Residhotel (Rhode Tourisme)

Thanks Wayne.

We have just been in contact with the actual developer of the development and it seems that he is in touch with other builders/developers about this situation and may assist us in our discussions with Residhotel. Obviously the developers also do not like what is happening, how will they be able to sell their developments if there are major problems with the management companies and reduction of rent etc.

In a nutshell its happening all over France,I am also involved in the same thing but some 12 months out of pocket so far plus 5,000 euro in legal expenses.

My experiance is simple...NIGHTMARE!!!!!!

The law in France protects the management company and not the investor,I have done all the legal stuff and won every case however i have not received a penny from them as they ignore me my advocat and the courts

My advice is go to ''command de payer'' and then evict swiftly,if you still get no joy go for administration.This process will take at least 6 months and for that time dont expect any income.

It seems strange that each compnay uses the same tactics,In my experiance I think they are all in it together,lets face it being offered a 5 % hassle free investment is what we all dream of,however,the reality is that the developers and agents shift the property knowing this is unrealistic and then try to renegotiate

Sadly this is how they do buiness in france and they will try to get as many owners as possible to accept the lower rental,they know that its only a matter of time before people run out of funds and cannot pay the mortgage,therefore they have to sign under duress.

It will be funny next year when the developers and agents go out of business because theres no money, especialy UK money flowing in to buy their overpriced and oversold investment vehicles which are clearly nothing more than a way of shifting real estate on the back of false gaurantees

My advice is dont waste time getting groups together, in the first instance spend your time getting legal action in place,these people know the system and will mislead you all the way

Another bit of advice is to avoid solicitors in the locality of your claim,they all appear to have an unhealthy existence together in their own little world.

Dear Brian,

You have to think short and long term. The ex management company running my flat ended paying in October 2007. I got my rent for Q4 2007 via a bailiff together with 2 other owners as we did a Commandement de payer and a Saisie sur Tour operator. It worked out that we gave in total 400 euro for the 3 of us, which have been refund when we received our rent back from the Bailiff. My rent was 1,700 euro.

Then the company put herself into bankruptcy but in order to avoid any questions from the court where the headquarters were, this management company changed the location of its headquarters from South of France to North of France… They had money to pay our rents, they had money to rent new offices, to move offices and to continue paying the employees… but as several other management companies do they stopped paying us (the owners)… they sent us a letter after 3 months of non-payment for some one us but for the majority it was after 6 months or a year. This letter mentioned a rent deduction of 30% and no rent increase as it is written in our lease. Only 10 owners accepted… they received ONE payment and then another letter arrived… -50%!<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

We went to several lawyers and they all advise us the same way: the management company has no right to do such things, we decided to fight. The transfer of headquarters has been cancelled by the court, and contacted the French government and with several other associations they granted us this extension of 12 months to find a new management company and to take time to sort out the problems in the residences.

Now the management company asked the court for help, we accepted it and an administrator has been nominated by the court. He broke our lease with the management company. So we now have our flat back. We have to decide what to do with it but at least we are currently free and don't have the assle of being paid or not. We made the choice of not keeping the management company as they were really crook. Our residence was full every single season since December 2005. The average occupancy rate was around 98% in winter and 70% in summer… we did not receive our rents, we were not paid, they were arguing all the time about our occupancy rights (we normally had 4 weeks per year, with some dates mentioned in our lease but the management company has several times asked us to change dates… but the flats were rented???)…

Currently some people in several residences are directly renting their flat. They make more money than they have in the past (non-payment) and what they would have had with some strange or unclean management company. For some of them they have completely contracted out of the schema (ZRR, Demessine), refund the VAT (around 20,000 euro).

In my case I don't rent my flat as I am going to court to ask for a cancellation of the sale. All in all since the beginning the lawyer costs me 800 euro. The management company has not paid me for a year now. Thanks to the lawyer I had one rent back and I am free of any lease or management company, trying to find the better solution to make my money back and to find out what I will do with the flat.

Hello

I am the owner of an appartment on the "Golf Garden" Levenois another development with Rhode Tourisme & have recieved exactly the same letter, saying they are experiencing difficulties & are going to reduce our rental income by 40%. Any advice would be welcome.

Mike - we are in eaxactly the same situation and I have today instructed my solicitor to respond vigorously to this situation. Sharon Hill at YFP has also suggested some excellent things to do including dorming an owners co-operative and agreeinga common way forward.

One issue she suggests is to contact the managing agent who may be prepared to give us a list of owners contact details. That said it would appear that the majority of owners are likely to be French and so we would need to have bilingual ability. I will let Sharon know that she can share my contact details with any other owner so that we can try and resolve this issue

Hi there,<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

My name is Gabrielle Achilleos and I run a company that looks after online administration for those that have purchased leaseback property in <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />France.

Having seen your post, I think we may be able to help you as we offer legal services in house and are used to regrouping owners to form a stronger 'force' against these management companies.

