Document Sample
					                                     GABRIELLE EISENSCHER
                                               DEA de droit privé général
                                               AVOCAT À LA COUR
                                                   Palais C.1868

3, Villa Victor Hugo 75016 PARIS                                                        Téléphone: 33-(0)                                                         Télécopie: 33-(0)

                                                                ADI IRELAND

                                                                Paris, March 18th 2009

Vos réf :

         Dear Members,

         Enclosed please find some comments about the LAGRANGE lease for


         Each of you will sign with a company called NOUVELLE MDB - meanning
         NEW MDB- which is a company with a capital of 40.000 euros : this means
         that your lessee is definitively not a small company that would have been
         created by NOUVELLE MDB just for one residence and that could be easilly
         closed without any damage for the managment company.

         This company started its activity on 1rst february 2009 but is part of

         The commercial name is SN MAISONS DE BIARRITZ to keep the attraction
         of the name MAISONS DE BIARRITZ towards the potential clients.

         Please know that the unique Partner of that company is LAGRANGE
         GESTION with a capital of 12.000.000 euros which shows how financially
         secure the new company is. (I have a copy of the status that were
         registered at the Commercial Court at PARIS).

         This element brings you a great financial security and also a good sign of
         how NOUVELLE MDB and LAGRANGE lead their business.

         As you may know, on the opposite, some competitors are well known to
         create small companies as tenants and which are closed as soon as the
         head company wants to reduce the rent or modify the lease without letting
         any choice of négociations to the owners.
                 Membre d’une Association agréée acceptant le règlement des honoraires par chèque
                               NII: FR74404319915 - SIRET : 40431991500025

                                                   Page 1/11

1/ You are about to sign a french commercial lease.

This means that you agree on submitting your lease to french law and
specifically to the commercial special regim which is enforced in the
Commercial Code.

That kind of lease has not been created for tourism residences but is usually
submitted to that specific form.

The main question depends on what happens at the end/ term of the lease
as explained here after.

2/ Some initial paragraphs refer to the past situation :

- when you had signed with MAISONS DE BIARRITZ VACANCES a
   previous lease that was cancelled by the administrator while the
   liquidation proceedings was one.

- when LAGRANGE was chosen as the new managment company by the
   Commercial Court of PARIS

Those two events explain the fact that both of the partners, the owner and
the tenant have tried to negociate in order to sign the following lease.

3/ The contract describes in an article that is personalyzed per each of you
the plots that are rented to avoid any mistake. Those plots are submitted to
the condominium binding rules document which is always appliable to the
tenant and subtenants.

If your tenant create a damage to the co-ownership, I remind you that you
would remain responsible towards the co-ownership of the actions of your
tenant. The « syndic » or the co-ownership can even ignore the tenant and
sue you directly.

Please understand that you agree on renting your private plots with
furnitures ; I remind you that you bought those furnitures on top of the price of
the real estate.

      Membre d’une Association agréée acceptant le règlement des honoraires par chèque
                    NII: FR74404319915 - SIRET : 40431991500025

                                        Page 2/11

1/ The commercial lease duration will be nine years which are said full and

The lease is said to take effects on the day you sign ; yet LAGRANGE
agreed modifying that date if you sign immediately to avoid to loose some
rents for february and march 2009.

Anyway, I insist on the fact that this duration of 9 years is a minimum
which is not sufficient for tax reasons : to keep the benefit of the
examption of payment on the vat over the sale price you must keep
your ownership 20 years : this means that at the end of this lease, if you
thought about not renewing and signing a second lease, after this one
please do not forget that you will have to refund a proportion of the vat.
(1/20 per year)

2/ If no new addentum or no cancellation is established at the end of those 9
years, the lease will go on but the tenant which is NOUVELLE MDB will be
able to ask you officially for a renewal which must be done being conform to
the french commercial code ; If you received such an official document, you
would be able to refuse to renew the lease but would have to propose to pay
in indemnity to compensate the damage that would result from the loss of

If you resell your estate or give it as gift or do whatever legal act that
forwards to someone else or modifies the ownership, your rights have to
follow this transfer : the new owner will be subsituted to you in the lease
obligations. To inform the new owner, the lease will have to be added to any
legal document ; I have no special comment since that clause is conform to
law. This means that the new owner agrees on being part of a commercial
lease and a leaseback program. The new owner could not get rid of the lease
during those 9 years. He must agree on beeing linked to NOUVELLE MDB


The residence will be used as a tourism residence and coan not be modify
for example as an hotel.

