English
FrançaisThe Operator of our Residence for Tourism proposed to lower the lease rate; we rejected it. They filed for bankcruptcyand stopped paying rents to the owners. The current lease period expires on September 30, 2019. The judge has appointed aConciliator. What happens now? What courses of action do we have to: 1). get rent payments from the Operator? 2). to break theLease so we can rent or sell our apartments ourselves? 3). To find a new Operator to take over the Lease and operate theResidence? 4). What costs (expenses) can we anticipate paying? 5). Can an owner communicate directly with the Conciliator?
Any help would be greatly appreciated. Thank you.
Hi,
I am not familiar with the Concillator process described but I can share my experience of what happens when the operator (Odalys) in my case pulls out of a development.
First they will agree a date for the return of the apartment to you. They should return it in the state it was bought allowing for reaonsable wear and tear...so the fridge should work but it may have some marks on it etc.
You will sign a document to accept it back in good order.....check absolutely everything..In my case the dishwasher wasn't working properly and I didnt discover it till it was too late.
They will remove all their stuff (sheets for hire, poolside seats, letterboxes, and any common amenities (table tennis table in our case)
You may decide to change the locks on the front door....surprisingly easy by the way.
On the day of the handover you will need EDF to put the electricity account for the apartment into your own name,
Then you are pretty much on your own
Your co-owners will need to set up a Co-prop and you need to find someone to look after the day to day operation of the apartments..This is called a syndic. They will charge a fee for this and will do stuff like:
Pay the insurance premium on the buildings
Arrange for the pool to be cleaned
Get a gardener to cut the grass
Pay the maintenance fees on any electric gates or common stuff like that
Pay the electricity bill for the common areas
Pay the water rates including for the pool if there is one
Usually most towns in france have an agency who will do this...
In our case with 68 apartments the basic running of the complex costs about 120K PA...and the syndic gets 10K-12K of this...
They issue you with monthly or quarterly bills for your share...usually done in Tantiemes (1/10000) of the total costs...so a 1 bed pays less than a 2 bed etc..plus your parking space etc.
Usually when a management company leaves you will have some exceptional Year 1 expenses to be paid
1. You will need individual letterboxes for all the bills and stuff you will be paying
2. You may need to renumber the apartments or the parking spaces if parking was previously pooled
3. You will need individual water meters as water usuage will usually be billed by the syndic to each apartment
After that you can do what you like with the apartment i.e.
1. Rent it by the year furnished
2. Rent it for 3 years at a time usually unfurnished
3. Rent it on airbnb/abritel for summer rentls etc
4. Rent it by the week via a local estate agent for summer rentals
5. keep it exclusively for your own use
6. some combination of the above
Sometimes the syndic wil do the finding and renting for you for a fee of course....
Every year the syndic which is hired and fired by the Co-Prop will have an AGM
Additional expense items will be voted on and if approved the costs will be shared according to your Tantieme...so we have paid for stuff like
Landscaping
CCT cameras
New pool lining
Painting the outside of the buildings
the list is endless
If you want to change the outside of your apartment you must get permission from the co-prop
The co-prop is elected by the members....and they hire and fire the syndic though it may not always be easy to find a replacement synduc especially away from the popuar tourist areas.
Other bits to think about
In our case the reception which Odalys used was turned into another apartment....that generated some cash for the syndic and reduced everyones shares of the tantiemes
In our case the biggest cost we faced was 350K (c.5K each) to repaint the whole complex...The co-prop rejected this and did a fancy power washing instead for 70K (1K each.. the jury is still out on this.
Bad debts can be a real problem for the co-prop......if this gets over 10% it can lead to problems....takes years to sieze the apartment
Everything about how a co-prop and the syndic works is prescribed in law. Its a vry mature process. everything has been thought about.
Sinking funds are a real challenge after 10 years of running by an Odalys or equivalent. they have no interest in putting their money into sinking funds...remember they run the syndic while they are in charge...so if you have lifts or swimming pools you can have big once off costs which will have ot paid for as they arise.. the new laws mandate a vert small sunking fund but it would take a decade before it could cope with something like repainting
from a tax point of view
You wil have to pay Taxe Fonciere, You will have ot pay taxe habitation unless you rent out full time in which case the occupant on Jan 1st will have to pay it (Taxe habitaton is being switched off by Macron but not for Maisons secondaire which is what you are (unless you move to france and live there permanently)
You should be able to keep your leaseback tax benefits apart from having to pay back the VAT you got the benefit of when you bough the place
(1/20 for each year left out of 20)
So you will need to keep paying your accountant to keep you tax legal in France
You will probably need to install the internet (35+ per month)
thats all I can think of for the moment.....
Woody
That's a good summary. But regarding how you rent it out, if the lease ends in theory you can rent it out how you like, but if you want to avoid repaying the pro-rata TVA you need to offer at least 3 leaseback services using a company whose main business is managing property, which has a SIRET and you will need a contract with them (in french) indicating the services they provide. And because your lease had changed you need to change your tax activity to "para hotelier" and you will have to charge TVA with the rent. If you do not do this you will have to repay the pro-rata TVA.
Yes agreed. I got a local agent to offer 3 of the 4 services but it didnt pass muster with the local tax authorities (their legal entity was set up to do cleaning only) and I had to pay back about half the VAT rebate plus some penalties....The onus seems to be on you to to pay it back and you may not get a demand from the tax people.
yes. When you change your tax activity to "para hotelier" you will be asked to provide a copy of the contract proving that they provide at least 3 leaseback services.
Thank you so much for the excellent comments. They are most useful so I will pass them on to my co-owners who are in the same boat. I much appreciate everyone's contribution
and am delighted that my membership in this Group is most beneficial. Je vous remercie bien.