European Commission furthers kafkaesque treatment of EU citizens


EC Commissioner for Justice, Didier Reynders, responded to a parliamentary question posed by Irish MEP Clare Daly on the action to be taken to provide justice for those abused in the purchase of French leaseback properties. Commissioner Reyners’ reply suggests that the European Commission have forgotten just who they represent! The unwillingness for the EC to acknowledge that the French state is in breach of the directive on Unfair Terms in Consumer Contracts is puzzling.

To say the least.

MEP Clare Daly’s question:

In his answer to Written Question E-001291/2021, Commissioner Reynders acknowledged that purchasers of French leaseback properties ‘may have been misled, or insufficiently informed about the effects of the contract […], including for example the applicability of the eviction clauses’ and that ‘such professional contracts would certainly deserve clear explanations given to potential buyers of tourism residencies with rental services included’.

Furthermore, the matter of ‘eviction compensation’, which the leaseback purchaser must pay in order to claim back the property, is a clear breach of Council Directive 93/13/EEC on unfair terms in consumer contracts.

With that in mind, what steps will the Commission take to ensure that purchasers of French leaseback properties are not penalised by hidden terms in their contracts – such as eviction compensation – which breach Council Directive 93/13/EEC?

See the original question put by Clare Daly MEP.

Commissioner Reynders’ reply:

EN  E-003030/2021
Answer given by Mr Reynders on behalf of the European Commission

The Commission confirms its answer to written question E-001291/2021. The contracts in question, which concern the renting of holiday properties via service companies, are considered as contracts between professionals under French commercial law. The EU Directive on unfair contract terms (1) only applies to contracts concluded by sellers or suppliers with consumers and excludes contracts between persons acting for purposes relating to their trade, business or profession. Moreover, such contracts seem to reflect mandatory statutory provisions under French law which are applicable to the parties to the contract independently
of their choice and hence they may not be subject to the above-mentioned Directive pursuant to its Article 1(2).
The Commission does not have the power to assess individual private disputes related to the qualification of a contract as a consumer contract and the existence of unfair contract terms, which need to be dealt with by national courts taking into account all the factual and legal circumstances of the case.

(1) Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, OJ L 95, 21.4.1993, p.29.

To recap, the unfair term being referred to is the fact that the contract indicated, and purchasers were told, that the duration of the lease contract they were about to sign was 9 (or in some cases 11) years. But, under the French commercial law governing these contracts they go on forever unless the other ‘landlord’ party ends it. These landlords are typically large companies operating in the Résidence de Tourisme sector and well versed in French real estate law. The tenants are typically individual consumers who are not operating in this sector and not cognisant of the complexities of French real estate law. They must pay an eviction compensation to get out of the contract. This can run to thousands (figures of €50k have been mentioned). Indeed even when the owner becomes aware of this enduring nature of the contract, it is never clear what this amount is (it is based on a gross turnover figure supplied by the landlord).

In summary, what actually happened in many cases is that consumers paid over the odds for holiday properties since they were told they had a lease contract which provided for ‘guaranteed’ rent, they signed this lease contract which they believed was for 9 years, then the companies reneged on the ‘guaranteed’ rent, but the consumer was not able to get possession of their property. As ‘owner’ of the property, the consumer continued, and continues, to be stiffed by mortgage repayments to French banks, French council taxes (Taxe Fonciére), syndic maintenance charges etc. But he can’t end the contract, and in many cases has no access to the property.

Commissioner Reynders states that the lease contract signed by purchasers of French leaseback properties, known as a ‘Bail Commercial’ or Commercial Lease, is governed by French Commercial law. This is true. Those who signed these contracts discovered this to their detriment. He also states that this law considers these contracts as only signed between professionals.

The use of this specific type of contract is mandated by the French state to be used in the French tax investment scheme, commonly known as French leaseback. However the tax incentive is aimed at individuals, not professional French real estate entities. The scheme was devised to encourage individuals to effectively pay for creation of tourist infrastructure in France. And it has been successful in doing so. The individual gets some tax breaks (in France) and does not have to pay TVA (VAT) on the purchase of the property. That is the scheme.

It is marketed at individuals, at consumers.

The tax mechanism used by those consumers in France is known as LMNP, which is non-professional furnished rental.

The EC has been provided with all of these details. The national consumer authorities in Ireland (CCPC) and UK (CMA) have been given complaints by consumers who were mis-led on this contract. The DGCCRF have investigated. But the DGCCRF is part of the French Ministry of Finance, the same government department that devised the tax scheme in the first place – the same department that consistently refuses to make any effective changes to the scheme to make it transparent and protect consumers.

So, why is the EC Commissioner for Justice pretending that Irish purchasers of French leaseback holiday homes are French real estate professionals, when they are in fact Irish farmers, IT professionals, doctors, postmen (you get the gist) who knew nothing about French real estate when they were sold these properties?

