CCPC Update

Uncategorized

The CCPC (Competition and Consumer Protection Commission) in Ireland delivered the first batch of cases to the French DGCCRF (Directorate General for Competition, Consumption and Fraud Control) at the end of October and a second round of cases is due to begin delivery to them this month.

The CCPC have said:

“The DGCCRF has informed us that it is assessing the detailed information sent by the CCPC in preparation for the commencement of investigations in the New Year. DGCCRF has given assurances that it will devote the necessary staff to the assessment of this case.”

The CMA (Competition and Markets Authority) in the UK have also submitted complaints.

The new French Ambassador to Ireland, M Stéphane Crouzat, was approached by Irish owners. In response to both the complaints and the request for information on the rules pertaining to the leasebacks, the embassy engaged with both the CCPC and the DGCCRF. M Crouzat has indicated that it will take more time:

“We are fully aware that this is a lengthy process but please be assured that all parties will continue to work to try and resolve this matter”.

However, in the meantime, owners are being called to court in France for re-possession proceedings and are receiving demands for payment here at home via the Courts Service for mortgages on French properties they were sold with false and misleading promises.

The French authorities devised the scheme. They must take responsibility for their role and step up to the challenge to rectify.

And that is not a matter of ‘tweaking’ the French laws going forward in order to protect the economic boon that leaseback has been for sectors of the economy, but to actually protect the citizens of France, and of Europe, that have already been trapped by this government-initiated tax ‘incentive’!

Forbes

See this recent Forbes article by Jean-Jacques Manceau (sorry M Manceau – it’s a Google translate) –

“Only here, for many investors, the dream has gradually turned into a nightmare . According to a government report, the injured investors are estimated at about 10% of owners, nearly 20,000 people.

..

Specifically, buyers invested in tourist residences, managed by large groups, such as Pierre and Vacances, Lagrange or Belambra , which guaranteed them a lease for nine years, as part of a commercial lease.

Then, when the lease expired, the same operators renegotiated the lease payments they had signed between -15% and -50%. In case of refusal, these managing companies threatened to close the door. As a result, the homeowners were destitute, with monthly payments and charges still running, an unoccupied residence .

While the government is exploring ways of reform to improve the prior information of investors, including the risks involved, a working group bringing together the players in the sector was set up by the Directorate General of Enterprises (DGE) .”

Indeed, if the French governments idea of ‘reform’ is to increase the font size in a brochure (warning on the real implications of signing a commercial lease in France), then I think they need a lesson on ‘reform’..

Lipstick on a pig won’t cut it.

Of course they know it stinks, and to protect investment in the French economy it seems they have a new idea – ‘FILM’.

 

I’ll take a rain check on that lads..

Read more >

Legal Advice in Ireland for French Leaseback Mortgage Default

Legal

There are many purchasers of French leaseback properties that have defaulted on their French mortgage due to the absence of rent that was promised in the original lease contract when they agreed to purchase the property. Many of these have had the property re-possessed by the French bank and have had a judgement made against them. Some are being pursued by the French bank, or by the company that the bank have sold the mortgage on to. There are others who are continuing to pay these mortgages, but are experiencing financial difficulty doing so and may be forced into a default.

Carley and Associates Solicitors are an independent law firm with Offices in Cork and Dublin. Eugene Carley is the Principal of the firm but he also works for New Beginning. He opened the Law firm to defend New Beginning customers in Court nearly 3 years ago.

Eugene has broad experience in Banking as well as a team of Barristers who specialise in defending people against Banks. Barrister Gary Fitzgerald is also excellent and very well versed in European law, and especially consumer law.

We hope that all owners who have experienced problems with their purchase of a French leaseback property have submitted a complaint to their national consumer protection agency. And although the European Commission has called for an investigation and co-operation between the consumer agencies of affected member states, there are many who have immediate difficulties.

If you are experiencing difficulty and you are looking for Irish legal advice you would be well advised to contact Eugene. He is up to speed on the issues being experienced. You can email him at eugene @ carleysolicitors.com

See Jim Stafford’s piece in the Irish Independent on French mortgage default.

