Gregory Hanson

France – Divorce – simplification for non French – from 01 January 2021

Grégory HANSON — Fri, 01 Jan 2021 13:44:09 +0000

Spouses wishing to divorce with French Courts, no longer have to travel to France to be divorced.

From the 01 January 2021, divorce procedure in France is substantially simplified for spouses connected to France but with some international element, for instance married in France but living abroad, married abroad but at least one spouse is a French citizen.

Before 01 January 2021, it was compulsory for spouses wishing to divorce in France to travel to France which could prove complicated especially with the current travel restriction.

The procedure is now essentially a written one where spouses can be represented by a lawyer.

This considerably simplifies procedures particularly in non disputed divorces.

Our divorce packages start from 1500 € including VAT.

The practice is available to answer all your questions.

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France – mortgage – Coronavirus

Grégory HANSON — Thu, 31 Dec 2020 16:08:39 +0000

Investors have purchased property in France through a mortgage.

Many investors are having difficulties to pay the instalments due to the ongoing epidemic.

Non-payment of mortgage instalments is a breach of contract.

Banks will attempt to terminate lease based on this non-performance and claim for reimbursement of capital and interest still due, plus penalties.

Further, some mortgage contracts contain stipulations authorising the mortgagee to ask for a holiday period usually up to 6 months.

Another option exists under article L.313-12 of French Consumer Code, the “Tribunal Judiciaire” (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 investor can prove that holiday can help to overcome his 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; investors face this kind of difficulty should contact the practice.

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France – leaseback issues- Coronavirus

Grégory HANSON — Sun, 20 Sep 2020 15:32:00 +0000

Ongoing pandemic does not prevent owners from obtaining eviction of tenants for non payment of rent.

A decree was pasted by the French government (“Ordonnance n° 2020-306 du 25 mars 2020”) ordering that no procedure could be implemented against a party in breach of contract from the 12 of March 2020 until 2 months after end of period of state of urgency (“état d’urgence sanitaire”) du to coronavirus.

This decree notably applied to leaseback situations and more specifically termination of lease and payment of rent.

This restriction has been lifted since.

Further, management companies remain liable for rent due prior and after this period of epidemic.

Consequently, it currently possible to serve an injunction on a management company in breach of contract to obtain payment of rent and possibly eviction.

In 2020, despite the pandemic, the practice has evicted management companies in breach of lease contract.

For more information, please contact the practice.

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France – divorce – Coronavirus

Grégory HANSON — Fri, 31 Jul 2020 14:30:06 +0000

In France divorce procedures tend to be very slow even in normal circumstances

During epidemic French court will only rule on urgent maters.

Once lockdown is lifted, court will have to catch up on the backlog of dossiers.

However, it is still possible to divorce by signing an out of court amicable divorce settlement.

This procedure can be implement and settled within three months maximum.

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Some basic information on French inheritance law and inheritance taxes

Grégory HANSON — Sun, 22 Mar 2020 11:18:11 +0000

It is generally agreed that French inheritance law allows less freedom for individuals to decide what will become of their assets after death in comparison to countries of Common Law tradition.

For instance it is not generally possible for parents to pass a will to advantage unreasonably one child rather than another.

On the other hand, the law is protective of heirs, since it is generally not possible for the children or spouses of deceased to dispose of property without the consent of all the other heirs.

Nevertheless, under certain conditions, since 17 July 2015 it si possible under EU Regulation 650/2012 for individuals to choose, in their will, to apply the law of their nationality to the succession and administration of their estates.

(You should refer to earlier poste Inheritance law, enforcement of EU REGULATION 650/2017 in France
http://gregoryhansonavocat.com/2018/03/22/inheritance-law-enforcement-of-eu-regulation-6502017-in-france/)

HOWEVER EU REGULATION DOES NOT ALLOW TO WAIVER PAYMENT OF FRENCH INHERITANCE TAX FOR ASSETS AND PROPERTY LOCATED IN FRANCE

Here is a non-binding table of tax rates applicable 22 March 2018, this document is purely indicative since, as always in tax matters, rates can evolve depending on government policy or personal situation.

Direct line:

• 5% on tranche upto 8072€
• 10% from 8072€ to 12109€
• 15% from 12 109€ to 15 932€
• 20% from 15 932€ to 552 324€
• 30% from 552 324€ to 902 838€
• 40% from 902 838€ to 1 805 677€
• 45% on tranche above 1 805 677€

Civil partners and spouses no inheritance taxes Brothers and sisters:

• 35% on tranche under 24 430 euros
• 45% above 24 430 Euros

Nephew uncles, first cousins, great uncles:

• 55% on total

Other heirs:

• 60% on total

This is a general table, it does not take into account tax deductions and penalties, I advise owners to seek specific advice on their personal tax situation.

For instance, each child could possibly be eligible to 100.000 € tax relief.