Could it be because:

  • he is an imbecile? unlikely – he is an EC Commissioner after all
  • he was poorly briefed? unlikely – owners and national consumer authorities have been in constant contact for years with the EC on this issue, and he has assistants/researchers to provide such briefings
  • he is corrupt? unlikely – it is doubtful that someone gave him a ‘brown’ envelope (though who knows – these are large French companies who have a lot at stake, and such a thing is not unheard of here in Ireland, particularly involving real estate development)
  • he is politically motivated? possible – maybe he doesn’t want to antagonise French politicians, maybe he’s pals with Bruno le Maire etc, maybe they vote in some alignment
  • the EC operates to a default position (that civil servants are long accused of) of doing the least possible? hopefully not
  • from a political perspective, the EC is happy to go after US tech giants (and rightly so), but not so happy to go after the second biggest member of the club? perhaps – and if so, is this where the EU project fails?

Note that back in 2004 the ECJ ruled against Spain in a judgement in a case on this same directive. Why not France?

What do you think?

Constructive replies please to Commissioner Reynders at  or

Many thanks to Clare Daly MEP for progressing this on behalf of over 6 thousand people who signed a petition seeking justice.

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DGCCRF criminal investigation is complete


Purchasers of French leaseback properties who submitted consumer complaints to the CCPC alleging mis-selling have received confirmation from the CCPC that the DGCCRF (French consumer national authority) criminal investigation is now complete. This process started in 2017 and is welcome news. Their report will be handed over to the French public prosecutor who will decide if it will go forward to the criminal court.

See below for the full text of the DGCCRF communication:

Projet de communiqué de la CCPC aux investisseurs irlandais

The DGCCRF, which is the French consumer protection authority, brought to the CCPC’s attention the following update on its Sale and Leaseback investigation.

The CCPC have been informed that the investigation conducted by the National Investigation Service (SNE) of the DGCCRF has been completed.

The report has been finalised and should be sent shortly to the public prosecutor.

According to the French legal framework, it will be up to the prosecutor to decide whether to refer the case to the criminal Court.

In case of referral to the criminal judge, the Irish complainants concerned by the scope of the report sent to the prosecutor will receive a formal notification of the proceedings introduced before the criminal Court, so that they will have the possibility of bringing a civil action during the investigation before the criminal judge.

At this stage, the outcome of the referral to the public prosecutor cannot be known.

In addition to the difficulties related to the evidence of possible infringements,  the combination of the age of the Irish investments, the liquidation of some undertakings and the constraints resulting from the Covid-19 pandemic has made this investigation very complex.

The DGCCRF will inform the CCPC when the reports are handed over to the Public prosecutor and will draw the latter’s attention to the importance of keeping complainants informed about the state of play of proceedings.

Projet de communiqué de la CCPC aux investisseurs irlandais

La DGCCRF, qui est l’autorité française en charge de la protection des consommateurs, a informé la CCPC du suivi de son enquête sur les résidences de tourisme.

La CCPC a été informée que l’enquête réalisée par le Service National des Enquêtes (SNE) de la DGCCRF est achevée.

Le procès-verbal a été finalisé et devrait être transmis prochainement au procureur de la République.

Conformément au cadre légal en vigueur en France, il appartiendra au procureur de décider de le transmettre ou non au  juge pénal.

En cas de saisine du juge pénal, les plaignants irlandais concernés par la portée du procès-verbal  transmis au procureur recevront une notification formelle de la procédure introduite devant le juge pénal, afin qu’ils aient la possibilité de se constituer partie civile au cours de l’instruction devant le juge pénal.

A ce stade, l’issue de la saisine du procureur ne peut être connue.

Outre les difficultés liées aux éléments de preuve à rapporter pour caractériser de possibles infractions, d’autres paramètres tels que l’ancienneté des investissements irlandais et la dissolution de certaines entreprises, combinés aux contraintes résultant de la pandémie de Covid-19 ont rendu cette enquête particulièrement complexe.

La DGCCRF informera la CCPC de la transmission du procès-verbal au procureur de la République et attirera l’attention de ce dernier sur l’importance de tenir les plaignants concernés informés de l’état d’avancement de la procédure.

The CCPC have indicated that since this is a criminal matter, they will not be communicating further with owners unless requested to or authorised to do so by the French authorities.