The tenant will be in charge of the private areas but also of the common
areas that are said to be essential for the specific use.

As in every commercial lease for such programs, you are said to consider as
essential the submission of your estate to the vat.

      Membre d’une Association agréée acceptant le règlement des honoraires par chèque
                    NII: FR74404319915 - SIRET : 40431991500025

                                        Page 3/11
The vat regim definies the tax regim applied to tourism residences. Therefore
on the opposite, the tenant has to respect binding obligations as

- to propose to tourists some services on top of the fact to provide a place to
sleep : cleaning, towels and equlivalent, welcome office conform to the legal
definition. Law refer to 4 possible services but 3 must be provided

- being registered at the court record as a tourism managment company

The most important element is the necessity for the tenant to keep the
residence been classified as a tourism residence. There is a legal
classification that is checked by the Goverment administration. This is a way
to be certain of the quality of the services that are provided

All those clauses are conform to the normal use and to the legislation.


1.An article referring to the tourism promotion done abroad is written down to
remind the tenant a legal but binding obligation : since the govermment give
an advantage on the status, he wants to get in return tourists to come to

2.The tenant could not complain about the state of the residence and the
private areas if those elements are conform to european technical and legal

The inhabitations are said to be new and furnished.

A join inventory of fixures between you as an owner and the tenant must be
done to avoid further litigations on the state at the end of the lease. This
article is aways included : this will be established 4 weeks maximum after the
signature although nothing is said about the costs of that diligence.

3. The tenant must keep the private plots in their good state and fix
everything which would need to be, except what is classified as structural
elements (art 606 civil code which is the following one

Art. 606
     Major repairs are those to main walls and vaults, the restoring of beams
and of entire coverings;
     That of dams, breast walls and enclosing walls also in entirety.
     All other repairs are of maintenance.).

      Membre d’une Association agréée acceptant le règlement des honoraires par chèque
                    NII: FR74404319915 - SIRET : 40431991500025

                                        Page 4/11
Thus please understand that although some repairs are chargeable on
the tenant, you will be charged with expenses which are not part of the
maintenance ; the article refers to the façade cleaning the work to adapt
the residence to the new legal and technical standards which are
payable by the owner…

4. The tenant must keep also the furnitures in a good state but you have to
provide those furnitures at the beginning - which is conform to what exists
already.Those funitures are essential to provide to tourists what they expect.

This article obliges the tenant to refurbish the private areas otherwise the
furnitures would become too damaged to be kept.

5. The tenant will be charged with all maintenance charges (ownership hosue
keeping, tennis maintenance, garden work..)

Those charges include also 50% of the tv tax, and a part of the water
consomption and the electricty consomption. Please do not follow the first
lines of paragraph 4.1. D since this does not explain the limit of this
obligation which is understandable in the following lines.

On the opposite the owner will be charged with the landlord tax and the
dustbintax but also for his income based on the rental income that
must be declared to the tax administration each year.

You will also be charged with 50% of :

- the co-ownership cahges
- the water and electricty consomption
- tv tax

Yet your financial participation is limited to some personalyzed euros.

The annual charges binding on you will be deduced per quarter on your
rental income every trimester.

6. The tenant would not be allowed to ask for penalty even if the work on the
structural éléments would last more than 40 days if those work are done
between 15th november and 15th march during the low season.

      Membre d’une Association agréée acceptant le règlement des honoraires par chèque
                    NII: FR74404319915 - SIRET : 40431991500025

                                        Page 5/11

1. A traditional paragraph refers to your agreement to let the tenant deal with
the vendor legal guarantees : you are said to give a mandate that can not be
broken : this is understanable to have the residence been well managed ;The
tenant is responsible for the work he orders. Imagine a water damage occurr,
you will appreciate the management company to be completly in charge
rather that fighting on your won with the insurance and the work to fix.

2. Please understand that he tenant is free to sell his activity to sanother
company if the tourist activity goes on ( this is due to the commercial lease :
the value of the estate depends on the continuation and duration of the
activity which must not stop)

If NOUVELLE MDB want to find another company to substitute to himself,
you can not refuse nor complain even if you do not appreciate this company.

