English
FrançaisHi all,
I've been a spectator for a while but not posted previously. I've been stuck in a deteriorating situation for a while now with a leaseback that I was missold in 2008.
With a third (and very significant, long term) rent drop proposed by the management company, I am at the point of walking away. I have not signed the papers to agree to the latest rent reduction.
Many co-owners feel that they will do so, as any income is better than no income. As the reduced rent is already below the mortgage interest payments, and the value of the property is significantly below what it was sold to us for (which seems to be sadly a familiar story) I don't feel this is a viable option.
I have seen many people saying they handed back their keys and some discussions about whether French banks will pursue in the UK and Ireland. There does not seem to be a definitive answer to this - does that mean nobody is at that point yet? This will obviously influence my decision - I am in the UK with no assets apart from my home, which has a small amount of equity.
My other question is - does anyone know, if I do sign the form and then am forced to hand the keys back (very likely given the state of my income post-COVID as I would need to subsidise the rent) would the fact that I signed to agree to the rent reduction prejudice any case I have?
I know there is a DGCCRF investigation ongoing and have already submitted a misselling complaint via the CMA.
Sorry for appearing with a complex question!
LJ
Hi LJ,
It is indeed a situation very familiar to many owners of French Leasebacks unfortunately. The rent being below the mortgage interests looks to be very low but yes the biggest worry would be the value of the property if you were to sign the new agreement. In same time if the majority of owners the management company might give you some difficulties, stop paying you etc... but this depends on your current lease, their financial situation, and others things, ...
You have purchase the property in 2008 and from this day you are the owner in full of the property so handing over the keys is not exactly what it would happen. If you contact your lender and tell them you are handing over the keys they will not really know what you mean.
What will happen if you stop making the mortgage repayments, will be more like them contacting you in written about the first few missed payments, then ordering you to pay before they start legal process.
The start of the legal process will be with them engaging the bailiff to seize rent, French bank account and demand the full capital outstanding. Meaning the repayment schedule will then be ended.
The next step if you don't answer, will be for them to force an auction of the property in Court. If the auctions happens there is a very strong chance the selling price does not cover half of the capital outstanding so the banks will probably be contacting you for the difference.
This is where many are today but we are left in doubt of what is going to happen next.
I have contacted solicitors from both side, French and Irish (regarding few cases) and they will always tell you, yes the French banks could potentially transfer the case to Irish Courts via the European courts but so far they are not doing so as it is too expensive and complicated. I have asked solicitors to put details in written to me but none of them did it. So it shows that we are all, including them, in doubts of what can really happen. I presume it will be similar regarding British cases but cannot guarantee anything of course as I have not seen this happening.
Signing or not the new agreement should not affect anything as you are put between a rock and a hard place. Banks always tell you they don't care about the rent as this was not included as income when they granted you the loan.
In same time if your personal incomes have reduced you should contact the bank (lender) to ask for holiday period, increase of length, or else. They may refuse but this could also be put on the file for court showing that you have tried.
Before you hand over the keys, maybe look to sale the property, see if the selling price can cover the capital outstanding on the mortgage and get rid of it this way. This could be the best option.
Please keep in mind, my comments above are based on experiences and of course we don't know if they could bring a new law or else helping them to recover funds. Or to protect owners (but I will doubt that). Hopefull the investigation will help but I think it will take years if it does. Finger crossed on this.
I hope this helps.
Regards,
Eddy