English
FrançaisDear All here is the following letter Brian Crowley MEP received when I asked him to take up the case of Leaseback. If the contents of the letter are true then it is quite disturbing…Seamus might comment. I have asked him to have this verified, I will update you all when I hear back.
In your letter, you draw the Commission's attention to recent changes made to French legislation regulating the leaseback scheme applicable to the purchase of properties in France. You mentioned that these modifications caused inconveniences to your constituents who have bought properties in France, and were therefore benefiting from this scheme.
I understand that the leaseback scheme allows the buyer of a property to benefit from a refund of VAT of 20%, under the condition that ownership of the property is maintained for a minimum of 20 years. The duration of the commercial contract with the management company in charge of renting out the property was initially set by law to 9 years, with the possibility to terminate it without incurring penalties after this deadline. It appears that a new law will result in retroactive changes to some of the terms of the existing contracts. Specifically, this new legislation will act to nullify the possibility to terminate the contract with the management company after 9 years. The new law stipulates that the commercial contract is now set for life, and that an early termination of this contract would make the owners of the property liable for a penalty of an amount which would exceed the initial benefit granted upon the purchase of the property by the refund of the VAT.
First of all, I would like to recall that, under the Treaties on which the European Union is based1, the European Commission has no general powers to intervene with the Member States. It can only do so if an issue of EU law is involved.
1 Treaty on European Union and Treaty on the functioning of the European Union
Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111 http://ec.europa.eu/dgs/finance/
From the information presented in your letter it could not be concluded that the amendments of French law regulating the aforementioned purchase scheme would infringe upon EU law.
Here is Brian Crowley’s reply to me:
Further to your recent contact regarding difficulties with leaseback properties in France, please find attached response I have received from the Directorate-General of the European Commission for Financial Stability, Financial Services and Capital Markets Union.
Unfortunately as I outlined earlier, the Commission confirms that these are issues of French national law and not under the competence of the EU.
The attached letter, in my view, restates the necessity of those affected engaging an English-speaking French lawyer to pursue their interests in France.
I understand this is not the response you were hoping for and I am sorry I cannot be of more help with this but in my view, the best way for the owners to proceed, would be to engage French legal assistance as a group.
I assume that the MEP's advisor was referring to the new commercial law governing tenancy agreements - the Pinel law
There are many internet sites in English concerning the Pinel Law and many of them give a reasonable summary of what the new law contains. Naturally there are more sites in French best obtained by googling "Loi Pinel".
The Pinel law contains numerous changes which will make life tougher for owners . However, contrary to what is stated in the letter , it does not greatly change the tenant's right to extend the lease -there always has been that right in commercial law that when one lease period ends the tenant can insist on extending it. Basically this means that a tenant has a life-time lease and the owner can not do anything about it ,except if the tenant breaches the contract ,including nonpayment. There are several lesser used reasons that an owner can claim back control of a property.
I'd love a French lawyer or even Seamus to advise if what I have stated is incorrect in the last paragraph -rather than again have someone less familiar with French commercial law tell me that this is misinformation.
What I do not know nor find is whether there was in the leaseback law that governs this leaseback scheme an exemption from the usual commercial law allowing tenants to extend the lease. Whilst most owners believed that after nine years they could regain control of their property and/or not renew the lease (without incurring costs )I'm unsure of the legal basis for this belief.
As far as I know there is no exemption. This lie is put forward by selling agents and is part of the scam. Our snake of a sales agent told us we could take back our property after 9 years and rent it out ourselves.
Yes, Jeanazur, I had same opinion. That is why I reckon the letter writer in first post didnt really know what he was talking about. There were no "retroactive" laws - it was never established in law that after nine years the property would be "ours". Thart's why I'm as angry at myself as I am with the seller of my property.
If I had gone to an independent French commercial lawyer and asked a few questions I reckon that I'd have learned that all commercial leases are effectively for ever. In fact, and this is to my shame in not doing this, a proper googling at the time would have at least suggested this to me.
However, I think the salient point in your campaign is not so much the lease aspect (there is nothing that one can legally complain about there) but the fact that those who sold the properties deliberately offered certain rents as a deliberate lure and then many(most?) slashed them by half. That is, either deliberately or grossly negligently, they offered a rent that they knew was not sustainable but worth paying for a few years in order for us to pay over-the-odds for their properties.
Incidentally is anyone studying the sales literature of present leaseback sales companies/
The Penalty Compensation upon non renewal of lease has been enshrined in French Commercial Law since 1953 and we should have been informed of this by the selling agents -see post by Fabien Cordiez from 2009:
"If you break the lease and make your apartment revert into a classic property, then in addition to repaying VAT on a pro-rata basis, you risk having to pay the leaseback company compensation.
