LeaseLegal

Question put to EU Parliament by Clare Daly MEP

Clare Daly MEP has put a question to the European Parliament in relation to the scandal of French leaseback properties. She specifically focuses on the enduring nature of the lease contract or ‘eviction compensation’ to exit and asks what steps the EC plan to take to ensure that France upholds its obligations under Directive 93/12/EEC.

The scandal of the French ‘leaseback’ scheme is well known.

Since 2017, France’s General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) has been
investigating the matter. Several matters are at stake, including ‘eviction compensation’.

The purchaser of a leaseback property signed a lease contract for 9 (or 11) years, and the seller made
them understand that the contract ended then. However, this was not the case under Article L145-14
of the French Commercial Code, which sets out that these contracts are given to consumers as part
of a tax incentive. After 9 years, purchasers cannot reclaim the property without paying ‘eviction
compensation’: a considerable and prohibitive sum that effectively traps the consumer in the contract
indefinitely. This is not in the original contract, thus constituting a ‘hidden term’. This type of contract
was a requirement from the French authorities under the tax incentive (Demessine law and others).

This would appear to be a clear breach of Directive 93/13/EEC on unfair terms in consumer
contracts(1). Consumers subject to these contracts cannot get a fair hearing in a French court since
rulings are made with reference to the French Commercial Code, and not to EU consumer law as it is
transposed to French law.

What steps will the Commission take to ensure that France upholds its obligations under Directive
93/12/EEC?

The 6 million dollar question.

Or much, much more than that. The building of French tourist infrastructure is financed by a French leaseback tax incentive. It is paid for by individual consumers (not real estate investors and experts) who pay for a French leaseback property.

I use the word ‘pay’ since the word ‘buy’ implies that you get something for your money. With French leaseback it seems to many consumers that they ‘pay’ but somebody else gets the benefit!

Read the full question at https://www.europarl.europa.eu/doceo/document/E-9-2021-001291_EN.html

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