French Leaseback Nightmare

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Tractor

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I purchased a French leaseback in 2007 & it has been a nightmare. At this stage, my strong preference is to simply default on my french mortgage as I can no longer put up with the constant stress (financial & otherwise) that this process is putting me under. I see no other option & simply don't care about the financial losses that I will sustain by my actions.
Has anyone else ever defaulted in such a way ?. I would be keen to hear of practical experiences before taking the actual step of cancelling payments. How likely is a Fench bank to come knocking if they think/know you have other assets ?. I believe the whole leaseback scheme is cray and strongly feel I was mis-sold its merits from the outset.
 
Could you clarify in what way the leaseback is not working out and also in what way you were mis sold the property.


If you default, then presumably the French company will come after you if you have assets and a job. Presumably they have an address for you in Ireland makign it much easier for them to pursue you.

Can you not just sell the property and get rid it that way if it's so stressful?
 
Management fees have been unilaterally doubled. Rental income is being witheld. There is no end is sight to this nightmare. The property simply won't sell. I feel like I have been completely swindled by a process which is inherently corrupt.

I am being left with a mortgage to service (22k annually) and no means of paying via so-called "guaranteed rental income". I have other assets which concerns me as I worry the French financial institution is aware of this.
 
No. "Guaranteed" rental income is currently being witheld to "avoid insolvency" of the management company. I also looked at the possbility of re-financing my loan earlier in the summer but am receiving information that French banks are no longer prepared to look at any leaseback re-financing because of perceived increased risk of default. This is why I am so embittered as I feel I have been left hung out to dry.

I don't honestly know which way to turn as I do have other assets but simply cannot countenance seeing them drip away to service an investment mortgage which is unlikely to ever see the income I had been promised. I feel like I am being put in an increasingly impossible situation. I don't care, at this stage, about the financial loss of my initial investment and the loss of mortgage payments for the last 3 years. I just want to know the practical implications of a default for me personally. I don't have other debts, will not be investing in foreign property again (!) & will likely not need financial loans in the future.

I also, frankly, "blame" the French financial instutution(s) also for giving out loans for these projects where development/management companies advertise these projects but then don't deliver on their side of the bargain. They are sold as low risk investments to fools like myself but are anything but.

Any practical help is much appreciated.
 
Tractor, I am in the exact same situation regarding two management companies oging bust, there is no secondhand market for our development as it is complicated by the VAT refunded by French Govt and the fragile nature or rental income./uncertainty as to its viability, with a yield now at 3.755 no one in the right mind would touch it unless it was a yield of 10-15% so that will give you the real value of your unit. I have asked various people on whether a French bank would take action against you with no definite answer. I am the one hassling my bank to try and work out a deal, have phoned them and written numerous e mails asking can we talk, threatening foreclosure, so I said fine let me know what the procedures are to foreclose and then the line went silent. If you dont have any other assets then it is not worth their while pursuing you in another country, did you buy it in joint names with someone else or on your own? On the other side of the coin if they did proceed and went to court then you would have a judgement against you.

I also this week wondered how I got myself involved in a so called safe investment but having spoken to various people, I came to the conclusion that yes it my problem but guess what Mr Bank Manager, this is our problem, not just mine, so let them feel some of the pain. I have not yet determined whether to walk as I would like to renegotiate but if that is not forecoming then I have to reconsider, mine is 26k in arrears, I only was advised of this when I hounded the bank for months for a statement for the last 2 years, still have not received same only got a one line e mail. Bet there are kicking themselves on lending to Foreign Investors.
 
you probably have these website addresses but just in case
frenchleaseback.net -lots of forums and advice
-www.diarmaidcondron.com - an expert on lease-backs. I dont know wheterh he's a lawyer, but he's Irish and seems to know a lot.
 
This problem hasn't gone away.
Thousands of Irish & UK people invested into these schemes
There are other post on this forum
 
Hello, is anyone out there still dealing with this? My parents bought in to this scam in 2004 and never received the promised rent and ended up defaulting due to 2 years of non payment. The banks then sold the 400k mortgage to a vulture fund for 150k and they now aggressively chasing my mother (now a widow) for the balance plus a lot of interest. It’s absolutely despicable considering it was they who defaulted first essentially. If anyone has dealt with it or still is would love to chat.
 
nicola sun said:
Hello, is anyone out there still dealing with this? My parents bought in to this scam in 2004 and never received the promised rent and ended up defaulting due to 2 years of non payment.
Click to expand...
What specifically? I presume that there are/have been lots of leaseback schemes over the years in France and elsewhere? Are you referring to a specific one?
 
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Sounds like the whole thing was mis sold.

thecity.ie

French Leaseback Scandal Hits Irish Investors

Sold as safe, the French leaseback scheme left Irish and U.S. investors trapped in debt. Hear their stories in this 7-min audio documentary.
thecity.ie thecity.ie

There should be something on the school curriculum about financial planning and risk.

The only time I've hears good things about property investment overseas is where the owner gets a lot of personal use from the property.
 
Had a sale & leaseback for 15+ years, sold it in 2019 as my young lassie was starting college and that was the original intention of the buy in the first place. Yes, lots of niggly issues over the years and delays in getting rents paid but by and large a very positive experience. I got to know Languedoc very well and got very comfortable finding my way around Beziers and Montpelier. I did not make a fortune from it but basically, the equity I pulled out of it served it's purpose.... paid for my daughter's 4 years undergrad!
 
We bought 2 leaseback apartments in the glory days of 2005! . Fully used up all of our free weeks (2 per year per apartment) and usually bought an extra week at owner’s discount of 20%.
No major problems, rental income was reduced by about a third during the financial crisis but gradually increased once things stabilised on the world financial markets.
Luckily we took out an Irish based mortgage so no problems with French complex bureaucracy.
Got the Vat discount being offered by French Gov at the time for tourism developments.
Sold both in the last few years, slight loss, but hey, got almost 17 years of wonderful French holidays in our apartments. They were located in the SW, beside the beach.
Added benefit was stopping at the Red Bus (Roscoff or Cherbourg) to fill the empty car boot with wonderful wine costing between €3 and €4 per bottle.
Overall, great experience.
Sorry about the experience for previous poster’s parents but there are good stories out there too.
 
First one sold to another French owner, no hassle, but at a loss. Second one sold through a local estate agent who has lots of experience selling leasebacks in the area. Broke even on this one. Estate agent very efficient, handled all interactions between notaire, buyer and ourselves.
Buyer has to pay notaire and estate agent fees which can bump up the price quite a bit for them.
 
Hello,

I'm absoutely amazed to read that people are speaking about French Sale & Leasebacks, in a positive manner.

There's endless negative stories about how they were sold, rents having a set artificially high to illustrate a yield that supported a massively over inflated sale price etc.
 
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