Mortgage Default

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

I read elsewhere online (cannot remember the website I'm afraid) that the worst case scenario is that a court in your local jurisdiction could try to force you to sell your main home, if you had your French property repossessed and there was a debt remaining.

However, my main home is in negative equity (as I suspect is the case for a lot of people in the current climate). How then would a sale of your main home benefit anybody? If the property is in negative equity, there is no money to be made...just further debt to be repaid to yet another bank?

Still in limbo. The court case is this coming Tuesday. Depending on the outcome of that, we have three options.

1. There is a new company that wants to take over but I fear that once they see the sate that Park & Suites have left the place in, they might pull out....and even if they don't, I wouldn't trust any of these 'management companies' as far as I can throw them.

2. A private investor wants to buy the building and run it as a hotel...but he is only interested in buying it if he can buy all 100 odd apartments and I don't think there is much hope of everyone wanting to sell.

3. Another private investor wants to buy the building and will buy apartments from those that want to sell and lease from those that don't want to sell. This would be the best option by far.

I'm just hoping we can get something in place so that I at least have a small chance of selling. I'll sell at a loss just to get rid of it. All in all, leaseback has been a disaster. It will surely go down as one of the greatest scams in history.

r_cummings41224.7763310185

Sorry to hear that r cummings. What happened next - did you find a new management co to run the building or are you still in limbo? Frightening.

Your lease can say what the hell it likes Tuulia but they won't take any notice of it. My lease said the same thing but it hasn't stopped the thieves that were running the complex, Park & Suites, from not paying us our rent for the past year, walking out leaving the place like a pig-sty (despite the contract saying they have to hand it back 'as new', leaving unpaid gas and water bills totalling €33,000, destroying the air conditioning by using the wrong coolant and generally ruining the place. The attitude of these thieves seems to be ...'so...take us to court'.

Good luck - you're going to need it.

r_cummings41220.8510185185

Hi Tuulia

Yes in principle you can force the cancellation of the lease.However I was in this position and the reality is not black and white.

Firstly if you get the lease cancelled you will still have a tourist residence that you cannot live in, that needs to be maintained. If you were able to sell as a classic residence you would be liable to pay back a proportion of the 19.6% TVA you were favoured with when you purchased.

When I was in this boat the other owners did not want to disolve the lease so I had to go with the majority and accept a new company who paid a fraction of the initial income.It would have been impossible for me to act as an individual.

So in summary you have a legal right to cancel but it is not as easy as it seems to benefit from the situation. I'm afraid the dice are loaded against you.

Let us know how you get on. Regards Waggtail

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

I was looking at an English translation of our lease with Rhodes Tourisme, and it states the following on page 7 of 7:

Article 12 – Resolutory Clause

Failure to fulfil commitments

It is expressly agreed that in the event of non-performance by the Lessee (i.e. Rhodes Tourisme) of one of these commitments and of non-payment of the rent on one of the due dates, or non-respect of his duties, the GRANTOR shall be lawfully entitled to cancel the present contract.

This cancellation shall occur one month after a formal notice sent by recorded delivery letter or injunction to pay served by a bailiff which has remained unsuccessful, without the need for court action.

Does this therefore mean that we are entitled to cancel our lease using the procedure above? We do not necessarily intend to do this (because this in itself has consequences) but I wanted to know if we had that entitlement? I will have to re-read through the forum to see what the consequences of same would be.

Thanks,

Has anyone any good leaseback stories. Getting worried.

Mine has been performng to date but have started to get strange letters from Pierre et Vacance wanting to change the Rent agreement

Welcome Dugerna. You confidence will keep you from sinking into this muddy affair. Leasebacks are exactly the sort of scam that made money for banks when things were good for everyone, but things have changed now. There has been one story of bank repossessing a residential home on this site, which seems like a small percentage considering the amount of people affected.

Hello everybody, is there room for another one in the

'Leaseback' fiasco boat. Our lessor, Topotel, has filed

for liquidation so we are faced with no rental income

well into the future while the 'Liquidator' goes through

the painfully slow French Legal system. (already gone

through another process to renegotiate the lease

agreements). So it's time to walk away and leave the keys

of our French dream to the Credit Agricole de Languedoc.

It has now reached epidemic proportions in the leaseback

sector. Our Lessor, Topotel in fairness tried hard to

make a go of it but has failed. I will lose a lot walking

away but I am confident that our family home is safe

under Irish law and paying a mortgage on an overpriced

Residence Tourismo does not make sense any longer. Today

my last €1000 will be taken for this months mortgage and

thereafter I am going to default.