Its really a shame as leaseback is a good system but some of these management companies are really giving it a bad name. What happens is that the management companies recieve a big chunk of money from the development companies at the beginning to subsidise the launch (as of course the first year is always difficult to get started) they then use this up as tell the owners that they cant keep up with the rental payments...

In any case if you need to hand with this, you are welcome to contact me at contact@helpserviceonline.com or go to our website at www.helpserviceonline.com

I hope we will be able to help you soon!

Best regards

Gabrielle

Hi

I also have an apartment in Belles Roches in Notredame de Bellecombe. I have also not received any rental income for October. I have sent a couple of emails but have not yet received any reply.

PLease contact the following address if you are concerned with Splendid in Allevard


investisseurs-allevard-splendid@neuf.fr


Thanks !

Hello,
I have invested in Splendid aswell, and have not receive any rent. I have just sent a letter. But I have received any proposition yet.
But today, I have received the taxes to pay (local taxes + TV license), 488 euros....
I will try to find more info on other forums...
Does anybody have more info?



Roxie

It looks to me that leasebacks are not a secure investment unless you can get an agreement from the management company not to withdraw after the 3 year periods. This is on the assumption that you know about this potential problem and perhaps this is where a good lawyer comes in - I wish we had used a good one. I am not sure from memory if the notaire was involved with our Bail.

Brian L

John

Watch this space.

I am flying to France on Friday to instruct a lawyer to fight for me over the fact that I was not told about the 3 year rule and neither was it mentioned in any sales projections I was given.

Net result is that it was not mentioned to me until 85% of the purchase money was paid and I was handed a lease with no rises in rent, rents a year in arrears and a 3 year break clause. My argument is that it is not the produt that was sold to me by the sales agent who only showed a 9 year lease teerm with monthly income, index linked rents etc.

Mutley

Noel,

I agree ... however in practise, everything is different.

First a lot of mgmt companies do not pay the rent, it is rather difficult to sue them if you are alone. However alone you might get your lease back easier, but then you might have to pay some "charges" to the mgmt company which will not let you alone...

I was not at all aware of this 3 - 6 - 9 when I signed the lease & bought the flat.

It is common practise to avoid sending a legal document... bailiffs are expensive in France, some mgmt companies do not pay the rent nor the taxes so why shall they pay a bailiff?

"my lease says that the tenant agrees not to seek an indemnity payment at the end of the contract " good, but we have seen that at least in one residence such thing was mentionned but the mgmt cpy took the owners to the court and she won! The owners had to compensate for the lost of activity...

According to some lawyers even if an amount is written, it can be changed (increase) at the time of the termination of the contract.

If your spending between 70,000-200,00 and more on a leaseback it is not unreasonable to be told of major clauses like this.

I know it is a French law but it seems unfair that the Tenant(Them) is only committed to 3 years and the Landlord(us) is committed to 9 years!

It would seem from the posts on this forum,not many,if any,people knew of this clause!

Most probably used a solicitor and all used an agent,it shows the quality of legal advice that was given!

Regards

John

Noel

If you were on the wrong end of this 3 year break clause,i would have thought it was more than worth doing.

If you were sitting there with no rent after 3 years and the solicitor or agent(or both) hadn't pointed out this clause(mine didn't) you would be pretty miffed and inclined to sue.

It would be easier if your agent or solicitor was U.K based.As i said you would have good grounds as this a major clause!

Regards

john

Happy New Year to all of you.

Just a quicky. I am not a lawyer but I have been following the evolution of the Residences de Tourisme in France for now 3 years. I own a leaseback property in the Alps and got several problems with the managment company. We are now "free" as our managment company has been liquidated and is off. We have refused all proposals of other management companies as they do not match at all our initial conditions (the ones we had when we bought the property and the ones we were supposed to get).

The notaire should have explained you what a leaseback is... It is supposed to be part of his job.

However several French owners are now sure that the notaires used in those transactions are part of the system and would not say a word about leaseback and the commercial law. If they would have, they might have lost the sale!

The tenant can break the leaseback (it is a commercial rule called the 3 - 6 -9, which correspond to the years when the lease can be broken). They don't need to send us (the owners) a paper or a legal notice... and believe me a lot of them just sell your lease to another company once you have accepted the rent deduction or anything else!

The tenants can also stop paying our rents whenever they want!

We CANNOT usually terminate the contract.

However if the tenant does not meet one of the terms or conditions written in our lease, we can sue them and the judge can break the lease.

So If they stop paying (the payment is one of the conditions of our lease), please write them a letter asking them to pay you, then contact a Huissier (if you have not received the rent) and send a Commandement de payer. Once done, contact the judge and Tribunal de Commerce and get your lease broken. Or if you are several on board, get together and ask the judge to decide if the company can continue or if it can be liquidated.

At the end of the leaseback contract if we want our flat back and do not renew the lease, we have to pay them "une indemnite d'eviction" - an indemnity equal to at least a year of the rent they have earned ... No-one (notaire, agent or someone else) has ever told me that before... we (French owners) are getting to discover that!

