Frequently Asked Questions

Be happy for this moment – this moment is your life
1. How is the €166,000 price for one-eighth share arrived at?
It is broken down in the following way:
€133,000
€12,000
€3,000
house valuation
furniture
car
€12,000associated house purchase costs (inc tax, notaries’ fees, survey etc)
€6,000Authentic Management / James Pearson arrangement fee
*see Documents section: Leggett valuation for house itself is €156,000 for 1/8th (excluding car & furniture) – a generously healthy 15% discounted from that to counter usual estate agent optimism!
2. WHAT IS INCLUDED IN THE €166,000 INVESTMENT?
This effectively gives you 1/8th ownership of the property, its accompanying land and all its contents, and the car. Everything you currently see in Le Mas du Figuier will be collectively owned, as indeed will any subsequent purchases by the owners. At the point of sale, any contents that a new buyer does not want will be sold back to the current owners (via an auction process) with the proceeds split evenly back to the owners according to their ownership shares. Any items unwanted by the fractional owners will be disposed of by Authentic Management.
3. IS THERE ANY NEGOTIATION ON THE €166,000 PRICE FOR EACH ONE-EIGHTH EG IF I BUY TWO-EIGHTHS (OR ONE-QUARTER)!?
Sorry, at this stage no! I think it is the right price, a fair price to all, as outlined above. The impetus behind building this website was to provide full transparency to all potential investors, who then can all consider the exact same deal. I do not want to start off a fractional ownership relationship with some owners getting better deals than others, or others feeling aggrieved. Even if you buy several-eighths, the financial deal is the same. However, if any shares remain unsold, I naturally reserve the right to amend this price if the valuation changes, up or down.
4. If the price is €166,000, why am I paying €170,000!?

€166,000 is the price of the 1/8th share as broken down in FAQ1. However, each owner also needs to contribute (a) €2,000 for the house reserve fund, and (b) €2,000 for the renovation fund. These are one-off amounts, payable at the agreement inception.

Le Mas du Figuier is a large, old house which we hope to be using all year-round. There is always the potential for some unforeseen costs. The reserve fund is set-up at the fractional ownership inception to ensure that there are sufficient monies held in reserve to pay for larger unforeseen items. Having said that, general repairs and maintenance are provisioned for in the annual running costs under contingencies (€3,000 per annum budgeted). Moreover, I (unusually for France) had a full UK-imported surveyor to write a report (see documents) on the house before purchasing it, so we should feel somewhat assured that the building is in very good shape! The reserve fund will be dipped into if there is a small excess in the annual running costs, and for any larger items over the course of the ownership period. Naturally, anything that is left when the house is sold will be returned to the owners according to their equity stakes. At all times, Authentic Management will endeavour to ensure all owners have full transparency over how their money is being spent.

The renovation fund is different. All new owners will contribute €2000 at the beginning, with the combined total (€16k) to be kept in the communal house account for initial refurbishment, renovations or house upgrade. Essentially, once all owners have spent some time at Le Mas du Figuier, there will undoubtedly be some changes (improvements or additions) owners may want to make. Authentic Management will consult with all owners and decide what should be done. This money will be used for this purpose within the first 36 months.

Examples may include, but are not limited to (and we won’t be able to do all these!):

  • Contribution towards fractional ownership of speedboat, moored in Montpellier
  • Contribution towards fractional ownership of local vineyard
  • Install outdoor kitchen €15,000
  • Convert bedroom six into 2 ensuite bathrooms: house becomes 6 beds with 6 ensuites €15,000
  • Convert one-third of garage into cinema room €10,000
  • Upgrade wine cave racking €10,000
  • Upgrade pool cabana / convert cabana shower into kitchenette €5,000
  • Some wall repainting €3,000
  • Purchase house bikes €3,000
5. HOW MUCH WILL THE ANNUAL RUNNING COSTS BE, AND WHEN ARE THEY PAID, AND TO WHOM?

Annual running costs will be shared equally between all the owners proportionate to their equity shares. It will undoubtedly vary each year, but in year 1 they are set at €5000 per one-eighth share.

€5000 per 1/8th works out as €17 per bedroom per night over your 6 weeks usage period.

Each year, this will be paid by all owners regardless of their intended or actual usage, into a central house account controlled by Authentic Management.

