for the cleaning of , plus heating and lighting in,  the common areas,  Also, the maintainance of ,say, the lift or pool,  a share of the security costs(guards), minor repairs like broken windows, unpaid breakages by guests in common areas. These are costs that, as owners, we do not pay -it's up to the hotel to pay for its running costs. Our syndic , which  acts as the financial intermediary between owners and hotel company , never get involved in the hotel's own running costs.

I can't imagine the hotel company saying to me  with my own guests, "sure, you don't have to pay a  penny towards us keeping the hotel looking spick and span and maintaining services that your private guests use. "

So, really, I wouldn't continue to receive bills "as normal".

(that's besides me paying for my apartment cleaning , sheets etc which obviously I'd pay separately for when going solo unless I reach an  amicable accord with the hotel

2. " you can  refuse to accept reduction"

Really? -

At lease end -or,indeed, periodically,-  both tenant and owner have the right to rent reviews . If the company can prove that the reduction is reasonable - especially by proving that no other company is willing to pay more than anyone else ( which is true)  then how can we legally refuse to accept a reduction? Remember , we can't reasonable refuse to extend the lease. If the reduction requested is deemed reasonable then one must accept the new rent or  break the lease and face a compensation claim.

These two more points that make me think the proposed deal may be better than the alternatives-and Seamus's question about tax accounts make me sway more that way... Seamus - the tenant company does all the French tax accounts; it's part of the deal.  I gather by your question this is not usual.

All "bail commercials" (the lease agreement) are different. But most are pretty similar. It seems that in yours it is specified that the management company pay for certain maintenance tasks in the building and that they do your tax return. If you exit the lease you will no longer have these conditions and as you point out you will have to pay the additional relevant running cost for the building and for your tax return. Most users pay a french accountant 350 - 450 EUR for the tax return. The reason I asked this specific question is that we are developing an online return. It has been in development for almost 2 years now but will be complete early in 2017 (early enough for next years return) and will cost 90 EUR. So this is another option you may want to consider.

Thanks to everyone for information provided. Re reclaiming apartment, somehow! and renting out on long term basis: in my understanding Residences de Tourisme can only be  rented out on a short term basis?  Is there a way around this?

Thanks for any insight into this further issue.

Argent, if you want to avail of not having to pay back VAT as macdara does then you will have to have short-terms lets. If you want it to revert to a classic property then you will have to repay VAT and use it as you wish. French law can be complex...if the complex is designated as Residence de Tourisme then getting a building within it designated as classic freehold will be probably at the discretion of the local council. We exploerd this option and we were told that it could be a slow process and we would have to purchase parking spaces because our building didn't have parking. A French solicitor will give you the best advice on this and may contact the local council on your behalf. The notaire you used may also give you free advice on this.

There are ways to rent longterm if you setup as a series or shortterm rents. ie renting monthly on airbnb - 9 month winter let+3 month summer let etc. In my resort the operator(tenant) also paid "syndicat  de co-prop" charges. Initially after exiting lease we signed yearly contarct with main operator in resort and actually has use of reception. However since them use small operator nearby so no longer have use of reception. No prob as 3 of the hotel services can easily be covered (keys,linen,cleaning). Resort never had breakfast service but this would be a service that a small operator without access to reception could not provide.

As Seamus mentioned, you are still a co-owner regardless of lease. In fact apartments have been sold in our resort and new owners have no need for RdT/TVA compliant bail-commercial or DIY-lease and are no different to other co-owners. However as soon as some owners move away from main operator then there is a dilema regarding old setup where operator paid co-owner syndicat fees. In our resort the main operator pays the co-owner fees for owners who have bail-commercial signed with them. All other owners pay their own co-owners fees. However Syndic has to take over apartment utility bills (electricity+water) as part of overall resort bill are no apartment meters. 