Best of luck with it.

Hi ,

There seems to be widespread default on French Leaseback Mortgages, but how far can and will French Banks pursue defaulters in Ireland or UK. Threats are one thing ,but court orders or seizing UK/Irish Assetts is another?? Do you know of anybody where this has happened?

Ladies and Gents

I am in the same boat as the rest of you. I have struggled for 2 years to pay the mortgage.Walking away seems the only atractive option.

This Leasback situation started to fail about 3 years ago.

It seems strange to me that in all of the cases of repossession threats by the banks, no one has been summosed to a British/Irish court to be ordered to repay arrears.No one has even had notice that this is going to happen.

To my mind there are two explanations to this:

1. The banks can't or won't ( I hear those that say their bank has told them they will chase them abroad-that is what I would say if I was going to be out of pocket) operate abroad.

2.That the situation is not mature enough for these processes to have happened yet.

I personally think the likes of Barclays would struggle to enforce this in foreign courts.

Hi,

Thanks for all the posts so far it really does seem that leasebacks are a massive headache for most investors. I would like to know what has been people's experiences after not paying a french mortgage. Has anyone had it repossed and then been chased in the Uk for the remainder of the balance?

Thanks

Paul

Has anybody had to deal with Celelem regards mortgage arrears,originally the mortgage was through UCB but its now Cetelem.
Every letter/document is in french so i have no idea whether the loan is a non-recourse,nor do i understand what they send me.
Its hard to believe i bought a property in a country whose language i do not understand,the sleepless nights are just part of my life now.
This was a pension plan but has turned into a bed nightmare.

BROPH

Hi Virgo65,

Good luck tomorrow . I don't know the answer to your bankrupcy question, it seems to be almost impossible to get a straight answer. Do you have to get representation to go on your behalf tomorrow?

Having had two phonecalls from my bank in as many days, I haven't heard anything since - they were to e-mail me the details of the new agreement they were offering me. So I guess I'm also back to square one!

Hi Botron,

Welcome to the club. Something is very wrong with the leaseback system, as this keep happening. Read every post on this forum as it will provide you with information. Nothing will come of your situation unless you get out now. In real terms, cut your losses and never invest in France again.

Property: Horizon Bleu Unit Theoule

I hope somebody can help me. We bought a leaseback

property in France in 2006 and 3 months ago the money

stopped being paid into our bank account. I tried to

trace the company that paid so far, but can not get a

response from anyone. The company originally involved

Azur Assistance, sold it to another company and I fear

they are all no longer trading.

“We have sold this program under the mandate of a company

called "C'est la vie properties" with no direct contact

with the sellers. This property has been bought from a

private company and because of the economic situation it

looks like they are having difficulties.”

I also wrote to the notary but have had no response from

him either. We are now paying the mortgage, but we're

not in financial position to do so. Can anyone help?

Judging from all the problem mentioned above i would

rather not try and sell.

Is there another company that would take over the lease?

Is there anything I can do?

Thanks

Hi again to you all!

I have checked my mortgage offer from UCB and no mention

of non recourse!

By the way I am due in court on March 15th (next week) in

relation to repossession, I have been telling myself not

to worry, let them take it, I just don't care anymore. I

did email bank and lawyer over a month ago stating that I

would put property on market and try to get 115k for it

via real estate (their valuation) but they did not reply,

no word and obviously next week they will get court order

to sell with reserve of 40k! Such is life!

All propErties I have here are in arrears so what can

they do? Can they put me into bankruptcy?

Thanks for information to date.

This topic has 7 pages of posts and I have come across 1 post mentioning that they are being pursued by a bank in the UK. I would have thought that there would be more. On the other hand, there is plenty of fear of repossession. This is what banks really deal in, fear. Tbox did the right thing tell the banks that they can have it. Then you will see what it is worth to them. Doc66 is also right, mass default is happening. Write to your MPs and MEPs, there is a letter circulating through this forum. We need to be talking to each other and organising ourselves into groups according to the banks you are defaulting with. You might have to employ UK or French lawyers, so get prepared. If anyone is with a bank beginning with B then let me know through private messenger.

I have yet to default but it may happen due to the usual circumstances of management company being shut down, no rent received, currently awaiting news as to whether a new company will be able to take over but with a drop in rent (no three year increases as stated at time of purchase), a hefty taxes foncieres annual bill and quarterly maintenance fees (again, no mention of this at time of purchase)...has left me in lots of debt.