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Investing in tourist residences is “risky”, according to Bruno Le Maire


Guillaume Errard has a piece in Le Figaro on the possible reform of ‘risky’ nature of French leaseback property purchases:

The article features a letter written by Bruno Le Maire, French Minister of Economy & Finance  dated April 7 and addressed to Brigitte Kuster, which appears to discuss reform of the leaseback system:

” A reform aimed at improving information pre-contractual […] in order to better warn of the risks associated with this type of investment, is currently under study ”,

Ce type de contrat est assez contraignant pour le bailleur qui doit, dans certains cas, verser des indemnites d’eviction pour ne pas reconduire son bail. Face a cette problematique, une reforme visant a ameliorer l’information precontractuelle des investisseurs en residence de tourisme, afna de mieux avertir des risques lies a ce type d’investissement, est actuellement a l’etude. L’objectif de ce projet de reforme est motive par le constat du caractere risque de l’investissement en residence de tourisme, ce qui requiert une information objective des investisseurs, a l’instar des obligations d’information prevues pour les produits financiers.

This type of contract is quite restrictive for the lessor who must, in certain cases, pay eviction compensation in order not to renew his lease. Faced with this problem, a reform aiming to improve the pre-contractual information of investors in tourist residences, in order to better warn of the risks associated with this type of investment, is currently under study. The objective of this reform project is motivated by the observation of the risky nature of investment in tourist accommodation, which requires objective information for investors, like the information obligations provided for financial products.

Errard goes on to write (Google Translate):

The setbacks of investors, engaged in arm wrestling with their manager, pushed Bruno Le Maire to act. ” The objective of this reform project is motivated by the observation of the risky nature of investment in tourist residences, which requires objective information for investors, like the information obligations provided for financial products ” , continues the minister. In other words, we could consider that the process be validated by the Autorité des marchés financiers. A safeguard which would indeed not be useless for an investment whose income is supposed to be guaranteed.

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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

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

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French consumer watchdog DGCCRF and French leaseback scam


Peter O’Dwyer reports in the Sunday Business Post that the CCPC has written to the DGCCRF requesting an update on their investigation into the alleged scam involving the French leaseback property purchases by Irish consumers.

The CCPC have stated that an assessment will be made on the information provided by the DGCCRF in order to determine if there was a breach of consumer protection by Irish traders.

“When they have completed their investigation, the DGCCRF will provide to the CCPC, information on any potential concerns or infringements with respect to Irish agents identified during the course of their investigation,”

Read Peter O’Dwyer’s full report from 6th April 2021: French consumer watchdog probes holiday home scam

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Irish parliament questioned on DGCCRF investigation


Tánaiste Leo Varadkar (former Irish Prime Minister) was questioned in the Dáil (Irish parliament) this week on progress made by the CCPC on the 150 complaints made to them by Irish consumers in relation to French leaseback purchases. The question was posed by Catherine Connolly TD.

Mr. Varadkar replied:

“The CCPC received complaints from Irish property purchasers and provided an initial preliminary assessment to the DGCCRF for over 150 complainants,” he noted.

The sale documents from the Irish buyers have been transferred to the French authorities. “The CCPC has and continues to provide significant time and resources to this matter and to support the DGCCRF investigation,” he added.

“In order to protect the integrity of the investigation and comply with relevant French criminal procedural codes, the DGCCRF requested that the CCPC refrain from commenting or communicating on the investigation other than providing updates,” said Mr Varadkar.

“When DGCCRF has completed its investigation it will provide to the CCPC information on any potential concerns or infringements with respect to Irish agents identified during the course of their investigation.”

“At that point, the CCPC will assess the information provided by the DGCCRF in order to determine whether there was any breach of consumer protection legislation by Irish traders,” the Tánaiste said.

Note that the CCPC received over 200 complaints from Irish purchasers in 2017. They stated at that time that the matter was immediate priority issue for their Consumer Enforcement Division. The issue has been raised in the European Parliament and European Commission. However, the French DGCCRF have not provided any reassurance to Irish consumers.

The first round of comprehensive complaint details were sent from the CCPC to the DGCCRF before the end of 2017. Given we are now in Q2 2021 and there is no visibility of any useful or just conclusion, it seems that EU Directives to protect consumers may not be worth the multi-lingual paper they’re written on…

Where is EU Justice and Consumers?

There has been no assistance to those faced with large mortgage repayments on properties that many owners believe were over valued at the time of sale and fraudulently sold on the basis of ‘guaranteed rent’ and trapped in a never ending leaseback contract. This contract is of the French governments design, a scheme designed to promote French tourism, basically a scheme to have individual consumers pay for tourist infrastructure.

