November 24

How can you obtain a two year suspension of payment of mortgage installments?

Many individual investors having acquired properties in France under leaseback programs are now facing difficulties to pay the monthly installments of their French mortgage.

These investors had purchased a property in France, usually in a “Residence de Tourisme”

To beneficiate from this tax advantages (notably reimbursement of VAT), all the investor in a residence had the obligation of renting out the newly acquired properties to the same management company under a nine year French commercial lease (“bail commercial”).

The management is responsible for subletting the properties, the most often to holidaymakers for package holidays.

If these leaseback programs have often been profitable to all parties there have been many situations where the tenant, due to crisis in the tourism industry , has defaulted in payment of rent.

The failure of the tenant to pay rent has put the investor in the incapacity to repay their mortgage leading to litigation with French banks.

Our Practice is often questioned about possibilities of obtaining extra delays from the bank having granted the mortgage.

French banks are rarely willing to negotiate rescheduling of installments unless the debtor is prepared to pay a substantial sum up front.

Further, owners who do not live in France are not eligible to French consumer insolvency procedures “procedure de surendettement”.

Nevertheless, there is an option for investors having difficulties to repay mortgage in France.

Under article L.313-12 of French Consumer Code The “Tribunal d’Instance” (civil court for petty claims) can suspend payment of mortgage instalment and interest for a maximum period of two years.

The Judge will order this holiday period if the claimant can prove that it can help to overcome the investor’s temporary financial difficulties.

This could mean for instance: replacement the management company by a new non-defaulting one, the investor’s financial situation improves (i.e. new employment) or the property is sold.

Once the holiday period has been granted the investor/debtor is in a stronger position to negotiate a long-term solution with the bank.

Each case is different; owners face this kind of difficulty should contact us.

September 6

How is the amount of child support determined by the Judge?

Support is paid in the form of monthly instalment by the parent who doses not have custody to the one who does.

In case of shared custody, the Judge will only rarely grant support if there is a very substantial difference of income between parents.

There is no fixed scale established by statute.

Each judge will estimate the amount of monthly support necessary depending on the income and expenses of the parents, the age and needs of the child, the number of children.

For instance with an income of 2000 €/ Month a parent could expect to pay for one child between 150 and 300 € Month.

At any time until the child is capable of supporting itself, a parent can ask a judge to increase of reduce the amount of support depending on the changes in the situation of parents and child.

Obligation to pay child support does not stop when the child is 18. This obligation continues until the child is capable of subsisting alone (usually when studies are over).

June 6

Does the Judge take into account the opinion of the children before deciding which parent will have custody?

The child’s opinion will be taken in to account if the Judge believes he/she is in age of having a point of view. French Judges usually admit this capacity from the age of 7 or 8, depending on the maturity of the child. Theoretically the child can testify in Court but this is quite unusual. To avoid the trauma of a court appearance a lawyer “l’avocat de l’enfant” is usually appointed to represent the child, at the request of one of the parents.

This lawyer is paid by legal aid and is completely independent from the parents. He/she has received a special training on how to interview children and will speak in the name of the child during court hearings.
This is a relatively reliable way of giving the position of the child on custody, visitation rights etc…

May 5

Can shared custody be ordered even if one spouse opposes to it?

Traditionally in France Custody over children was given to the mother.

The father would have a visitation right usually two weekends a month plus half of the school holidays.

Sometimes, the father was granted an extra visitation day during the school week.

The father would have the obligation of paying child support to his ex wife.

During the last ten years shared custody has become a trend in France.

Even if the other spouse doses not agree, shared custody will be granted if it is possible from a practical point of view.

For shared custody to be granted:

  • parents must live sufficiently close to each other to allow the child to go to school and leisure activities without to much hassle,
  • both parents have a professional activity compatible with education of children (for instance: not implying night work or lots of traveling).

When it is granted judges usually order that the children spend alternately one week with each parent.

There will be no obligation of payment of child support unless there is a very substantial difference of income between parents.