I also did not use my Irish home as collateral. My Irish home is in negative equity. I don’t have a car, and I have two maxed out credit cards, no savings and a hefty over-draft that I breach monthly. So, I have no “assets” for the French bank or tax authorities or government to recoup. What happens in that situation? The only asset I can think of is my pension but that is not something I will be able to access for a long time...indeed, can that even be considered as an asset?

For those of you currently going through the default process, please can you keep us informed of any developments, and I wish you the very best outcome that is possible in these circumstances.

Hi

A relative of mine bought 4 properties in France 5 years ago. The rent received does not cover the mortgages so he is subsidising the mortgages each year as well as paying French taxes and an accountant in France. He has a mortgage with a French bank but also a mortgage with an Irish bank. If he defaults with the French bank, he still has to pay the mortgage with the Irish bank so he is in a dilemma what to do. Any advice.

Thanks

Maria

Hi Westside

Unless your house in UK is collateral I don't see how they can get any

more out of you. As a French lawyer said to me if I was happy to lose

my investment, then just get on with my life. Easy to say I know.

You are not in a unique situation and there is always support in

numbers

i would not worry about it,they would have a lot to pick up if that was the case,

what about all the de faulters in this country,

do not worry about it,put it behind you,

did you try and talk to bank to give you a break in payments,etc

is there rent coming in from man co

Thanks Trimigistus (it wavers from time to time!).

I wrote to my local MP and MEP when my rent stopped first. They didn't do much; wrote to the french authorities on our behalf. We got a copy of the letter and heard no more. I wouldn't hold my breath for support.

I like your positive outlook pinkdog fan.

I still think the government needs to know what is going on here. French people must be affected also.

Morning everyone,

I am now well in to the default process. My last mortgage payment was May 2011. Apart from 1 bailiff letter and a monthly letter from the bank saying my payment bounced, that's it. I have the apartment up for sale, but no luck selling it. I have spoken to 2 french lawyers who have been very helpful. Both said (one more cautiously than the other) that the likelihood of following me for funds is practically zero. I did not use my home in ireland as collaterol. I expect at this stage it must be near the court date for repossession. After that I presume I'll be notified how much it made and how much the shortfall is. And they can sing for it; they're not getting a penny more out of me.

I paid Tax Fonciere in 2011, but not in 2012. I got another letter from them with 10% fee added on for late payment. Again, they will not get another cent from me either. After I got the second bill, I spoke to the french lawyer again asking what jurisdiction the french tax authorities have. Basically, they will put the amount of unpaid tax on to my repossessed property and this sum will be added to the amount I am expected to pay after the sale of the property at auction.

Another bill I'm due any day is the tax they will expect me to repay (we were exempt for it when purchased initially); again, I don't have the €8,000 or so that is so I'm going to tough that one out too.

These schemes were a joke; totally unsustainable and run by gangsters. I put my savings in to it when the rent first stopped; just to keep the mortgage paid. Well no more.

Sometimes I get down about it and go through phases of constantly thinking and worrying about it. But that passes! What can they do? NOTHING. My dad has been diagnosed with terminal cancer; months to live so this gives me new perspective.

Hi

I believe they can pursue you outside of France as posted

elsewhere. The questions are, how successful will the

actions be and what can you do to protect your assets?

I am in a similar position, Development incomplete,

management company hasn't paid the rent and as such I am

likely to default on the mortgage. I am trying to find

out what I can do to protect my assets. I also understand

that many french mortgages on buy-to-let are non-recourse

meaning they can only repossess the property and can;t

pursue their loss on your other assets. I can find see

anything on my mortgage offer to this affect so it may

require a lawyer to look at it.

If anybody has any advice or assistance it would be

greatly received as the whole situation has left me

feeling quite ill.

Mutley- did I read you have a website that may provide

some useful information?

Kind regards

HI All,

Has anyone actually gone through default, repossession of a

lease back, if so can they share their experiences and

maybe list the steps that heppen?

Thanks in advance

Sorry - it shoes how stressed I am - the name of the sire

is Le Domaine des Sources (not Les Domaines)!!

My husband has a mortgage on a French leaseback property

(in Les Domaines des Sources in Salvetat). We are still

getting rent from the holiday company we've leased the

property to (Odalys), but this has hardly increased over

the 8 and a half years we've had the property, and goes

nowhere near to covering our expenses. Now both my

husband and myself have been made redundant. Our main

fear is that the French bank might be able to re-possess

our UK home, although it is in my name only. I owned it

before I met my husband, and have never put his name on

the deeds, and he has never contributed to the mortgage.

