France TV 2 news programme Journal featured a piece on French Leaseback on 17th July 2019.
It featured one owner from a residence de tourisme in Deauville and another owner from Domaine des Fontenelles, operated by Madame Vacances. It seems that MMV are looking for €50k eviction compensation from this owner, while the contract that the purchaser signed explicitly stated that no eviction compensation would be payable.
Is this a breach of a consumers rights ? Is EU Consumer law supposed to protect consumers of member states from this kind of planned abuse ?
There was a contribution at the end from a French lawyer, Maitre Bertrand de Campredon of Goethe Avocats (specialists in leaseback issues).
See below for a transcript of the programme kindly prepared by an owner in a residence in Languedoc.
Now to continue with our summer series we are turning to the question of your holiday money, should you invest in a residence de tourism is the question we are asking ourselves today. You buy an apartment which, while you are not there, is rented out by an operator who looks after everything and pays you rent with significant tax advantages. It is a model that was first conceived in France 50 years ago. But is it such a good idea for your holidays and as an investment? For the answer we are going over to Deauville for a report by our colleagues Hose Laminale, Denise Semoniaire and Pascale Carreau.
By the sea, in the mountains, touristic residences are seducing more and more French people. “When you look at the residence as a whole it is fantastic” says one owner. There are 140,000 owners like him in France. In principle you simply buy an apartment, let it out for most of the year without paying tax on the rental income. But is it really such a good deal? Gary Powers is owner of this apartment which has 62 square meters in Deauville. “We have a view over the swimming pool and the marina”, he says. His apartment is situated in a touristic residence which he only occupies for 8 weeks each year. The rest of the time it is rented out. The operator of the residence pays him a rent which can be as much as 4000 euros a quarter. “It is good because I do not have to go looking for guests or take care of the place while I am away, this solution suits me perfectly.”
It did not exist 50 years ago but today touristic residences account for about a quarter of all professionally managed touristic residences. “It is a model that works well today as it allows individual guests to choose where they want to stay and after that to do what they want”. A booming market, satisfied customers, well not always. Many owners regret having bought accommodation in a touristic residence. Such is the case with Caris Decamile. He is the owner of an apartment managed by an operator. When he signed up he was told he could end the lease after 9 years without paying any indemnity to the operator as stated in his contract. Problem! Notwithstanding what his contract says the law allows the operator of the residence to claim an indemnity, in his case 50,000 euros. “You come to realise that you are caught up in a system which is very costly if you want to get out of it…legal actions, lawyers’ fees, bailiffs charges etc”, says this owner.
According to his lawyer many owners sign a lease without understanding the legislation. “The problem is that owners are not well informed and they simply do not have the legal knowledge to understand properly the commercial lease and the difficulties which can arise from it. On the subject of an eviction indemnity you need to be a technician, a lawyer to understand what an eviction indemnity is”.
Many associations are now asking the government to ensure that the law gives better protection to owners in a touristic residence.
Do let us know of any corrections to the above.
The piece is 26 minutes in and is about 3 mins long.
You can watch it here :