I'd differ slightly with Seamus re meters but in a resort where usage in bail-commercial and DIY-lease apartments broadly similar then no major issue. However main operator in our resort changed over to longterm rental (winter lets, 9+3months etc) which put DIY-lease owners at major disadvantage. Bail-commercial apartments wth 30-40 weeks utility usage against DIY-lease with 4-6 weeks getting same utility bills. DIY installing direct EDF meters just means you would pay for your apartment usage directly and sill pay portion of all apartment utility bills. Thankfully apartment electricity and water submeters managed by syndic are being installed after 2nd attempt at AG vote as originally rejected. However even with that dilema for 2 year, DIY-lease setup is far better to the straight-jacket of 9-12 year bail-commercial. Can sell at any time and use apartment when you wish.  

We had issue with former management company back in 2007/2008 where they stopped to pay us rentals. We issued the CDP, it went to court etc but Residhotel got away with it. We did not win..they won and are still operating at their other locations. They quoted our location in Les Deux Alpes as well as some other ski locations as being non-profitable. Looking back now we should have just sold then as freehold but instead ended up signing with a new management company where we are in our 3rd year and not having any issues .so far!!. Would love to get out but we are tied in to another 6 years with them. As will at the point have only a year left on the mortgage, will definitely want to exit and hopefully we can do this. In the meantime I have tried to sell as a leaseback without any luck. As we are now only getting approx. 2% yield, would need to  knock the price down considerably to have any chance of selling as would need at least a 4% yield. Would love it gone so now weighing up the best option. For now it seems best to wait it out for remainder of the lease and provide the legal application for exit one year in advance. Is this really straightforward? can I be confident I can exit?

Thanks,

/M

Sorry but you will still have to pay compensation to them

We are currently in the years notice period to exit the lease, after our initial lease period has completed ( revised under the safeguard)- we have been contacting the Management company to advise the date they are giving the keys back without success. Over 20 emails ignored.

We have instructed the solicitor who engaged the baliff to issue the break notices to the management company and the receivers, to write to them but fear we will be heading down the legal route! We are due to pay 1 quarters rent in the agreement but reading the various threads it seems the contracts we all signed may be over ruled by the Commercial Lease Law in France. They can chalenge our notices and I understand this could take 2 years minimum to resolve.

I dread that our dream of having a holiday home for our use in our retiremnt later this yearis going to turn into a nightmare! I wish wed left during the safeguard.

Has anyone else in the same position or has expereinced something similar to this?

Hi,

we are also coming up to the end of a 9 year lease.

Yes - my understanding is that commercial lease law in Franch overrides anything in the lease and the tenant/operator can demand up to 2 years of his turnover on the property in compensation (Éviction Indémnite).

I also do not wish to renew my lease (in fact I never want to sign a contract with anyone in France again !).

One option seems to be to offer them a lease that is advantageous to you, is not unreasonable compared to similar market rentals, but that you know they will not accept.

• If they do not formally reject it within a certan period, then it will be in force. If it's in force and they do not pay the applicable rent, then you 'should' be able to evict them.
• If they do not want to accept it, then the onus is on them to prove to a French court why.

It seems that if you tell them you are not renewing then the onus is on you to prove why you shouldn't have to pay compensation and they have 2 years to demand it.

But you need legal advice!

And with French law it seems that 'should' is always in the interests of the operator and not owners !!

also, I hope you have signed the petition and anyone who wants to get in touch with our campaign please contact me through form at www.frenchleaseback.info/get-in-touch

Petition:   https://www.change.org/p/eu-french-government-justice-for-hood-winked-owners-of-french-leaseback-properties

Hi everyone,

You are all saying that compensation is two years rental, this varies we have been quoted 3 years average gross rental turn over,

Times a coefficent number which can be any thing from 1 - 5  No one ever mentions the times number.

Why?Is this never mentioned, it totally changes the amount the management company charges for exit. Is it any where in French law that says they can do this?

You pay them nothing to exit if you force them to pay the original rent...accetpting the 50% reduction in rent is part 1 of the scam...if you do this then part 2 becomes possible...i.e. exit fee. If you enforce your CDP they have to pay otherwise get a judge to cancel the lease for non payment of rent.

Hi everyone thank you for the reply I know these things I just want to know if anyone else has had the exit fee timed by a coeffient.

Is this the Law or is it the management company.