Leaseback French Mortgage Default

Uptonite

I hope someone can offer us some sound advice?

We own a French property via a leaseback scheme. The management company and building company went into administration and we are paying a mortgage on an unfinished property. It will one day I think get finished, but we are mixed up in a very long, slow legal battle.
Sadly it is looking like we are about to default on the French mortgage and the bank in France is not cooperating when I am ask for a deferment. They have reduced it to interest only but that is not much help. We have run out of money to fund it (the management company was meant to rent it out to cover the mortgage and we had a 6 month buffer which has gone).
The value of the property will not be as much as the mortgage - about 20K E less.
Can anyone advise where we will stand when we default?
I am sure they will they come after us but then what?
Is is better we try and find the shortfall via a loan or can we offer to pay them back over a number of years?
Or should we take a loan and keep paying the mortgage whilst we struggle on to get the development finished (we are with 50 other owners).
There is also a matter of the VAT that we will have to pay back to the French government...
It's not an easy situation and I would really appreciate any advice!
Thank you so much

Thrugelmir

Uptonite wrote: »

Or should we take a loan and keep paying the mortgage whilst we struggle on to get the development finished (we are with 50 other owners).

A speculative investment as it sounds you require the rental income to service the mortgage.

So maybe worth just biting the bullet and taking the hit.

As who is going to pay for finishing the development?

Uptonite

Thanks for replying. Do you mean 'take a hit', as in 'walk away'?

My worry is about our credit rating and will the French bank come after us? I am trying to get legal advice on it.

We could keep ploughing money into it, but it's no unclear how long it will be until the buildings are finished. The building company is back in the picture again and is slowly trying to finish the site but this could take years as i can't see where they are going to get the funds. The insurance will not cover the cost of the build so we are all in a state of limbo. What I dont want is for us not to be able to ever get a mortgage again.

Thank you

Colne

We are in the same situation with our leaseback purchase in France, rent back guarantee backed up by the French Government, but which has now broken down due to Developer going bust and we are unable to make the mortgage payments. Have you had any luck with answers to your original question? We have found that the French bank is a nightmare to deal with, and understanding the legalities is like trying to knit fog, even through a solicitor!

knightstyle

Try asking on a couple of expat forums as there are some very knowledgable people on there when it comes to French law.
http://poitoucharentes.angloinfo.com/forum/
http://www.totalfrance.com/france/forum/viewforum.php?f=33&sid=2d8689c34253de57dced702bac938b65