See more about French banks’ role in French leaseback property issues

Read more >

Press Updates – Autumn 2017

News

Updated 5th Nov 2017

The Times

Peter O’Dwyer had another article in The Times (Irish edition) on 31st Oct 2017 – see Property ‘scam’ complaints passed to French watchdog.

The Times

Peter O’Dwyer had an article in The Times (Irish edition) on 10th Oct 2017, Irish Victims of Alleged French Property Scam Win Reprieve, where he outlines the view of European Commission regarding how owners can demand that a French court stay any re-possession proceedings until it is proven that the owners’ consumer rights were not violated. The statement was given to Peter by Veronica Manfredi, Head of Consumer Law Unit at the EC. Read more on EU Consumer Directives.

“If a consumer tells a court that he believes that his European rights have been violated, the court must stay the proceedings and assess whether this is the case. There is ample case law from the Court of Justice of the European Union on this, notably concerning mortgage enforcement proceedings,” the official advised.

Mr Hayes said the banks should halt their proceedings immediately: “The French banks granted mortgages to the Irish purchasers despite false and misleading information used in advertising and contracts. The guaranteed regular rental income never transpired and many of the properties halved in value.

He followed it up on 14th Oct with another piece, Irish Leaseback Buyers Get French Help.

“The DGCCRF assured us that it is committed to seek solutions for the consumers from other member states affected in this leaseback properties issue and it will contact the commission in case EU-level assistance to facilitate communications with the other authorities is needed.”

BBC2 Victoria Derbyshire

There was a fantastic film and discussion on the BBC2 Victoria Derbyshire program on 27th September 2017 by journalist James Melley. James had a great handle on the issues and the program clearly outlined the problems which Irish and UK purchasers of French leaseback properties have experienced. The program featured contributions from owners, Daniel Dalton MEP and Vicky Ford MP.

It also featured a contribution by Richard Green, head of Madame Vacances/Eurogroup, one of the leaseback operators that owners have taken issue with. His answer to Victoria Derbyshire when asked why he was demanding eviction compensation from the owner in the studio who was trying to get out of disadvantageous contracts was that it was ‘statutory’. It was as if French law required that he demand such huge compensation. Bless..he just can’t help it..

He also made reference to ‘rescuing’ the resort for owners and how it was the work of his people in France that had created such value in the resort for owners. The owner in the studio didn’t quite agree that he’d been ‘rescued’ and as for the value, well he reckoned he was down €70k.

Richard Green tried to put some spin on his message. Unfortunately for him, it went well off course.

Kudos to the BBC and James Melley for taking this issue to a national UK audience.

The program is available on the BBC Player for 30 days.

 

Irish Independent

Jim Stafford answered a French leaseback owners question in the Indo on 1st October 2017, How to Handle Sale and Leaseback Mess. The news wasn’t good. The owner wanted to know what would happen if he defaulted on his French mortgage. It’s a question that many Irish purchasers of French leaseback properties have asked. See Jims response:

If you stop paying the mortgage, the bank is likely to repossess the property and sell the property as a ‘distressed property’, which would likely increase your losses. The bank would then seek to recover any residual debt from you. It would first have to obtain a judgment against you in France. You could defend the proceedings on possible grounds of mis-selling, as many of the loans were organised through the developers. If the bank does obtain a judgment against you, it could then enforce that judgment through the Irish High Court by obtaining a European enforcement order against you. The bank could effectively attack the equity in your Irish home.

Having spoken to legal experts here in Ireland it seems that they don’t come cheap and trying to attack the family home would be a very costly exercise for the French bank (or vulture fund that they might sell the debt on to).

 

 

 

 

 

Click here for other press and media.

Read more >

CCPC Prioritises French Leaseback Issues

Uncategorized

The Competition and Consumer Protection Commission (CCPC) have informed Brian Hayes‘ office that the French Sale and Leaseback complaints are the immediate priority issue for the Consumer Enforcement Division.

They have received over 200 complaints from Irish consumers and expect to receive more.

The French equivalent consumer body, the DGCCRF (Direction Générale de la Concurrence, de la Consommation et de la Répression des
Fraudes), requested that the CCPC provide them with a summary of the situation in Ireland and a description of the main concerns of Irish consumers and a general legal assessment, in advance of their consideration of the matter.

