Non-Recourse Mortgages

Juan,

Did you manage to find out if mortgages on french leaseback properties are non-recourse or not?

 Regards,

The concept of non-recourse mortgage does not exist at French law. French banks can in principle chase the borrower for payment of any shortfall, after the mortgaged property is sold through repossession proceedings called 'Saisie Immobiliere'.

The worst possible scenario legally for an Irish citizen/owner who ceases paying his French mortgage is that the French lender, having sold the property at auction, pursues payment of the shortfall, if any, against assets situated in Ireland.

The risk of the above materialising is remote however. Should there remains a shortfall after a repossessed leaseback property gets sold at public auction, creditors could in principle pursue payment of the balance from the defaulting owner. French Courts should have sole jurisdiction for this and therefore the risk of being sued in Ireland is very low.

Please note however that a Judgment obtained in France could be executed in the Republic of Ireland. Under EU Regulation EC 205/2004, the procedure is simplified where claims are uncontested. In such a case, the French lender could obtain a European Enforcement Order against the Irish borrower and execute the same in Ireland. 

European Enforcement Orders entail automatic recognition and enforcement, without any intermediate proceedings or grounds for refusal of enforcement of judgements handed down in another Member State. For contested claims, the lender would first need to apply in Ireland for an enforcement certificate called 'exequatur' in French legal terms, and then enforce the French judgement as if it had been issued in Ireland.

To my knowledge, very few French lenders actually take such a step, because foreign enforcement procedures are usually regarded by French banks as being uneconomical.

I hope the above helps.

Fabien Cordfiez

French lawyer and Solicitor

www.french-lawyers.com

Hi Fabien

I'm interested in your post & particularly about your advise on contested & uncontested re-possessions. 

My situation is that I am taking legal action in France against the various parties involved in selling me my leaseback with the ambition of having the sale canceled and all monies returned to me. As I am no longer paying my mortgage, it is likely that I will be subject to repossession proceedings simultaneously by the financial institution that hold my loan. My French lawyer will be actively contesting this claim  but I am told that both cases are standalone & are not seem as being related which I personally find extraordinary.  A different judge (& court)  are responsible for the 2 cases.

As the repossession proceedings will be actively & vigorously contested in France, is your previous post saying that this makes it much less likely that the French institution would pursue me in my home country as it would have to get a local judgment here (Ireland) & it would have to also to argue (in an Irish court) against the 2nd case that I am taking against both it and a number of other parties and which would be presented here as of being relevant to any possible judgment against me.