Sadly, after over 25 years working in the French property world, I have seen too many people lose their businesses and property to the French banks.
Ironically, in a country which protects its citizens, tenants and minorities, the banking laws were written by the bankers, for the banks.
There is no logic or compassion when it comes to the crunch and too many people wait too long to react to “nasty letters” from their bank.
The process of repossession and sale by auction is, like many things in France, laborious and expensive; a mechanism difficult to stop once in gear.
There are ways to stop or delay the process, which are often not easy to find, understand or implement for a foreigner who does not totally understand the language.
25 years have seen the “stop – go” of bank lending in France, repeat several times: Again, not always logical the banks will lend and lend on certain types of property and businesses, up to the point where prices rise too high to make them a viable investment.
We saw this with farms and vineyards in the late 1990’s and again in 2000 – 2005.
Led by corporate investors such as insurance companies, multi-nationals who bought famous vineyards in the Bordeaux region, suddenly a vineyard was considered a safe investment!
This can be true, but, at the time, many non professionals lost money on overpriced, mediocre properties.
A similar situation occurred with leaseback sales of apartments for holiday rentals.
The French government introduced a tax incentive for buyers of tourist properties, which included repayment of TVA/VAT to the buyer in return for a management lease to rent the property for a number of weeks per year.
With promises of 6-10% return from rentals, the banks lent 80% of the total price, including VAT.
The government refunded the 20% VAT, which meant the buyer had spent 0€ to buy a property.
In 2009-10 the bubble burst and many of the management companies went bust.
We simply want to say that prevention is cheaper than cure: If people find themselves in financial difficulties with a bank in France, action needs to be taken quickly to avoid disaster.
Some situations cannot be saved, but many can and we have the professional contacts and experience to advise.
Contact Richard Edds. Richard@leisureandland.com