The operator (tenant) waives the eviction compensation in the commercial lease, knowing that this waiver is not valid (not enforceable). The judges cancel the lease. The operator of the French leaseback property (tourist residence) is not entitled to an eviction indemnity (damages called in French : indemnité d’éviction).

1. French Leaseback

5. BUYING / SELLING or RENTING a real
estate in France can be tricky
You want to buy or sale a French
Leaseback or a property.
Many issues arise when you buy and
sell or rent real estate in France :

7. •Breakdown of appliances before settlement
•Rent review in France
•Buying real estate in France: Preliminary
agreements
•Deposit after signing a preliminary
agreement ?
•What contract should my French lawyer
review ?
•Selling Real Estate in France

8. •Choosing a Real Estate Agent in France
•What kind of contract should I sign with the real
estate agent in France ?
•Eviction of a Tenant in France (unpaid rent)
•Buying property in France that needs refurbishing
•Real estate Latent Defects (hidden defects)
•Can I terminate the lease ?

9. LEASE BACK INVESTMENTS IN
FRANCE ARE COMPLICATED
There are specific considerations
for French lease back investments :

11. •Termination of a Commercial Lease due to
unpaid rents
•Termination of a Commercial Lease in France
•Charges and Commercial Lease in France
•Obligations of the managing/operating company
•Responsibilities for lease hold repairs.
•Selling a Commercial Lease in France

13. •Legal solutions and Litigation in France
•The notice period under the French Law
•What should I do if my tenant in France is not
paying rent ?
•4 pitfalls to avoid when investing in a student
residence
•Trap: serviced residence rents which are too high
•Service premises in a co-ownership

15. French
leaseback
problems

16. Since the 80’s and the 90’s, several thousand of owners
bought leaseback property in France. The operating
company states the return profit would be 4 % to 5 %
per year. Sometimes the builder sells himself the real
estate.
During the 2000s, the operators marketed the French
Leaseback overseas and especially in the UK and Italy.
It was marketed as a risk-free and high return
investment.

18. The leaseback schemes were aimed to put enough
renting properties on the touristic areas of France. The
government and the big leaseback companies present
it as a win-win solutions for operator, investor and the
economy. The leaseback companies lobbied the MP’s
int the French Parliament.
A lot of buyers thought they will be able to have a
holiday home in France after 9 years (or at least 20
years).

19. Tax cuts, vat refund and rental income
The purchaser benefits of a VAT refund,
because his deal is funding a new build in
France. The operating companies and/or
the construction company doesn’t has to
finance with costly bank loans.

21. The french tax agency does not collect VAT on these sales. This tax
cut comes from the french law voted by the Parliament. The French
government wants to boost the real estate industry. Construction and
tourism are creating a lot of jobs in France. The idea is to put on the
market enough holiday homes and flats to rent for few days or a week.
The leaseback scheme works around an operator, who rents to
tourists or students. The operating company has to paid guaranteed
rent. It means the yearly rent is the same, even if the flat isn’t rented
during the low-season. The leaseback owners are supposed to be paid
every year without having to care about the daily business of the
tenant.
Tax cuts, vat refund and rental income are the main reasons for buying
a leaseback scheme.

23. Why is there a problem with French Leasebacks?
Why are so many owners are trying to sale by publishing on real estate websites
specialized in french leaseback resales ?
Many buyers have been misled by the leaseback companies.
The purchasers and future owners think themselves as consumer. But under the
French law, they are more merchant and professional, regarding the lease (and not
the buying of the real estate). So, the owner is a commercial lessor and the lessee
(tenant) is supposed to be the weak party, like a consumer ! Yes, it is outrageous !
But why? The buyer of a French leaseback property signs a commercial lease,
when buying the real estate.
The year lease is a commercial lease. It means that a complicated set of rules
applies to this contract. The real estate agent and the notary doesn’t explain it the
buyer.
For instance, if the lessee wants to renew the lease, the owner cannot refuse
without paying damages (indemnite d eviction). The only way to avoid paying
damages is to prove a major breach of contract by the tenant (operator).

24. THANK YOU
FOR
WATCHING

25. THE
END
https://frenchrealestatelaw-traesch.fr