Renewal of leaseback agreement

Hi JonnyG

We have an apartment in Le Cristal de l'Alpe and are 5 years into our first lease. We asked last year if we could effectively buy-out our current lease which was refused. We also asked what would happen if we didn't agree to the continuing lease ie the second 9 year lease and was told that compensation would be 2 years of income that CGH would have received. However, they didn't tell us exactly how much that would have been as it proved to be too expensive for us anyway.

I'm aware that some of the MGM residences are currently coming to the end of their first lease (Tignes for sure) and they might be able to give you some more accurate information.

I would add that we are really pleased with the way CGH have managed our residence.

I have an apartment in Vallandry that I bought from MGM and is of course now managed by CGH.

We have been in the process of negotiating the renewal for about 2 years already,

and although the initial 11 year lease ended at the end of 2015 we have not concluded a renewal yet.

I believe your question relates to the Eviction Indemnity (IE).

From memory I recall this is calculated as 2 years lost rent if you do NOT renew.

Here is some legal advice we were given:

15. What about the "eviction indemnity (IE)"?It is a legal provision related to commercial leases. It is caused if the LESSOR refusesrenewal. The legal bailiff who we consulted on the subject of IE confirmed that:"In no case will the LESSOR have to pay eviction compensation if the LESSEE decides not torenew the lease when it expires. This compensation is payable only if the LESSOR givesnotice of termination with refusal to renew. In addition, the LESSEE cannot obtain suchcompensation when deciding not to continue the lease because of the refusal of the LESSORto reduce the cost of the rent. "16. Could we consider adding a clause in the lease for CGH to waive IE in the future?Here is what our lawyer said: "The law expressly provides for the principle of compensation.This does not prevent, through a necessary negotiation, dealing with the issue of IE”. NB: forexample, to discuss the deletion of IE on maturity of the 11 new years.But "on an amendment to the lease, at the moment, I formally do not recommend that youmake a statement in your termination notice of a desire to modify the lease including theposition on ‘eviction indemnity’. Indeed, if this request were to be inserted in the notice, youwould open 'Pandora's box' which would result in additional requests from your tenant.

I hope this helps you. If you want to discuss this some more, perhaps we should have a private chat?

Bob B

We are coming to the end of our lease in La Rosiere and I would appreciate a private chat with Bobbart if that would be possible at some point?

By way of introduction I am an owner in an apartment complex at Champagny, built by MGM and currently managed by CGH, although initially we had a lease with Soderev/Lagrange until they tried to armtwist us into changing the lease and put the arm of the company managing our property into administration. To be fair CGH bailed us out at that point and have proved to be far better tenants then their predecessors. Having said that they aren't perfect and the returns to the owners are quite poor.

We are due for renewal in 2022 and as you would expect not all owners are agreed on the way forward. A number of us English speaking owners are trying to research the options available to us. We are free from any TVA penalty in 2026, but we have of course to consider the potential of compensation to CGH if we do not renew. There is a clause in our current lease which states they would not enforce a penalty beyond 2026 so the question arises as to whether we could safely enter a 9 year lease in 2022 which allows those who wish to exit in 2026. Some of the owners are keen to sell but have found it impossible while trapped in a lease arrangement.

It would be useful for me to contact anyone who has either recently renewed with CGH, is about to renew with CGH, or has successfully exited an arrangement with CGH and set up an alternative arrangement.

Thanks in anticipation,

Tony.

Hi Tony and others

I am also new to this forum and am looking at acquiring a CGH leaseback in the secondary market.  This one has renewed a second term which is due to expire/come up for 3rd renewal in 2025, having then been leased for 20 years in total. The key issue arising is thus the eviction indemnity.

I am very interested to hear from others if there has been any recent examples of engagement with CGH in the current economic environment and what their attitude is to the enforcement of the Eviction Indemnity after the leaseback running for two terms, and if so, at what levels.

Regards

Roy