In order to do this efficiently and effectively, the CCPC issued each Irish consumer who had submitted a complaint with a template document and they received most of these back by end August 2017. Due to the volume and complexity, the CCPC retained the services of an external lawyer to consolidate the returns and perform the general legal assessment requested by the DGCCRF. That exercise has now been completed and they are in the process of sending the information to the DGCCRF and they have updated them as to the current position.

As owners, we welcome the response from the CCPC and are reassured that they appreciate the gravity of the situation and the impact that it has had on Irish consumers, and indeed many Irish families.

We now await the response from the DGCCRF and are confident that the CCPC will undertake follow-up actions to ensure Irish consumers rights are vigorously defended and protected across the EU.

See also the issue raised at the European Parliament by UK MEP Syed Kamall and the answer from the European Commissioner for Consumers, Vera Jourová:

The Commission has been informed by other Honourable Members about loss-generating leaseback properties in France affecting French, UK, Irish and possibly other EU citizens. Leaseback property transactions are not regulated at EU level. In principle, mis-selling of products may fall under Directive 2005/29/EC concerning unfair business-to-consumer commercial practices which prohibits traders to mislead consumer, for example by making them underestimate the risks. As the Commission has no direct enforcement powers in cases where traders have acted against national rules stemming from EU consumer law, it advises concerned consumers to contact the competent national authorities, here the UK Competition and Market Authority.

The Commission services already informed the competent French authority (Direction générale de la concurrence, de la consommation et de la répression des frauds, DGCCRF) about the case and was assured that the relevant national enforcement authorities in the UK and Ireland will be contacted as part of the Consumer Protection Cooperation network under Regulation 2006/2004 on consumer protection cooperation.

Many thanks to Brian Hayes and his office for their continuing support.

See also How Irish consumers submit to CCPC.

 

Read more >

French Banks – Key Players in the Leaseback Problem

Financial

In one well appointed resort located in Languedoc in the south of France, the holiday season has begun and the pool is noisy with splashes and the restaurant humming. This is a Résidence de Tourisme (RdT) which on the surface looks carefree (‘insouciant’ if you will).

However, if you talk to most of the owners they will tell you that they purchased leaseback properties here with a love of France, but have found little to be ‘amour’ with ever since. Indeed it has taken owners quite a while to realise just how stung they’ve been. Many only realised last year that the lease they signed for 9 years in fact goes on forever.

But, there are a number of owners who would probably remain quiet. These owners are French banks.

The French banks lent money to Irish and UK purchasers to finance these pretty, but highly overpriced, properties like it grew on trees. These purchasers signed documents for the Notaire and had little, if any, direct contact with banks. Until they couldn’t pay the mortgage that is. The pattern of owners defaulting is a familiar one and all because the ‘guaranteed’ rent they had been promised disappeared. Then the banks reared up. Properties were re-possessed and sold for a fraction of the purchase price leaving a large mortgage hole, which the owners in many cases could not pay. Typically, these banks then sell the debt on and the owners are then faced with debt collectors and threatening letters to their home.

Credit Immobilier de France (CIF)

A number of the properties in this resort it would seem are owned by Credit Immobilier de France (CIF). Indeed the other French banks were not shy either, and it appears that Credit Foncier own a number, as do BNP Paribas. But there was an interesting article in Le Monde last week which singles out Credit Immobilier de France. And it is not surprising that this bank is mentioned in the same breath as the largest real estate fraud in France, L’Affaire Apollonia.

Almost nine years and three examining magistrates later, the case rebounded last January, thanks to a judgment of the Court of Cassation, which led the Marseilles magistrate, Valery Muller, to resume the investigation, in particular concerning banks . Already 32 indictments were handed down: that of manager of Apollonia, John Badache, its sales executives, three notaries, representative of the loan broker Cafpi and executives of various banks, Crédit Mutuel Mediterranean and especially Credit Immobilier de France (CIF) and its Rhone-Alpes subsidiary.

According to Jacques Gobert, the lawyer representing the association of victims of Apollonia (ANVI-Asdevilm, which has 400 members):

The CIF has consistently over-indebted customers, despite repeated warnings from the banking supervisor.