Read the full report by John Mulligan in the Irish Independent on 27th March 2021: Irish authorities are aiding probe into French property

The CCPC have also responded to request for an update from Clare Daly MEP:

This matter is a DGCCRF criminal investigation and the CCPC have been requested to comply with the requirements of Article 11 of the French criminal procedure code and not comment or communicate on the investigation unless permitted to do so by the DGCCRF. In order to protect the integrity of the DGCCRF investigation, the CCPC has strictly adhered to this requirement. In April 2020, the CCPC was advised that due to COVID-19 the DGCCRF investigation had been disrupted and that this had delayed progress on the matter. However, we have continued to engage with them and to seek updates on progress. Although the COVID-19 crisis has impacted their investigation, we are assured that work has continued and the matter is being progressed.  The CCPC appreciates that the French legal system confidentiality requirements may be considered difficult and frustrating for the complainants affected. However, please be assured our priority in the CCPC is to continue to support the DGCCRF investigation and to ensure that we comply with the legal procedural requirements of the French criminal investigation process.

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French Court de Cassation rules in favour of leaseback owner


The purchaser of a French leaseback property, in believing that he was deceived at the time of purchase, took a legal action in France against the promoter and his commercial partners in the sale. The owner lost the initial action and the Court of Appeal at Aix-en-Provence subsequently also ruled against the owner. However, on September 4th 2020 the Court de Cassation overruled this Court of Appeal judgement and found that the

Following the judicial liquidation of the first tenant (the initial operator of the tourist residence), the investor had to accept a reduction in rents in order to retain the benefit of the tax exemption.

The Court of Appeal had ruled on the one hand that the commercial brochure provided to the buyer indicated “only that profitability was ensured by the fact that the investor will take out a firm lease of eleven years with the operating company” , so that she had committed no fraud.

The Court of Cassation rejected this interpretation and quashed the judgment of the Court of Appeal on the grounds that it should have sought ”  if the commercial brochure did not present the investment as having guaranteed profitability”.


See the judgement at


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Updates on Belambra and Pierre et Vacance


Belambra Leaseback

From Martine Denoune:

Leader in holiday clubs in France, the Belambra Clubs group has just sold to Atream, an independent real estate and private equity fund management company, the common areas of the “  Domaine de Mousquety  ” in L’Isle-sur-la-Sorgue (84 ).

Let us hope that this sale will allow Belambra to avoid unpaid rent which seriously penalizes its lessors, the private investors of the holiday homes it manages.

See the comments below Martine’s post for owner’s views and defense groups.

Pierre et Vacance Leaseback

From Martine Denoune:

The leading operator of tourist residences in Europe, the Pierre & Vacances group has just confirmed the importance of the impact of the Covid 19 crisis on the start of its 2020-2021 fiscal year.

On January 28, 2021, the group’s Board of Directors decided to request the opening of an amicable conciliation procedure.

On February 2, 2021, the President of the Paris Commercial Court opened a conciliation procedure with regard to Pierre & Vacances SA and some of its subsidiaries, for a period of 4 months, which may be extended.

Again, see the comments below the post for owner reaction and defense groups.

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“French ‘Timeshare’ Bombshell” says The Times


The Times reporter Emanuele Midolo reported on Friday on the continuing French Leaseback issues. He reported on the treatment of owners by Madame Vacances (owner Eurogroup).

In June this year Madame Vacances owner Eurogroup, based in Chambéry, sent letters to all owners who had bookings between July and August. Due to Covid-19 the company claimed extraordinary circumstance (or force majeure ), cancelling all owners’ holidays and renting out the houses instead in order to raise money.

Owners tell how when they showed up to use their property for their holidays they found the locks had been changed and they were not ‘allowed’ in to their own house. At least not without paying a full tourist rental rate.

They describe how their lease stated that no ‘eviction payment’ would be demanded by the operator in order to exit the lease. However, as Irish and UK leaseback owners have discovered to their financial and personal detriment, eviction compensation can always be demanded under French Commercial Lease law. Of course these properties were marketed at consumers, not real-estate professionals. Therein lies the trap.

As one owner says:

We feel it’s their property and we’re just paying for it..

A French legal company, Goethe Avocats, which specialises in leaseback problems (or ‘nightmares’ as many owners would have it) and represents around 7,000 clients explains that:

.. under French law these contracts cannot be terminated without paying a fee— not even after the contract with the leaseback operator expires.

The same firm contributed recently to a documentary on the subject made for RTE called Burnt by the Sun.

Eurogroup asked one owner for  €64,000.  The owner estimated her property to be worth €120,000 to €130,000. As she put it:

You’re basically giving them back everything you would have earned — and more

About 100 owners at the site mentioned in the article are now suing Eurogroup in order to exit their contracts without ‘indemnité d’éviction’ and for damages for lost holidays.

Good luck to them !

Read the full article here.  It will be published in the print edition of The Sunday Times (UK edition) on 18th October 2020.

Read more about the DGCCRF investigation into French Leaseback issues.

Richard Green, the manager of Madame Vacances (Eurogroup), also featured in the Victoria Derbyshire program on French Leaseback in Sept 2017.

It seems little has changed…

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