VAT: you have to refund it: if 1/ you sell your property, or if 2/ stop letting it

I have been involved with leasebacks for over 6 years and this is the first time i have heard of the 3 year break clause.This would have a major impact on your leaseback if implemented!

Luckily it hasn't happened to me yet!.but i would of thought you would have good grounds for sueing a Solicitor,Notaire or indeed the agent.

With hindsight i wouldn't expect an agent to point it out,much the same as the co-op fees!.But i would expect a solicitor to!

John

Noel

What was incorrect about the termination process and who is the management company?

Brian L

Seamus,

You say "that a management company cannot change a lease unless you sign agreement to the change".So does that mean they cant impose the 3 year break unless you sign and agree it.Or does it mean they have an automatic 3 year break clause weather you agree and sign it or not?

John

Brian

I have and will continue to refuse to sign. Thing is my leaseback is in a national park and I think one of the planning restrictions was that all properties had to be used for Residence De Tourism and not private use.

The sales agent is well known for misleading clients . I got given a set of projections for income etc that was non contractural but what my sale was based on. It has proven to be useless.

I then got issued with an English copy of the lease that said rents were to be paid a year in advance. However when I had the French version of the lease I was to sign translated, it said a year in arrears.

I had a letter from the TVA people the other day telling me I have taken delivery when I have told the developer I refuse to take delivery until the lease is in order and I have officially signed for the property.

I am now putting this all in the hands of a French lawyer but cannot see how the developer and sales agent have a leg to stand on.

If I were you I would refuse to sign and take action in the form of command de payer and then put the management company into administration. There are a few clever people on this site so keep your eyes peeled on a daily basis for advice.

I am very slowly getting the impression that the French government are getting concerned about all of this and will use a few bench mark cases to lay down a marker as to how sales agents, developers and management companies will be dealt with in the future.

Mutley

John - I understand that it is only the tenant that can withdraw from the contract after 3 years not us the landlord.

Mutley - if I were you I would not sign any contract unless you can include a contract to null this 3 years business.

Noel - what happened with your situation?

Seamus - you sell these leasebacks - do you ever warn anyone about this 3 year termination possibility?

Brian L

Noel,

Does this 3 year break rule apply to both parties?

I assume you would then have to repay any outstanding VAT.

John

Brian

I currently have a similar contract in front of me and my lawyer is telling me it has to be a nine year contract to be classed as a leaseback for VAT refund. I am refusing to sign it. I now have the TVA people saying if I dont do the Kit Fiscal I may loose my VAT refund. I have told them today to prove to me I have accepted the property as completed with a signature and asked them if they are happy to class the property as a leaseback with a 3 year lease. No reply as of yet.

I have 2 leases for the same property, one issued by the sales agent that I based my purchase on says I should get rents a year in advance and the one just issued by the management company says a year in arrears.

I am refusing to sign anything for anybody and am trying to get the sale cancelled.

Seamus - Any knowledge or advice you have on this would be appreciated by me and Brian L.

Mutley

Hi all

We are still in negotiations with Rhode re Golf Levernois they have now offered a 30% reduction instead of 40% and with a weeks useage but have also now thrown in what seems like a threat. They seem to be saying that under commercial lease law that they as a tenant can withdraw from the contract after each three year period which they will rescind if we agree to their latest offer.

I understand that this is the norm under a standard commercial lease but not sure if it can apply to a leaseback. Has anyone else heard of this and what do think? This certainly was never mentioned when we bought the property. If this is the case then all leasebacks surely are at risk. I would never have signed up for this if I knew.

some good points in favour of both short and long term views but trust me these management companies wont be any worse off,in fact lots of them do this to cross subsidise other developments in their stables.If this is not the case then they will simply be increasing their margins at your exspense.

Agreed there are those with mortgages and desperate for income,however,I believe this will be a long term objective of the management companies and once they have got away with it once there is nothing to stop them doing it again

The French do this in business,they will push to the very end and the ones who suffer are investors,in our development we have banks taking apartments back and selling them on at major discounts.

In my eyes leaseback is nothing more than a cash cow for the greedy developers,estate agents and management companies,for those of you who have mortgages then you need to calculate your emergency funds because the longer this goes on the more money you will need to subsidise your investments.

My advice is to obtain a set of accounts and see the difference of income over the recent years,if indeed rentals remain static then why should you give up 40%

A contract is two way which has to be abided by both parties,once one breaks then you have an opoertunity to exit

Act fast decisive and with maximum force

Wayne

MikeF I too am have a flat in Les Belles Roches and have watching things develop with increasing apprehension. I received my full quarterly rent in early December. What does worry me is what happens if RT go bankrupt. Luckily I have not spent my TVA. to be quite honest I'd give back the TVA and have the block run as some other arrangement other than leaseback or even organise the rental myself . Please feel free to contact me. I'd be happy to take part in joint legal action. My French is not good enough to take on a legal case to break the lease but I'd put up some reasonable amount to pay for legal fees.