We don't even have a joint bank account. Can anybody

advise please?

We are even more worried now because Odalys has indicated

that, as it is making a loss on the site, they might just

walk away in 2016. Our lease actually comes to an end in

July 2013,- we are trying to find out whether Odalys will

make us renew it, and if they don't, whether we should

renew it anyway. It's a holiday village with a pool and

club house on site, and we're at a loss to know what will

happen to them if either just my husband or a number of

people don;t renew their leases with Odalys.

We do know however that if Odalys insist on renewing, and

we refuse, it will insist that we pay them the equivalent

of two years rent in compensation. I don't know where

we'd find that money, but would it be better to just cut

and run, i.e. just to refuse to renew, and let them come

after us for the rent they want to claim?

Nightmare. Hope you get something sorted soon.

The writing has been on the wall for the past year. They first asked for a rent reduction of 20% and when the owners reluctantly agreed to this and signed new contracts, they then reneged on it and demanded a reduction of 40%. We refused to accept this of course.

Where they xxxed up is that they paid one quarter's rent with a 20% reduction, thus, inadvertently accepting that the new contract (20% reduction) was in force. They then stopped paying the rent, claiming that nothing had been settled which resulted in the owners having to bring legal action against them.

They closed the complex and moved out leaving massive bills for both services and repairs on the 22nd of October. It's been empty ever since.

r_cummings41225.5057407407

Indeed. Just a couple more questions - how quickly/when did they leave you in the lurch? Did you have any notice? Is the building being used/rented out at all now?

I think we need more than luck my friend. We need a French legal system that supports we landlords against unscrupulous tenants like Park & Suites. At the moment we don't have such a system.

r_cummings41225.215162037

Hi All,

I'm pleased to have come across this thread. I made the decision to default on my French mortgage last year after a nightmare leaseback experience. I bought mine in 2005 so didn't pay too high a price but have had rent income problems since early on that basically cleaned out my savings.

I haven't paid my morgtgage since May. However I still pay the Tax Fonciere - don't know why really, just reckon they might be more leniant when coming after me for the balance due after repossession!

I did A LOT of research when making this decision (one I did not take lightly). Basically, it's very easy for a French bank to get a judgement in Ireland against your assests here for money owed there. The courts here can then impose a judgement mortgage on your property meaning if your property is to be sold, the French bank must be repaid from the proceeds first. This judgement remains on the property for 12 years. During that 12 years, the French bank can enforce the judgement which then becomes an order for sale; basically you are forced to pay them even if that means selling your Irish property.

HOWEVER, I can never imagine it all getting that far. I would fight them so hard; we were basically duped in to buying these 'investments' which were "government backed" - yeah right. Very easy for these management companies to walk away and leave us high and dry without rental income. This left me using all my savings and basically cleaned me out. My weekly income dropped so much now that I could no longer sustain the French mortgage.

I have a friend who works in property law and repossessions in Dublin and has never come across an order for sale from a French leaseback property. Fingers crossed I won't be the first!!

I have been reading the posts here about French banks chasing people in
Ireland after they have handed back the keys of their French property. I
have also read that most French mortgages are non-recourse which means
the individual is not liable after they hand the property back. If this
is the case how can French banks chase the borrower if they had a
non-recourse mortgage?

Thanks for the support, I thought I was the only idiot to be duped by these

conmen!

So at this moment in time is anyone aware of any charges or repossessions

by any bank?

Hi,

I am paying the communal charges and I paid tax fonciere in December. I just got the bill for the accountant to lodge my tax return but I don't fancy paying them €300 when I have nothing to declare anyway.

I've given up the sleepless nights; like westside said, let them come after me; I can't imagine the Irish court making us sell our Irish property to fund the French who sold us a complete lie in the first place.

I will post any updates regarding our default - in our case it's CIF. Keep in touch.

Cheers guys, I really do not want to be stressed like I am right now, but all I

can think of is that the bank (SG in this case) will come for me & make a

charge on my property order the sale of my home - I am not sleeping!

Also, what are you doing about other bills you receive for communal charges

etc....?

the most inportant thing is not to stress yourself out about it,let the bank worry about it,they will have bigger problems down the line,they will put a judjement against you in france and may extend it to where you are from,but so what,

it will die with you,

put it behind you as a bad investment and get on with life,

Hi Savo,

I don't have a legal contact who deals with foreign property. I am now ten months in to my default and still just getting monthly letters telling me my payment was rejected. I wish they would just get on with the nasty process of repossession; it appears they don't want another failed leaseback on their books. I would think there are hundreds in similar positions.