In 2012, following the degradation of its rating by the Moody’s agency, Crédit Immobilier de France was put under a “resolution plan”, a quasi-liquidation. The French state was then obliged to intervene and guarantees a maximum amount of 28 billion euros, until 2035 if necessary.

According to Le Monde:

The CIF is setting aside EUR 300 million of doubtful debts related to Apollonia’s customers, ie 15.5% of its total doubtful loans, which is significant, as the Court of Auditors and Finance of the Sénat , Senator François Marc (PS), in two reports, published in September and October 2015, respectively.

For Irish and UK leaseback owners, it seems that they are not alone..

Fédération Bancaire Francaise

And what do the the French Banking Federation have to say about the leaseback scandal ? Brian Hayes MEP sent them a letter to find out.

Benjamin Quatre, Director of European and International Affairs responded that the banks too consider themselves victims of this leaseback scandal !

They emphasised that they were legally prohibited from commenting on these schemes with respect to the individual involvement of their members.

It is important to note that all aspects related to taxes, profitability of the investment, explanation of the legal set-up prior to the purchase, and conditions of purchase of the property are not under the remit of the banks’ responsibility.

The latter decide to loan after having checked the solvency of the borrower.

In most cases the owners were clearly intending to repay the mortgage from the ‘guaranteed’ rent. In one case, the owner did not even have a job.

Are the French banks victims in this ?

Or did they know that they were lending to Irish and UK consumers who had been sold the leaseback package where the ‘guaranteed’ rent was key to the selling and financing of the property, where the rent was clearly to be used to repay the mortgage ?

Did they know they were lending on an overpriced asset ?

Did they in fact lend without any professional due diligence on what they were lending on?

Did they continue to lend even though issues had been raised in France on the viability of these leaseback propositions ?

In our example resort in Languedoc, I don’t believe there were any purchasers from Languedoc. The properties were overpriced, they were situated in a rural, undeveloped area with no tourist facilities. This local knowledge was not known to foreign investors, but was it known in that part of France ? Was it known to other stakeholders, such as the French banks ?

Let’s look at another French bank, Credit Agricole du Languedoc.

Credit Agricole du Languedoc

This screenshot from 2014 shows how this bank was actively marketing mortgages on French investment properties to English-speaking consumers. It appears that the page was removed in 2016.

It links directly from this English language site to a property site called French Property Centre (see on the left of the webpage). This link was live on the Credit Agricole website until Apr 2016 (according to www.web.archive.org).

French Property Centre, a UK registered company, continues (as of July 2017) to promote leaseback property with misleading information and invalid promises.

Despite all the issues reported by purchasers, all the bank re-possessions, they continue to promote without warning:

“Leaseback is a French Government backed scheme which allows you to buy a new property in designated regions of France and be refunded the 19.6% VAT! You own the freehold on the apartment or cottage and it is leased back to a reputable property management company for a minimum of 9 years.

Your investment yields a guaranteed annual return of up to 4.5%, you have a fully maintained and managed property – and have a personal usage option.

It’s an investment vehicle you can enjoy and which is working for you when you’re not there!

Main features of a leaseback property:

• A freehold, fully furnished property

• Investor entitled to benefit from the 19.6% VAT rebate

• Property leased to a reliable management/ tourist company for minimum 9-year period

• Investors receive index-linked, guaranteed annual return of up to 4.5% with options for personal usage

• No running charges or maintenance costs”

  1. The investment is not ‘backed’ by the French government in any way
  2. The property may be ‘freehold’ but is in a commercial lease which is not for 9 years but goes on forever under French law no matter what it says in the lease, unless you pay eviction compensation
  3. There is nothing ‘guaranteed’ about the rent.
  4. You will be hit with all kinds of  taxes, ‘charges’ and maintenance costs’ from bins you never used to water you never flushed down a toilet (for you have no access to said toilet..)
  5. The ‘reputability’ of many French companies managing these would make you weep.

 

Are the French banks the victims here ?

Or was there reckless lending to gorge their mortgage loan book on hapless foreign consumers ?

I’ll let you decide !

 

Many thanks to Google Translate

 

 

 

Read more >

How Irish owners can submit their complaint to CCPC

Uncategorized

Update:  30th August 2017

The CCPC have extended the closing date for receiving complaints to Fri 1st September. They are requesting that all complaints are submitted on the template that they have provided. See below:

2017 08 04 French Leaseback complainant form

I suggest that owners who wish to complain to other member state national consumer bodies can use this as a basis for their own.