Yet please know that NOUVELLE MDB could not get rid of his own financial
obligations towards you : NOUVELLE MDB would remain submitted to the
payment of the rents even if they had ended the activity and had forwarded to
another company. Therefore the risks are limited even if not equal to zero.

3. You agree to seing your plots subrented ( as opposed to what happen for
a classical shop ) since the tourists are linked to NOUVELLE MDB thanks to
contracts that are subrenting. Please understand that your agreement on
each sub contract wont be asked which is due to the activity : it is impossible
to make you sign each contract with every tourist

Yet, to respect the lease, the subrenting activity must be conform to the
regular use of the tourism residence. NOUVELLE MDB could not subrent to
an hotel for example. In addition, no subrenting activity can last more than 9

4. You’ll be charged with the insurance of the co-ownership even if the tenant
will sign compulsorily some insurance contracts to grant the residence
against the following risks :

-   civil responsibility
-   any risk attached to the use of the rsidence
-   fire, wtare damages, blast, robbery
-   risks attached to the renting acativity
-   neighbourghood litigations

« PROPRIETAIRE NON OCCCUPANT » which means for an owner who
does not leave in that estate but makes it occupied by someone else.
       Membre d’une Association agréée acceptant le règlement des honoraires par chèque
                     NII: FR74404319915 - SIRET : 40431991500025

                                         Page 6/11
If you want me to help you in finding a insurance Policy, I remain at your
complete disposal. I am used to deal with a broker for my usual irish and
English clients


1. You loose a part of your freedom by giving a general mandate to
NOUVELLE MDB to vote on your behalf at every meeting except if you go an
attend to that meeting. No law can deprive you from your right to vote which
is something essential in a co-ownership.

All leaseback contracts include such clauses which are understandable as
regards to the need to keep the co-ownership work efficiently. Some co-
ownerships are so mismanaged that nothing can be done and the building
start fall apart : this is the reason why such clause exist.

Yet, I do not like the fact that the tenant could vote and increase the charges
that you must pay : I remind you that you are not refund by the call for work
but only for the maintenance charges. If you would disagree on one possible
vote that could increase your charges to pay, you should vote
yourselves whatever that clause says.
2. As regards co-ownership, a first meeting must take place very quiclky and
designate a syndic that is a person or a company in charge ; NOUVELLE
MDB is likely to propose his own syndic which can be an advantage to avoid
expensive syndic fees.

Yet I advise you to create a « conseil syndical » which is a board of 3
persons in charge of checking the financial balances of the co-ownership and
in being active.

Do not let the tenant without control and try to be active. In addition when we
were negociating LAGRANGE insisted on the fact that the owners must take
their powers and use them for the interests of the coownership

Anyway the actual situation that exist in former MDB resorts is amazing since
it is totally contrary to law : no meeting has ever been setlled and no syndic is
in charge.


The rent income is made with a financial part and also the equivalent of
personal weeks of occupancy, which is very classical and conform to law
since the free weeks are valuable.

      Membre d’une Association agréée acceptant le règlement des honoraires par chèque
                    NII: FR74404319915 - SIRET : 40431991500025

                                        Page 7/11

a) The rent will be paid every 31th march, 30 june, 30 september and 31

b) For year 2009 the rent will be limited to the fact that the lease takes effects
during the year.

A special paragraph specifies that if 70% of the owners and if you sign early
in march 2009 the rents for febraury and march will be paid to you.

All the following amounts are calculated without the vat (charges and

For years 2010 and 2011 : another amount is scheduled and individualized.

Same thing for the followings years.

Each time the rent is added with the vat at 5.5%

c) On top of that rent you get an addiitonnal rent : all owners will shared 50%
of the turnover made by the tenant on the hôtel activity as opposed to the spa
activity or the restaurant one , if this amount is over :

3,5 millions euros 2009 to 2011
3, 650 millions euros 2012 to 2014
3,8 millions euros 2015 to 2017

It is important to know that that turn over is achievable if we refer to the
actual one and the ability to increase it by being realistic. Otherwise it would
be no use including such a clause.

d) A special article 5.1.D specifies that LAGRANGE GESTION grants the
payment of the rental icnome in case the tenant would fail ; yet it is submitted
to the achievement of the signature of the leases by 70% of the owners.

e) The rent will be reviewed every 3 years based on the average amount of
the last 3 years but limited to 6% ( which is better than the initial rate); of
course if a legal standard limited the indexation, this rule would be applied.

