English
FrançaisMorning Seamus/all,
Seamus, you are aware of my situation at Bastides de Grimaud and others there who like me have used your C de P service. Couple of questions that you/others may be clearer on than I am..
1. C de P .. I through you succesfully served one and received payment from Odalys for 6 months rent for the 6 month period ending 31/10/16. The rent is now outstanding for Quarters ending 31/12/16 and 31/3/17 so I intend to serve another one at the end of April. However, you will be aware of my friend/co-owner who despite having served one has still not received rent. His enquiries with Odalys got a wooly response ' we don't know when it will be paid'. I understand that if rent is not paid within 14 days of a C de P being served then legally the lease can be cancelled without risk of a 'loss of potential revenue' counter claim from Odalys. However, cancelling the lease might not be the best strategic action as it could jeopordise the 6 months owed if Odalys were to cancel. In the UK ultimately when undisputable debt owed by a corporation is outstanding, one can (as I've done before in business) serve a winding up order on the debtor whereby they either pay up or are forced into liquidation. Is this course of action via a French lawyer one that is possible/open to us? I will happily do it if so as Odalys should have the funds, and if not, were they 'wound up', it frees all owners on their sites.
2. I understand that to retain 'Residence de Tourism' status, at least 55% of the units on a site have to be available as holiday accomodation. Is there some quirky French law concerning 'R de T'? For example, if the majority of owners on our site elect to (wrongly in my personal opinion) take an offering from an alternative operator (SIGA) at vastly reduced rent but I and others do not, Odalys either have to continue with my/our lease or serve notice. Assuming they serve notice, am I then free to either own and use or sell my apartment (having paid back proportional TVA to the French Government or, does the 'R de T' status still impose a restriction on me in terms of sale/usage? I know that if I continue to rent away from a long term lease but still offer 3 of the 4 services then no repayment of VAT is obligatory. However, my fundamental question relates to 'R de T' status and if I have my lease cancelled and pay back the proportionate TVA, am I then free to do what I want with the apartment? In other words, does it then become just a traditional owned freehold apartment? Btw, the original purchase contract clearly states it to be freehold but classed as a 'R de T'.
Any help would be appreciated.
Iain
Hi Iain
Seamus may advise you better than me but I looked into coming out of the leaseback arrangement and paying back the proportion of VAT. My understanding is that the whole residence is has residence de tourisme status and this decides what the taxes foncieres are etc and means you don't pay taxe d'habitation.. I think you can use the appartment more but cannot use it as a main residence or sell it as a main residence. It can only be used for a certain number of weeks a year. I am unclear at the moment if this is dictated by the management company for example, our residence is only open 5 months of the year to tourists generally but it can be used out of season at the discretion of the director. I assume you would have to approach the French authorities to get the residence de tourisme classification taken off - not sure if you can do this for one unit in a residence with this classification.
Would also be interested if you hear any more.
Thanks K,
Interested myself to hear more from Seamus/anyone. Presently whilst I only get 6 weeks usage as part of the lease agreement, Odalys as operator can let it out all year round.
Once the lease is broken one way or another, I'm rather hoping I can use it,let it or sell it freehold like anyother property even if the tax position changes as you say and once I've paid the VAT back on the assumption (dangerous I know!) that either it ceases to be a 'R de T' because more than 55% of units are out of lease or, it remains an 'R de T' because more than 55% remain as leasebacks but I'm in the percentage up to 45% which are no longer under leaseback.
I believe that even out of the lease, it / I can remain part of the management company and providing I continue to pay the proportioned management fees then I can continue to benefit from the services/benefits in the same way as management Co's work for say small blocks of apartments in the UK/Ireland.
Iain
I do not know what is happening with Odalys. All I know is that your friend's CDP is the 1st one not to have rent paid! We get very few CDP requests -your friend's was the last - that I do not know if this is an admin issue or if Odalys are having very serious cash flow problems. But what I do know is that your friend can cancel his lease if he does it according to the law (uses a bailiff) without compensation being payable. But if Odalys go into adminstration it is not like UK administraion - it will likely be for consequetive 6 month periods during which an administrator pays you rent while Odalys propose a solution to the french court (which could be reducing rent or "letting go" weaker residences, and during this period you will not be able to end your lease if you have not done so before. But I am only speculating. A new company must have 70% of co-owners - the remainder can do what they want, and I think the best solution for those who "self manage" is to offer 3 of the 4 leaseback services using a local company so they do not have to pay back the TVA and they will be free to sell as a normal property.