Once again, I must warn you that each tax situation is different and would have to be analysed individually. Indeed, tax law is subject to regular amendments. The information given above is of general order and cannot be binding for individual situations.

Vu the complexity of situation, I do not recommend “home-made” will or just relying on this general advice since each situation is different and owners should seek the guidance of a legal professional.

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Inheritance law, enforcement of EU REGULATION 650/2017 in France

Grégory HANSON — Sat, 22 Feb 2020 10:44:30 +0000

EU Regulation 650/2012 on «jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession» was adopted by EU on 04 July 2012 it came into force on 17 July 2015.

This Regulation simplifies rules of succession in an international context, unfortunately UK, Ireland and Denmark have opted out of it which might complicate enforcement.

On the other hand, France has not opted out, the Regulation is now enforceable on French territory. For states that have implemented the Regulation, the default position is that the law of the country in which the deceased was ‘habitually resident’ at time of death will apply to his estate.

This law applies unless the deceased was “manifestly more closely connected” with another state, in which case the law of this latter state would apply instead. Precisely what “manifestly more closely connected” means is not entirely clear, but it is anticipated that this latter test will only be applied in exceptional circumstances.

The law applied under these initial tests can be overridden by an express election (usually in a Will) for the law of the individual’s nationality to apply.

Electing for the law of their nationality to apply SHOULD allow individuals to circumvent the forced heirship provisions prevalent in European civil-law jurisdictions such as France.

I must however warn owners that article 35 Regulation (EU) No 650/2012 provides:

“Article 35 Public policy (ordre public)
The application of a provision of the law of any State specified by this Regulation may be refused only if such application is manifestly incompatible with the public policy (ordre public) of the forum.”

On the basis of this article, a potentially flouted heir could try to challenge application of foreign law in France by arguing that it contradicts to strongly with French rules. I ignore how such a contestation would be received by French Judges.

Indeed, because it has so recently entered into force, I have found no case precedent on interpretation of this EU Regulation.

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Hanon Law “Loi Hanon” March 17 2014 brings simplification to termination of house insurance contacts on French properties

Grégory HANSON — Sat, 28 Dec 2019 16:45:12 +0000

Under French Law a house insurance contract is automatically renewed on anniversary date.

Before the “Loi Hamon” reform, failing to give notice 2 month before anniversary date, the contract was automatically renewed for one year without possibility of terminating it before the next anniversary date.

“Loi Hamon” has simplified conditions of termination.

After the first year, the contract can be terminated at any time 30 days after notice of termination by registered poste.

The house insurance contract can also be terminated at any time if the insurer has not informed his client of the possibility of not renewing the contract as explained above.

When a dispute arises between the parties, the client can sue his insured during 2 years from the refusal by the insure to guarantee damage. Past this delay, it is no longer possible to litigate against the insurance company.

In such a these mater it is wise to seek the advice of a legal practitioner.

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Succession issues for properties purchased in France by UK or Irish citizens

Grégory HANSON — Sun, 28 Jul 2019 16:38:19 +0000

Many UK or Irish citizens who have purchased a property in France are concerned about the future of their property after their death.

Indeed inheritance rules differ substantially.

Each situation is different and would have to be analysed individually, but here are some general consideration for an Irish married couple, residing In Ireland with children.

The general rule is: any real property owned in France will be governed by the French law of succession.

To avoid this it has been common practice for owners not residing in France to purchase property through a company (SCI ie: SOCIETE CIVILE IMMOBILIERE) because shares of a company are not considered as real estate so they can, under certain conditions, be ruled under Irish law.

The problem with this option is that the management of an SCI can be demanding (accountancy costs, tax declaration, no consumer law protection).

Another option is just to apply French law.

The disadvantage is that French law allows less freedom for individuals to decide what will become of their assets after death. For instance it is not possible for parents to pass a will to advantage unreasonably one child rather than another.

On the other hand, the law is protective of heirs, since it is generally not possible for children or spouses of deceased to dispose of property without the consent of all the other heirs.

Whatever option you chose, it will not dispense you from paying French taxes on inheritance.

The rules applicable vary depending on many factors notably: number of children, existence of a prenuptial agreement in Ireland, children from a first marriage etc…

Each case being different, I would advise owners to contact me directly to discuss their situation before eventually referring them to a NOTAIRE who could draft a will if it is relevant.

Some of you may have come across EU Regulation 650/2012 on « jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession » this was adopted by EU on 04 July 2012.

This Regulation will simplify rules of succession in the EU although UK Ireland and Denmark have opted out of it…

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On which grounds can French property owners litigate against French banks to claim compensation for professional negligence?

Grégory HANSON — Sat, 23 Feb 2019 14:39:18 +0000

The Practice is regularly questioned by English speaking owners who have purchased properties in France financed through a mortgage with a French bank.

Owners are no longer in capacity to pay monthly instalments of the mortgage because of financial issues.