 

Update:  20th June 2017

Please find a template that you can use for submitting complaints to the CCPC, or indeed any other member state national consumer body:

20170615 CCPC Template

The CCPC (Competition and Consumer Protection Commission) have requested that Irish citizens make their complaints to info@ccpc.ie.

In this way the complaint will be logged correctly.

We hope to have a template for submission available here for Irish owners shortly. Until then the CCPC have advised that the following content would be helpful to them:

1.  Information from the leaseback property owner that establishes his/her status as a ‘consumer’ (defined in consumer legislation as a natural person acting outside the scope of their trade, business or profession)

2.  A clear timeline of the events – that is the journey from how the leaseback property owner became aware/involved with the purchase to the date of submission (including key dates)

3.  Names and details for all individuals involved in the journey from start to end including location (address) and in the case of corporate entities, if they are still in operation

4.  Copies of the documentation from the start of the journey to the date of submission which could cover:

  • Advertising material
  • Screenshots from websites
  • Brochures on the investment
  • The arranging of the investment – application forms, correspondence etc.
  • Any financing applications/correspondences
  • The contract to purchase the property
  • The contract agreeing to lease the property under leaseback if not included in the original contract to purchase
  • Copies of all leases signed
  • Correspondence with the operators and the lease tenants
  • Any correspondence renegotiating leases/termsDetails of any legal actions taken in Ireland/France – date of action, type/purpose of action and any judgments received

5.  A summary of how the leaseback property owners feel their consumer rights may have been breached

6.  A summary of the main areas of concern for the leaseback property owners and what they wish to achieve in terms of the issues they raise

Consumer Helpline

The Consumer Helpline is available at lo-call 1890 432 432 or 01 402 5555 (opening hours are from 9:00 to 18:00 Monday to Friday)

and the postal address is:

Post: Bloom House, PO Box 12585, Railway Street, Dublin 1

For more detail go to their website.

Read more >

EU Commissioner Vera Jourová calls for French leaseback investigation

Legal

Update 16 June 2017

For details on how to submit your complaint to the CCPC see this post.

 

The EU Commissioner for Consumer protection, Vera Jourová, has called for the relevant national authorities to investigate complaints made to her office on cases alleging the mis-selling of French leaseback properties.

She has responded to Vicky Ford’s intervention on behalf of owners and said that:

The European Commission currently has no enforcement powers in cases where traders have acted against national rules stemming from EU Consumer law.

She advises that Vicky Ford contact the UK Competition and Market Authority, CMA:

I would therefore advise that you contact the UK Competition and Market Authority, which in cooperation with your constituents and other victims of the mis-selling, would be best placed to establish which rules are applicable to the present case.

Brian Hayes MEP has already been in contact with the Irish equivalent, CCPC (Competition and Consumer Protection Commission). They have made an initial response.

She notes that Veronica Manfredi, Head of unit responsible for EU consumer and marketing law has already met with Brian Hayes and 3 owners. She mentions that the Unfair Commercial Practices Directive 2005/29/EC, may not have been transposed into national law at the time of the mis-selling.

It seems that this EU directive was transposed into Irish law on 1 May 2007, by the Consumer Protection Act 2007. See more on this from Mason Hayes Curran. It was required to have been transposed to all member states national laws by June 2007.

She makes no explicit mention of the Unfair Terms in Consumer Contracts Directive. Directive 93/13/EEC on Unfair Terms in Consumer Contracts (the UCTD) protects consumers against unfair contract terms. Under Article 6 of this Directive, member states shall lay down that unfair terms in a consumer contract shall not be binding on the consumer. This, I believe, is fundamentally applicable to the leases and subsequent lease amendments agreeing to reduced rent.

Ms Jourová also indicates that there may be national financial regulation rules to be taken account of also if the properties were advertised as investments. In most cases they were advertised as both a lifestyle product and a financial investment. Hundreds of consumers intended to use them as a kind of pension. It is for this reason that the petition calls for the Irish Central Bank to investigate also. They have taken no role thus far. Their response was that the Irish Central Bank has no role in the regulation of property investments. Jourová calls on the national consumer authorities to investigate this aspect of the alleged mis-selling also.