No clause specifies that no increasement occurrs during the first 3 years as it
was once thought about. This sounds strange to me since it is contrary to
what was said : yeti t is possible that the specific numbers you have for you
personalized lease described per year include that limitation of the
indextaion ; please be careful since I can not check.

After the 9 years in that commercial lease, the new rental income will only
increase due to the indexation.

      Membre d’une Association agréée acceptant le règlement des honoraires par chèque
                    NII: FR74404319915 - SIRET : 40431991500025

                                        Page 8/11
Usually in classical commercial lease, owners can ask for higher rents when
the tenant has increased his activity since this has effects on the value of the
shop. In your situation, you agree on renouncing to that legal

2. Weeks of occupancy : legally defined as a rent

You benefit from 3 weeks : one in mid season, twoin low season and apart
from the french school holidays ; be careful about the fact that in FRANCE 3
zones of school holidays exist and can extend on some weeks

A percentage of the value is given ot be conform to tax rules.

In the final version, an improvement has been made : you can benefit also
from LAGRANGE brochures except for 2009 when exchanges seem limited
to NOUVELLE MDB brochure.

3. Special condition You will receive aglobal annual invoice that you will have
to agree with.

PLEASE know that the tenant is allowed to stop paying or reducing the rent
in case of a major event that would limit the activity : earthquake, pollution,
natural disaster but also any event that could interfer with the activity on the
tenant : ex a misuse or a bad maintenance of the common areas if the tenant
is not responsible for them.


Those paragraphs may seem borring since they are very descriptive but they
avoid pratical issues.

The tenant must forward his calendar twice a year at specific days and you
can arrive at the residence on Saturday at 5 pm and have to elase on
Saturday week + 1 at 10 am.

exist to say when you want to use your weeks : this is made to help the
managment company able to organyze himself : you’ll get the time Schedule
every 15th december maximu and 15th July by the tenant and must decide
before 31th january for the summer season and 1rst september for the winter
 If you do not respect those deadline, you can not complain.

The High season is the following one : from last Saturday in june to first
Saturday in september

      Membre d’une Association agréée acceptant le règlement des honoraires par chèque
                    NII: FR74404319915 - SIRET : 40431991500025

                                        Page 9/11
The mid season refers to the french school holidays for Easter plus the
months of june and september.

The low season is the other part but the out season is from mi
november to end of march.

Like in every lease of that kind, if you do not benefit of those weeks you can
not postpon them to year + 1 nor ask for an indemnity since it would be your
choice ; this is logical and conform to a good managment

Please understand that you will be submitted to the same rules than any
tourist but can be charged with some expenses except the free of charge
equipments and towels/sheets

You also can enjoy some additional weeks at your résidence at
FAYENCE by beneficying of -25% on the puclic price in mid and low

On top you can benefit from a reduction of 20% on LAGRANGE
LAGRANGE CITY for additionnal weeks ; in addition , you benefit from a
discount of 10% on the other resorts commercilaized by LAGRANGE
but not managed by LAGRANGE.

The contract insists on the fact that the exchange to other residences is only
an option and does not create any right. This is a aso classical clause


1. For the owners of villa a special article allow the owner to use his villa
    during the out season ( that is to say between november and march)
    except when the residence is closed by paying 150 euros per week . A
    written query must have to be done on that purpose.

2. For the owners of houses/ flats in the « village », the same allowance is
    made by paying 100 euros per week.


The submission to vat is once more enlightened

Alll your tax declarations will have to respect this special status.

      Membre d’une Association agréée acceptant le règlement des honoraires par chèque
                    NII: FR74404319915 - SIRET : 40431991500025

                                       Page 10/11

There is also one final change : the registration costs are chargeable on the
person who ask for it
The registration is not compulsory but give an official date that can not be
subject to litigation.


Everything is conform to law ; you can sign if of course you agree.

Remaining at your disposal

After its signature, the lease must be sent back to :

 Service Propriétaires / Mme FRADET
 77 Boulevard Berthier
 75017 PARIS

Kind regards,

                                                                      Gabrielle EISENSCHER
                                                                        Advocate PARIS Bar

      Membre d’une Association agréée acceptant le règlement des honoraires par chèque
                    NII: FR74404319915 - SIRET : 40431991500025

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