Maybe the French will be losing one of the 3 stars on their credit rating as this leaseback fiasco starts to backfire on them!

Hi all, I'm also very pleased to have found this forum. My situation is much

the same, sold a package that seemed a no brainer ie 9 years lease back &

mortgage covered. Well no sign of developer/management company (Royal

Polmen, has anyone experienced them?) so no rent and on top of that I lost

my job last June just before mortgage was to commence.

I explained situation to the bank SG, who last October said "we are looking

for a solution". I kept chasing for updates & nothing & now I have defaulted

on 2 months mortgage & they are handing it on to the recovery team!

I am very concerned & stressed that they will come for our home in the UK - I

really could do with some sound/legal advice, has anyone got a contact?

We have also had a terrible experience with French Leaseback. Dealing with the bank has been impossible! They just will not engage in any discussion to delay or change repayment schedule to take into account lack of, or delayed rent. They will give a payment holiday but when that's done, even when the situation has not improved they will come down heavy.

We have made many enquiries also as to what would happen if they foreclose, repossess and sell at a loss - which is guaranteed, these properties are overpriced and the model simply doesn't work! It's true they can follow you to Ireland but I think a Judge in Ireland would be more sympathetic to the strenuous efforts to negotiate with the banks and their total lack of interest in reaching a compromise - it's either pay the full monthly amount, on time, or default. We feel we have no choice but to walk away from this but we're doing everything we can to show our efforts to come to a mutually acceptable arrangement with the bank.

Another avenue to look at is 'reckless lending' by the bank. We were presented with a complete 'package' - purchase of apartment, management company in situ, mortgage lined up, syndic company etc etc. It can't just be the naive investors to get stung in this mess.

Thanks for relevant info, to follow up.

How can I find out if my mortgage is non-recourse? It sounds like I need someone who can offer impartial advice having translated my mortgage agreement. A bilingual notary? I can try asking my lawyer again but I have the feeling that the answer will be non-advisory as banks are 'above the law' it seems. I just want to know what I should have known then so I have some good solid info.

Thanks a mil westside for your kind reply.

Would you mind letting me know who sold your property in

France for you as I might just try them. I have 3 months

to do something but it certainly won't be stress!

Happy New Year to all!

hi virgo

sorry to hear about your situation,but unfort there will be more like you and me,

its hard to believe that they will sell it at a reserve price of 40,000,it is surely worth more than that,i am thinking of de faulting as well,i will go to interest only if they will give it to me,but that will only tie me over,til i sell my other place over there,that is mortgaged here on my family home..........a big mistake,

saw another case in the alps where the bank had a place for auction and had the same reserve actually,you had to pay a fee to get in to the auction,never found out what it sold for after,but it was the same development where i sold for 128,000,late last year,

i still think they will not be able to go after us here,i have a friend who de faulted in spain,i would think there is thousands there who have and he has heard nothing in over 18 months,

best of luck whatever you do,but do not let it get to you,your health and family are the most important things in life,read ml duignans book, ex offaly player,and you will feel better,

keep in touch everone...............there is support in numbers

Hi there,

I am also in the same boat. Due to this dreadful

recession I lost 2 businesses and have barely enough to

put food on table. Also the French management company

didn't pay the first years rent so I used all my savings

to keep things going.

Unfortunataly, after seeking to pay a minimum amount to

my french bank they refused so I defaulted on my

mortgage, that was about 10 months back. I have now

received a court order to say that my property will be

repossessed on March 15th 2012 and sold with a reserve

price of 40k, I bought for 126k incl vat! I owe bank

103k but with charges this has increased to 117k!

I really don't know what to do? I read somewhere that if

one offers to pay the bank an amount, they must accept

this (note they were very understanding the first year

when the trouble started with management company and

reduced mortgage payments for me). They have seized my

rents since Sept 2011 and have also frozen my french bank

account.

I would rather pay a minimum amount and see if things

will improve for me in 2012 but I guess unless I get good

advice or a perhaps join a group to put the repossesion

off for this year I will have no choice. Did Mutley say

that his friend was 3 years without paying a mortggae and

still did not have their property repossessed?

Thanks for any help/advice you can give.

TBox - I can confirm that everything you have said is correct. In my professional capacity I deal with clients in the UK and Ireland who have leaseback properties and I have seen first hand both the banks and the Government seizing funds on account and issuing court orders in the UK and Ireland.