The French consumer authority, DGCCRF (Direction générale de la concurrence, de la consommation et de la répression des fraudes), has been contacted by the European Commission. Ms Marie-Paule Benassi, Head of unit responsible for consumer enforcement and redress has communicated with them. The DGCCRF is looking into the matter but would need more precise information about the operators involved in the leaseback schemes.

Conclusion

Ms Jourová suggests that:

The UK Competition and Market Authority and the Irish Competition and Consumer Protection Authority share with the French DGCCRF all relevant information. DG Justice and Consumers is available to assist the co-ordination and to bring this issue also to the attention of the enforcement authorities of other Member States whose citizens may also be affected.

What should French leaseback owners do now?

The logical next step would be for all owners who believe they were mis-sold to submit the details of their case to their relevant consumer body. An initial submission might include a brief summary of the purchase with dates and what happened subsequently. Include all pertinent details from the marketing and the lease, stating the ‘guaranteed’ rent and the lack of information regarding the lease going on forever. Highlight the aspects of the sale that were mis-leading. For example, if you had known that the guaranteed rent was not in fact guaranteed in any way whatsoever, and in fact frequently was not paid at all, or if you had known that the lease went on forever, you would not have made the purchase and would not have signed such a lease contract.

Include the following (or supply at a later stage):

  1. your name, address and contact details
  2. any advertising, marketing material, newspaper articles, websites etc which initially prompted the decision to purchase the property
  3. any material from the selling agent, either in Ireland or in France
  4. any material you received from the intermediary/agent/developer in France, who assisted in the arranging of the purchase
  5. any material you received from the intermediary/agent in France in relation to financing the property
  6. any contract documentation you received on purchasing the property and the full name of the trader (development company)
  7. any contract documentation you received when you arranged the lease back and the full name and details for the trader (developer/sister management company)
  8. the new lease documentation and the full name of the trader (where a second or lease amendment was signed)

In my view it is important that the relevant consumer body are aware of all owners who believe there was mis-selling and unfair contract terms in their purchase of a French leaseback.

While there are many groups of owners within the same development there are many of these and with multiple operators. There were also multiple sales agents, notaires and banks involved.

Include a reference to the EU Commissioner for Consumer protection, Vera Jourová, and say she that after being contacted by Vicky Ford MEP, she has called for the relevant national authorities to investigate complaints made to her office on cases alleging the mis-selling of French leaseback properties.

Irish Owners – Make a Complaint to CCPC (Competition and Consumer Protection Commission)

The CCPC have requested that Irish citizens make their complaints to info@ccpc.ie.

In this way the complaint will be logged correctly.

The Consumer Helpline is available at lo-call 1890 432 432 or 01 402 5555 (opening hours are from 9:00 to 18:00 Monday to Friday)

and the postal address is:

Post: Bloom House, PO Box 12585, Railway Street, Dublin 1

For more detail go to their website.

 

UK Owners – Notify the CMA (Competition and Market Authority)

You can submit the details of the mis-selling you have experienced to the UK consumer authority by contacting them below:

They have a notification form you can use or you can email them directly at :

Email: general.enquiries@cma.gsi.gov.uk

For more detail go to their website.

 

Owners from other EU Member States

Identify your national consumer authority and submit your case to them. Include the above.

 

Read more >

Press Updates for French Leaseback Owners

Press

Update : 31 May 2017

RTE Radio 1

Following on from a successful piece on Morning Ireland by Justin McCarthy on 31 May 2017, many Irish owners have been in contact with the CCPC. The piece featured 2 owners and Brian Hayes MEP. They finished up by advising any listeners who had experienced these issues to get in touch with the CCPC.