At French Commercial law (the Decree of 30 September 1953), where a lease agreement comes up for renewal, tenants are legally entitled to get their lease renewed for the same period of time as the one stated in the lease. This rule applies without any limit thus French business leases can go on like this virtually forever.
Landlords can decide not to renew a lease. However, in such a case, the Decree states that Tenant is entitled to claim damages for non-renewal. So, compensation is due to tenants whose landlord gives notice that the lease will not be renewed. Such notice must usually be issued 6 or 12 months prior to the lease's end date. The Notice ('Congé') is to be served upon the tenant i.e. your leaseback company through a bailiff (Huissier)."
The fact that sellers and marketers of these 'properties' should have told us has at least been recognised by the French government - see below:
From: http://www.traesch-avocat.fr/Residence-Tourisme/Etudiante-Baux-commercia...13.11.14, p.2552.Tourist home: mandatory information of the buyer on the eviction indemnity and commercial leaseA minimum of 9 years commercial lease with no break option after 3 years
Article L. 145-7-1 of the Commercial Code requires that the commercial lease signed between the owners and operators of tourism residences or a minimum of 9 years, with no possibility of termination on expiry of a three-year period. The operating companies no longer have the right to terminate after three years, as in a conventional commercial lease.
Tourist home: After the first nine years, three-year termination is possible
After the first 9 years of rental tourist residence , the common law of commercial leases applies. The lessor has the right to terminate the commercial lease, but must pay eviction compensation to the lessee. The tenant has a termination right.
The obligation to inform the future buyer of eviction compensation in case of non renewal of the lease
In case of refusal to renew the commercial lease of the tourist residence by the owner, the lessor must pay eviction compensation to the lessee. If the tenant does not request the renewal of the lease, the lessor takes the enjoyment of his property and receives no compensation. Articles L. 321-3 and L. 321-4 of the Tourism Code provide for the obligation to inform specifically in the marketing materials of tourist residences , the purchasers of the existence of eviction compensation in if commercial lease renewal refusals. (also in the order of 23 December 2009 laying down the criteria for the marketing documents circulated to homebuyers located in tourist residences ).
The minister mentioned a "reflection" on tourist homes
"However, the Government has begun to consider to enhance the information batches buyers in tourist residences , in addition to information already made mandatory by the decree of 23 December 2009, cited above. It is, indeed, imperative that retail investors take stock of their financial commitment in tourist residences. " Rep. min., No. 10749, OJ Senate 13.11.14, p.2552."
It is encumbent on the Notaire acting for both parties to counsel the buyer on this matter - how could we possibly have even known to ask this question - it is a matter of utmost importance to the buyer and was deliberately omitted from all marketing materials, conversations and doesn't appear on any legal documentation relating to the purchase of leaseback properties.
I came across an article by Fabien Cordiez here: https://www.hg.org/article.asp?id=5395 that states that the Statute of Limitations in France relating to Professional Negligence was amended from 30 years to 5 in 2008 - I would like to know whether this precludes taking legal action against the Notaires who officiated these transactions/
Any information on this matter would be much appreciated.
Regards.
Thanks Argent for that info.
Owners in my residence are taking individual cases against the developer, notaire and bank. Their French lawyer has indicated that there is a limitation of 5 years and that this starts at the time that it became clear that there was a problem eg. non-payment of rent (not the purchase date).
cheers,
Thanks Sinead,
I'm being paid rent, but the Indemnity Law is something I've only just become aware of, so, even if leaseback properties were worth anything like we paid for them, and even if
everyone had been paid rent consistently, any profit would be written off by this penalty law which, added to the proportion of TVA remaining on a lease, would wipe out
any profit, even at the termination of the mortgage.
In 2013, SMAS Tourism served court summons on 90 co-proprietaires from various countries who had banded together,
and had given the stipulated notice to withdraw from the lease; SMAS demanded penalty compensation for non renewal of the lease to the tune of over 100k plus 10k
court costs from EACH person.
Given the fact that people have already lost so much money, and developers, marketers, agents, banks, notaires and managing companies knew of this law, and
those responsible for disseminating the information deliberately withheld it to ensure sales, it is frustrating that this may possibly be difficult to prove as grounds for suing, (and
even so, very expensive) especially in terms of proving date of knowledge under the statute of limitations - non payment of rent appears to be a more straightforward issue...
If anyone has any further information I'd be grateful.
Thanks.
Think the big problem that anyone suing any of this lot will be that you will be fighting against their professional indemnity insurers and we all know how deep their pockets are - would it not be simply better for all concerned to issue a conge for breach of contract (providing you have grounds) at the end of the first 9 year period - the management company then have two years to take you to court to establish compensation - if all the 100's possibl;y 1000's of owners do this it will block up the French judical system - then maybe the government will take notice