As estimates, this is broken down as follows:

Le Mas (€)per 1/18th (€)
land tax (taxe fonciere)6900863
Authentic Management admin fee6000750
cleaning5200650
misc repairs & contingencies 3955494
habitation tax (taxe d'habitation)3300413
gas & electricty 3000375
house manager2600325
house & contents insurance2100263
water supply & waste water collection1500188
swimming pool maintenance1200150
car insurance1125141
gardening1000125
car maintenance75094
SFR (TV/ wifi / internet60075
domestic purchases (toilet rolls, cleaning stuff etc)52065
chimney sweep25031
TOTAL (€)400005000
1/8th share (€)5000
Before the start of each year, Authentic Management will make an estimate of the upcoming annual running costs and add on a 5% contingency sum (except for year 1 which is set at €5000 and includes a contingency). This is to be paid by each owner by the start of each new calendar year for the 12-months ahead into the House account, managed by Authentic Management. There will be full transparency to all owners with respect to how their money is spent: all costs and expenditure, as well as the balance and all transactions going though this account. Any residual monies will be retained for the following year, and deducted from each owners’ required contribution for the upcoming year. If there is a need to spend more in any one year, Authentic Management will communicate this as soon as possible, and where possible utilise money from the reserve account (provided that account has more than €10,000 in it) before making any supplementary requests to owners (whom are obliged to pay if asked).

 

6. WHO IS AUTHENTIC MANAGEMENT?
This is the management company I (James Pearson) have set up to potentially administer this (and other) fractionally-owned properties. Currently it is owned 100% by me (James Pearson), and there are no other employees! For practical purposes, you are dealing wholly with me (James Pearson), and in fact the fees may be in my personal name, depending on tax implications!
7. WHAT WILL AUTHENTIC MANAGEMENT / JAMES PEARSON DO?
I am managing this venture: I will help you manage the investment process and documentation at the very start, ensure occupancy allocations are understood and done correctly and in a timely manner throughout the holding period, be responsible for collecting all the annual running charges, pay all bills for the property, arrange all ongoing repairs and maintenance, oversee and direct the onsite house manager, as well as the cleaning and client liaison needs: generally be your first point of call for any queries. I will be the final arbiter in any disputes that arise. I will have authority to raise monies from all owners and spend the monies in the House account to pay reasonable bills.
8. HOW WILL AUTHENTIC MANAGEMENT CONSULT THE OWNERS AND WORK ON THEIR BEHALF?

Authentic Management / James Pearson will endeavour to maintain an up-to-date Owners’ section on the website, informing all the Owners of any latest developments, notably around expenditures around repairs and maintenance, as well as any more general news of interest to all (eg local events). I will be contactable most of the year via email or phone, and the House Manager will be their representative in the house itself. I will act as the representative of Le Mas du Figuier Owners if required. I will aim to be as transparent as possible with all owners equally. I will attempt to establish a consensus view where possible, albeit recognising sometimes that will not always be achievable and hence some decisions will have to be made without that being established. As a general guiding principle, I will be the principal decision-maker on behalf of all the Owners. I will also act as the final arbiter if disputes cannot be settled independently. I will attempt to act in the long-term best interests of all Owners collectively, as well as ensuring the House is properly maintained.

I will additionally examine and scrutinise all expenditure, and pursue value-for-money for all the Owners. I will ensure all Owners are aware of any schedule of works (refurbishment, repairs and maintenance), and any notable expenditure (defined as over €1000 in toto). I will be responsible for organising any works, as well as for paying any bills from the House Account etc.

9. WHAT TYPE OF WORKS ARE EXPECTED TO BE CARRIED OUT OVER THE 8 YEAR PERIOD?

There is €379 per owner = >€3000 in total allowed for within the annual running costs for miscellaneous repairs and maintenance. Moreover, the house reserve fund will have up to €16,000 in it. Decisions will be made by Authentic Management each year, depending on the urgency of required works. There will inevitably be issues or situations that need resolving that are not anticipated. Naturally, a balance will be sought between carrying out necessary or desired works whilst ensuring the running costs are kept to a reasonable and acceptable level. The below is intended to be realistic examples and not an exhaustive list set in stone:

  • New ironmongery if necessary
  • Ongoing refresh of external and internal decorations
  • Rectify any electrical or plumbing shortfalls
  • Re-render or point some of the facade / elevation
  • Boiler servicing when required
  • Pool machinery servicing when required
  • Air-conditioning or ventilation installment if necessary
  • Replace central heating boiler(s) if necessary
  • Replace white goods if necessary
  • Fit electric mechanism to garage doors if desired
  • Fit new pool tiles if necessary
  • New furniture if necessary

Some of these may be essential, some nice-to-haves. Some of these may be necessary in the first year or two, some never; some may be desirable when we come to ultimately sell the house.