You can listen back at:

http://www.rte.ie/radio1/podcast/podcast_morningireland.xml

The piece is at :     ‘I am the owner of a property in France but I have no keys and no access’

Irish Times

Colin Gleeson wrote a great piece in the Irish Times on Mon 8th May:

Hundreds of Irish allege abuse of French leaseback scheme – Consumer watchdog investigating allegations in relation to investment properties

 

The Times

And in The Times (Irish edition), Peter O’Dwyer also had a piece on Mon:

EU is urged to act on French ‘property scam’

Peter followed this up this morning with an update stating that EU Commissioner Vera Jourová has written to the relevant national authorities asking them to assess complaints received by property owners:

EU backs inquiry into French property ‘scam’

Read more >

CCPC Investigate Irish Consumer Complaints on French Leasebacks

Legal

Update 31 July 2017

The CCPC have confirmed to Brian Hayes that they have carried out a detailed assessment of the complaints they have received. They have engaged with their French counterpart, the DGCCRF. In mid July, they passed details of the complaints to the DGCCRF so that they can investigate at a national level and see if the complaints concern infringements that fall within their remit. We know however that the DGCCRF are already aware of these issues.

The CCPC (Fergal O’Leary, member of the commission) have concluded the following:

..cross-border leaseback property investments are extremely complex products which do not currently fit neatly into the remit of any one organisation. In order to avoid further problems in this area it may be appropriate to consider and potentially enhance the protections currently available to EU consumers.

We view this update positively. It seems that the CCPC understand that there are issues and consider that greater or more specific EU consumer protection may be required. The DGCCRF investigation is on-going.

 

Update 16 June 2017

For details on how to submit your complaint to the CCPC see this post.

 

The CCPC (Competition and Consumer Protection Commission) are in the process of investigating complaints from Irish consumers on the mis-selling of French leaseback properties.

They have made an initial response and have made contact with their French counterpart authority, the DGCCRF, Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes. The CCPC has briefly outlined to the DGCCRF, the issues that owners have been brought to their attention.

The DGCCRF, have indicated to us that they are aware of French consumers and owners of such tourism properties being harmed by the commercial practices of some professionals working in this area.  The CCPC has advised the French authorities that the harm from these commercial practices is not limited to French consumers. The CCPC has explained that Irish citizens, also appear to have been harmed by commercial practices in the area of tourist property investment.

It seems that the DGCCRF have committed to undertaking investigations and appropriate enforcement actions during 2017 in relation to the alleged unfair commercial practices related to these tourist investment type properties.  The CCPC is preparing documentation provided by the owners who submitted complaints for submission to their French colleagues.

We are following up with the CCPC to get a better understanding of the options and next steps.

We have also highlighted to the CCPC that we believe the DGCCRF have been aware of these issues for some years now.

According to the FNAPRT (Fédération Nationale des Associations des Propriétaires de Résidences de Tourisme), representatives of the DGCCRF were at a meeting with the FNAPRT in 1 Dec 2015 (see http://www.fnaprt.com/des-avancees-sur-les-informations-fournir-aux-investisseurs/) and on 29 Jan  2016, where the specific mis-selling issue on eviction compensation was discussed amongst other things (see  https://mdenoune.com/2016/02/15/les-derives-des-baux-commerciaux/ ) and also 21 July 2016 (see http://www.fnaprt.com/la-fnaprt-presente-dans-les-groupes-de-travail-au-ministere/).

The FNAPRT  is an organisation of French owners of properties in these ‘tourist residence’ property developments.

DGCCRF

The DGCCRF have recently published details relating to a survey they carried out to monitor compliance with the applicable rules and to assess the state of play of the investment market in tourist residences in France, ensuring the fairness of the information given to individuals wishing to invest in this market.

See more at:  https://www.economie.gouv.fr/dgccrf/investissements-dans-residences-tourisme.

In 2014, France had 2,266 tourist residences representing a total of 183,143 apartments.

The DGCCRF site states that there are 3 main requirements to the classification of a ‘résidence de tourisme’ site:

  • a minimum of 100 beds
  • a minimum of 70% of the residences for residences under the co-ownership status for a minimum of nine years
  • be managed by a single physical or moral operator

It indicates that a minimum of 70% of the properties must be leased. There appears to have been a change in the law in 2015, which means that only 55% must be leased after 9 years to retain this status. Though between Google and myself, there may be something lost in translation..

Once again, NONE of this was communicated to purchasers, by any of the parties involved in the purchase, at any stage of the purchase. This restrictions of this ‘résidence de tourisme’ aspect of the property was something that was unknown to purchasers, certainly to those outside France.