Many owners believe that the bank is at least partially responsible for the situation.

Owners wish to implement a procedure against the French bank to challenge the validity of the mortgages and claim compensation for professional negligence.

a) Professional negligence

It is case law that, prior to loan, the bank must warn the borrower regarding its financial capacity and about the risks of debt resulting from the loan.

A debt / income ratio superior to 33 % is considered to be unreasonable. This rule is applied with more flexibility for higher income (for French standards) above 3000 €.

b) Consequences if the bank is found to be negligent

It is difficult to estimate what are the financial consequences of the absence of warning on the risks of debt resulting from the loan and hence calculate the damages clients could be entitled to.

There are three possible methods to award damages:

Sum equivalent to the total due to the Bank

The judges rarely grant damages using this method anymore because they deem it is “too favourable to the debtor”.

Sums equivalent to the interest, penalties and bank fees paid because of the mortgage

During past years, this method has been largely used by judges (Cour de cassation, Civ. 1ère, 1er juillet 2010, n°09-16.474).

Other methods of evaluation have been used in recent years.

In a particular instance, a French court has estimated that if the mortgagee had been warned of the risk of debt, there is a 5% chance that he would not have subscribed.

Consequently the Judge granted the mortgagee 5% of the sums initially borrowed from the bank.

(Cour d’appel de Grenoble, 2 juillet 2013, n°11/01558, Jurisdata 2013-014188). (Cour d’appel d’Aix-en-Provence, 14 juin 2013, n°2013/342, Jurisdata 2013-104975).

To obtain a satisfactory and substantial compensation it is important to provide the Judge with comprehensive prof of all the financial consequences of the inappropriate mortgage.

c) Validity of the mortgage

Indeed the signature of a mortgage is subject to strict and mandatory stipulations of Consumer Law.

The mortgagee must notably have a ten days cooling of period from date of reception of the mortgage offer (by recorder delivery) before signing and returning the contract.

Judges usually demand that the bank proves date of reception by producing copy of envelope with stamp.

Further, the mortgage offer must mention the “TAUX EFFECTIF GLOBAL” (“effective interest rate”).

If the offer does not comply with these rules interest and penalties are no longer due. Only the capital is due.

Owners who are encountering difficulties with their bank should contact the practice.

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How to evict the tenant of a French commercial lease

Grégory HANSON — Wed, 23 Jan 2019 10:25:40 +0000

Many British or Irish citizens have purchased property in France as part of leaseback development projects.

All properties in the same development are usually leased out through a commercial lease to a management company responsible for subletting it to students, elderly persons or holidaymakers.

Owner of property in France frequently ask how to evict a tenant who is in breach of contract for not paying rent.

I am afraid that there is no miracle process.

I can nevertheless outline the standard procedure to obtain a court ruling containing a payment of rent arrears and eviction order.

Prior to any court procedure, the owner must instruct a French bailiff (“huissier de justice”) to serve an injunction to pay rent arrears on the tenant (“commandement de payer”).

Under French Commercial Code (“Code de Commerce”) the tenant will then have a limited period (usually one month as stipulated in lease contract) to pay rent in arrear.

We will suppose the tenant does not pay the sum quoted in the injunction within the required delay or challenge the validity of the claim.

The owner can then have a summons to appear in court served on the tenant.

The case will be judged summarily within one to three month of service of summons. (Despite the dossier being adjourned at least once to allow defendant to prepare its case).

If proof of non-payment of rent is provided to the judge, judicial termination of lease for breach of contract will be ordered.

The Judge will also order payment of areas and eviction.

Once the eviction has been ordered, the situation will vary depending if the tenant vacates the property spontaneously or not:

– If the tenant complies with the court order and evicts the flats spontaneously and rapidly: the owners can repossess property.

– If the tenant dos not vacate, owners must instruct a bailiff to force the tenant to leave the premises, possibly with the help of the police.

IMPORTANT 1: Owners can request a payment order without eviction if they do not wish to terminate lease.

IMPORTANT 2: at any time if tenant no longer has the cash to pay rent, it can ask the Commercial Tribunal to place it under receivership. The consequences, of receivership are that until a decision is taken on the future of tenant (continuation, takeover, liquidation):

1. All eviction and payment procedures are suspended, the owner must declare the rent arrears due to the receiver within a limited period of time.

2. The receiver has to pay rent for the period after opening of receivership procedure. If rent cannot be paid the receiver must terminate leases.

3. As part of a continuation / takeover plan the receiver cannot force owner to accept substantial changes to the provisions of the lease (reduction of rent for instance). If receiver cannot pay rent lease must be terminated (see point 2 above).

IMPORTANT 3: Procedure to evict tenant of commercial lease differ form procedures concerning housing or residential lease (“bail d’habitation”). Indeed the statutory provisions on residential leases are very favourable to tenants to protect their housing right (“droit au logement”). This question will be developed in a future poste.

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