Seamus
Thanks Seamus, thought the 70% had gone down to 55%. Read it somewhere but might be wrong!?
You could be right Iain. I do not have a link to the law which defines this. It would be useful if someone could provide it.
55% in effect since 01.04.2015 http://www.creation-developpement-patrimoine.com/classement-de-residence-de-tourisme-le-seuil-passe-de-70-a-55/
Actual text of act at https://www.legifrance.gouv.fr/affichCodeArticle.do?cidTexte=LEGITEXT000...
70% to 55% change on 3rd paragraph.
Paste links into translate.google.com and click link again on translated window on right to read in English.
Thanks Seamus, Mac,
If the rent is not paid despite serving a C de P then surely Odalys can be pursued for the full rent outstanding. Let's say they do go into administration, I understand how we are then into a grey period but, surely an adminitrator/court could NOT maintain the lease indefinitely AND at the same time force the rent down?
I'm not a lawyer, but would have thought that if the rent was NOT paid to the full contractual value then the right to cancel without compensation remains?
In any event, why would an administrator want to continue with leases/financial obligations which they themselvves could cancel?
I know France isn't the UK but, I've seen a number of similar situations over here where a commercial tenant has gone into liquidation and one of the first things the administrator does as soon as there is no practical/more pressing need to retain occupancy is to cancel leases with landlords.
What you seem to be saying Seamus is that if we've got a C de P live in play now then forcing cancellation before a potential liquidation avoids that grey period.
I'll serve another one shortly (mid May) via your service and then take legal advice with a view to serving the equivalent of a winding up order on Odalys if this is an option under French law.
I get the impression in our residence, there a a number of owners (many of them French owners) that are willing/want to sign up with alternative operator SIGA despite a 30-35% reduction in rent. crazy in my view but it is their choice. I'd envisage that group and Odalys (who don't want to remain) are waiting/keen to see the number go past 55% and perhaps therefore Odalys are just holding back/hedging their bets in the interim.
Great forum this and thanks again Seamus/all.
Iain
I am not a lawyer either Iain and this may be pure speculation. I find it hard to believe that a company as strong as Odalys is struggling to pay even CDPs. Has anyone else served a CDP on them via another route in the last 2 months and been paid? But let us assume that they do go into administration (which I still thing is highly unlikely), then it will be what is called a "procedure du sauvegarde". French law controls what happens during this period. So you will be paid rent during this period (by the administrator). The "sauvegarde" allows consecutive 6 month periods during which Odalys would propose a solution to the french court. The court can decide to wind up Odalys (which they will not do), accept their proposal or grant them a further 6 month period. This would go on until an acceptable solution would be reached, one of which might be a reduction in rent.
And yes, once you are in the "sauvegarde" you can do nothing legal. If you have served a CDP before, and they have not paid and you have reached the stage where you can break the lease before the "sauvegarde" then you can break the lease without compensation.
Although I stress I am not a lawyer. Please get clarification on this from someone more knowledgeable!
Seamus
We had a small management company. We served them a CDP and refused to budge on rent or payment options. When they could not pay a receiver was appointed. When he was that the company was not able to survive he cancelled our leases. We eventually sold our apartments as freehold to an investor who bought the entire building.
Thanks Seamus and Juan,
Let's see what the next couple of months bring!
My advice, get out if you can. I had similar with Residhotel a few years back and regret not getting out then. Instead resigned with a different management company at much less rental yield. Have got advice from a French based lawyer who confirms that the only way I can get out of my current lease is to hope the current mgt company goes bust. Am keeping all crossed as then can get to sell freehold. Hang in there and dont sign for a reduced rent..you then have grounds to get out without compensation.
/M
Above owner was finally paid rent owed following the CDP, but it took 6 weeks which is the longest it has ever taken! Normally they pay with 2 weeks of being served.
Seamus
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