The information outlined on the DGCCRF website does not refer to the EU Directives for consumer protection, Directive 2005/29/EC on unfair business-to-consumer commercial practices (the UCPD) and Directive 93/13/EEC on Unfair Terms in Consumer Contracts (the UCTD) protects consumers against unfair contract terms. Under Article 6 of this Directive, MS shall lay down that unfair terms in a consumer contract shall not be binding on the consumer.

It also does not mention that the ‘commercial lease’ is not limited to the 9 years of the lease signed. It seems surprising that this did not give rise to complaints…

The conclusion from the DGCCRF in this piece seems to be that the regulation may need to be tightened, and they have set up a working group. However, it mentions that this working group is with ‘the professionals’. As owners know only too well, the vested interests of all of the ‘professionals’ involved, from developers to notaires, to banks, to operators, have all conspired to leave owners trapped in an investment worth a fraction of what they paid for it and facing constant payment demands for everything from the rubbish charges to the mortgage repayments on these properties !

Ces réflexions pourront se poursuivre, avec les professionnels, au sein d’un groupe de travail mis en place par la Direction générale des entreprises (DGE) en coordination avec la DGCCRF.

This would suggest a very ‘light touch’ regulatory approach.

We hope that the ‘consumer’ is at the table.

We have every confidence that the CCPC will act to protect the rights of Irish consumers and use the EU laws set up to support the free trade project.

Read more >

What did your Notaire do for you ?

Lease

In France, a NOTAIRE is the professional charged with real estate transactions. It is different to Ireland or the UK where a solicitor is the professional who handles the sale of a property. The role of a Notaire is fundamentally different in that he acts for both parties in the sale and is therefore duty-bound to be impartial and represent the interests of both the purchaser and the seller.

The French notaire has a duty to advise: the client expects a French notaire to explain the various options open to him as well as the consequences of the deeds/documents he signs.

This duty to advise implies that the French notaire is neutral and impartial : a notaire chosen by one client has an obligation of fairness towards him and towards the other co-contracting parties.

Solicitors should not be required for this type of transaction, and would not normally be used in France.

However the Notaire, in many cases, never warned the purchaser of the fundamental and significant facts concerning what they were purchasing. Facts that a consumer could not have known, and more especially a foreign consumer:

  • the 9 (or 11 etc) year lease that they purchaser signed went on forever under French law unless compensation was paid to the tenant at the end of the first lease

Many Notaires have claimed that the lease was not part of their remit, that it was signed between the developer and the purchaser. In my view this is obfuscation. The fact that the property was a leaseback property is stated in the deeds. The two can not be separated.

The notaires did not warn that:

  • this lease was a commercial lease and was heavily favoured under French law on the tenant

See below from the French Notaires website on the nature of a Commercial lease:

During the term of the lease, the tenant is almost immune from eviction; they can only be evicted in special circumstances and only if the owner provides compensation

..

At the end of nine years, the tenant has the right to have their lease renewed for the same term, at a rent that may not exceed an upper limit. If the landlord does not wish to renew the lease, they are required to pay the tenant compensation for non-renewal of the tenancy. The tenant is entitled to be fully compensated for the loss. The compensation may correspond to the market value of the business.

The notaires did not warn that:

  • The property was in a RdT (Residence de Tourisme) and what that meant in terms of planning & usage laws
  • The mortgage with the French bank left the owner with his home in Ireland vulnerable if the ‘guaranteed’ rent failed to be paid
  • Did not advise that a ‘notarised’ lease might provide some more protection to the purchaser
  • The ‘guaranteed’ rent was not guaranteed at all and there was a pattern of ‘failure’ of these projects

For many purchasers of French leaseback properties they never met the Notaire. The deeds were notarised by a qualified individual in Dublin etc, as they were advised.

In one case, the fees charged by the Notaire for the Deed of Sale (Frais d’acte de vente) alone for a small 2-bed property were almost €7,000. The notaire also legalises the mortgage loan and there is a hefty fee for this also (over €3,000). 40% of the fee could be taxes which go to the French government.

There is a fee calculator on the notaire.fr site. Does it calculate what you were charged ?

Multiple notaires are being sued in France in relation to their role in the sale of these.

 

Read more >