Rental Agreements

The letting of property in France by a foreigner is often as difficult as one might imagine. You are dealing with a foreign language, a foreign law and a foreign culture. French law tends to protect the renter, so you as landlord must exercise caution to avoid unpleasant surprises. A distinction should be made between short-term and long-term leases. “Squatter” problems and problems of renewal are avoided by restricting your rental activity to granting short-term leases to foreigners. Otherwise, the possible legal problems that might arise are pretty much the same whether the lease is short- or long-term.

Here are some do’s and don’ts that might help you through the thicket:

1. DO consider engaging a rental agent for short-term or long-term leases. But, caveat: Exercise caution in your choice of agency. A good agent will help secure a tenant and will manage the property. However, there are unscrupulous ones out there, whose dark side shows more readily when the owner is non-resident and English-speaking. Above all, be sure that their services are enumerated and their fees are stated in writing, and resist giving exclusivity. Fees should not exceed 15-20% of rents collected. (By the way, fees are deductible expenses for French income tax purposes.)

2. If you elect not to use a rental agent, DO enter into a standard form (i.e., printed) French lease agreement. However, if you opt to create an agreement of your own, it is preferable that the contract be in French. The contract must conform with various French conditions that relate to a bail d’habitation. Among other items, the contract must contain:
(1) The names of the parties,
(2) their legal addresses,
(3) the address of the property,
(4) the term of the lease,
(5) the rental amount,
(6) when payment of the rent is due (e.g., on the first day of each month),
(7) the amount of security deposit (two months recommended),
(8) preferable to include a prohibition against sub-letting, even gratuitously,
(9) conditions under which the lease can be terminated,
(10) obligations of landlord and of tenant, including insurance coverage,
(11) stipulation that the tenant shall (or shall not, depending on the terms of your deal) pay co-owners’ charges and the taxe d’habitation (the annual tax imposed on the party occupying the apartment on January 1st) occupant and
(12) applicable law. This area of French law is governed by Codes, containing various provisions that affect rental agreement even if they are not specifically written in. This is another reason for using a standard form lease.

If you are adequately protected financially (two months security deposit and a bank guaranty for the full rent), the possibility of a legal dispute reaching the level of a court case is greatly reduced, at least from your side. Stipulating in the contract that the French law and French courts have exclusive jurisdiction over any dispute will reduce the likelihood of a lawsuit by the tenant.

3.DO consider renting fully furnished. This offers tax breaks, allows you to charge a higher rent, and also minimizes the squatter problem.

4. DON’T forget to obtain owner’s insurance. If you obligate the tenant to insure against the normal hazards of occupancy fire, water damage, theft, personal liability then proof of such coverage should be demanded at the outset.

5. DON’T rent to French tenants if you can avoid it. A French tenant is more than likely cognizant of the rental laws that allow a tenant to remain in the premises after the stated date of termination.

Copyright Samuel H. Okoshken 2002

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