Non renewal rules change

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Non renewal rules change

Hi. I'm currently at the final stage of signing for a leaseback with the Notaire. I have been asked to sign an additional document because of changes to the compensation rules for non renewal of a commercial lease which came into force on 23 December 2009. Does anyone know what these mean and if they are positive?

The second paragraph of Aricle L145-14 details the possible compensation for non renewal:

'This compensation includes the value of goodwill determined in accordance with professional usage, plus any reasonable costs of removal and resettlement, as well as fees and transfer taxes to pay for a fund of equal value'

Does anyone know what this means in practice?

Thanks

Hi Chjg.

I bought a Leaseback 4 years ago from Seamus and I now coordinate all of the UK and International speakers for our development of 500 investors.

As a development, we're one of the lucky ones - our management company (one of the biggest in France at the time) went bust, but we managed to find a new one. However, that meant paying the mortgage for almost 2 years while the new Developer got up and running - and our rental payments won't reach the original agreed 2005 amounts for another 3 years. We're very relieved and won't be entirely shocked if our current management company leaves at some point (by common French Law, they can leave the tenancy at 3 yearly intervals - you can't.)

I think you're referring to new rules that allow you to have some kind of mandate with a Management Company - rather than a full-blown Commercial Lease. See the other recent post about this. This looks like it will get you around the issue of paying "reparations" to the Management Company, should you wish to go solo.

Besides all of this, I would implore you to consider VERY carefully your decision to take on a leaseback. We all feel completely stitched up on the original prices we paid both for the apartment and the contents (and we're the lucky ones, remember) and if you really want a leaseback, I can put you in touch with hundreds of people who will gladly sell you theirs - with a management company that is actually solvent and most of the snags sorted out (and there will be many...) in a resort that's actually taking off and improving.

Almost all of us, without exception, will admit to having walked into this somewhat blindly. What was supposed to be a "quiet" investment has become noisy as hell and an absolute millstone for most.

Ben.

Hi


The rules have been changed since July 22nd 2009 you can find the details on line (legifrance) if you read and understand French it will help.


Together with the compensation rules for non renewal of a commercial lease, you have to make sure that your mgmt company informs you that they cannot break the lease after/every 3 years, that they give you the occupancy ratio of your residence at least every year...


Rgds,

Hi srunner.

We have a legal team and a very good Syndic and my post only repeats the advice they have given me several times now - our contract stipulates that the management compnay cannot leave before the 9 year term, but common French law allows them to give notice at 3 yearly intervals. They haven't exercised this right, but it was a concern of the Legal Team recently when we approached the 2 year mark (ie 1 year's notice) on our newly negotiated contract. Off the top of my head, they keep talking about how French law differs to the UK in that you can stick any old thing in a contract over there and then cite Common Law at a later date.

You may be correct and I'm not in a position to argue the finer points, but we are 500 strong and employ a French legal team on retainer to advise us on this - I would be very surprised if this situation had changed and they didn't know about it, but I'll forward your comments to them and see what they say.

At the end of the day, I guess you just have get legal advice and pay for it - resources on the Net may well be correct, but you've got nobody to go back to if it turns out to be incorrect (we're currently pursuing several court cases, including one aginst the original Notaire - boy, do the French like to litigate.)

I would still reiterate my message of caution regarding buying a Leaseback.

Cheers,

Ben.