10. How does the usage allocation process actually work?

Each 1/8th owner will be entitled to 6 weeks exclusive usage of the house per year.

Flexibility, fairness and transparency will be key to the rota, with different owners requiring the house for different reasons at different times of the year, and from year-to-year.

Please discuss directly with James your requirements.

11. AS SOMEONE WHO IS SERIOUSLY INTERESTED IN THIS PROPOSITION, WHEN CAN I COME AND STAY AT THE PROPERTY, TO HELP ME MAKE UP MY MIND?
I have deliberately kept the house as vacant as possible over the next few months for precisely this reason. Please contact me directly to arrange a quick visit, or even a longer family break!? What are you waiting for?
12. WHEN IS THE INVESTMENT PERIOD / WHAT IS THE MECHANISM TO SELL?

The planned 8 year investment period is from 5th January 2019 until 2nd January 2027.

The house is expected to be put up for sale in 2026, and will be subject to the following process:

  • in January 2026, Authentic Management will ask three estate agents to value the house
  • once the three valuations come in for example, at €1,450,000, €1,500,000 and €1,550,000, then the house will be offered for purchase to any / all of the Owners at 95% of the highest valuation price, in this example at €1.4725m (95% of €1.55m)
  • if more than one owner wishes to buy the property, all interested parties will be invited to make sealed bids above 95% of the highest valuation (this needs to be made to the nearest €25,000 e.g. €1.475m or €1.5m). If the sealed bids are the same or only €25k apart, all of the interested Owners are invited to make another sealed bid, but it has to be the same or higher than the previous bid. This process repeats until an Owner bids >€25,000 than the rest, or each Owner repeats their previous bid. The highest bidder then can purchase the house at that higher bid price. If bids are still exactly the same, then there is an open auction with €1,000 increments, with the Owners drawing lots to see who has to start the bidding. This will be run by Authentic Management and their decision will be final.
  • Authentic Management will also help put together owners into a continuation of the fractional ownership scheme, depending on interest
  • if no owner wishes to purchase the property outright, Authentic Management will appoint an estate agent to market the property at the higher valuation price (€1.55m in the above example).
  • Authentic Management will use its discretion during any sale price negotiation, although it will accept no offers below 94% of that asking price before 30th June 2026, nor below 86% after 1st July 2026, unless there is unanimous agreement from the Owners to do so. If the house remains unsold by September 2026, Authentic Management will lower the price at its discretion, but by no more than 10%: a process that it can repeat every 6 months until the house is sold (with Owners each time having first refusal at 95% of the new price).

Inevitably the house sale may need to be completed before or after the 2nd January 2027 – if before, owners with time usage allocations toward the end of year may lose out on these weeks (there will be no compensation for this); if after that date, the house will continue to be used on a rota basis managed by Authentic Management whilst a sale is completed.

13. IF I WANT TO BECOME A FRACTIONAL OWNER, WHAT DO I DO NOW!?
Ultimately you need to pay €166k per one-eighth share, plus the €4k for the reserve and renovation funds.  Initially, though,  ensure James is aware of the level of your interest. It is strongly encouraged that you arrange to (re) visit the property, preferably stay over, and sit down and discuss with me all aspects of the investment. I would also like you to take your own independent advice, from both an international property lawyer and an international tax accountant, to ensure you are fully comfortable and that this suits your own personal situation. Formal documents have been professionally prepared for you to consider to reflect this proposition. You will also have a 14-day “cooling off” period extended to give you a last chance to change your mind…
14. WHAT HAPPENS IF ONLY SEVERAL FRACTIONS OF THE HOUSE ARE SOLD?
The house will be marketed for fractional ownership investment in 2018. If investors for four-eighths are not found, Authentic Management reserve the right to withdraw this offer. I will endeavour to keep all interested parties up to date with the latest situation as much as possible throughout the offer period.
15. WHAT HAPPENS IF I NEED OR WANT TO SELL MY SHARE BEFORE THE END OF THE 8-YEAR PERIOD?

This is theoretically possible and I will assist you in trying to find a suitable buyer if this situation arises – for example, in 2018 I have assisted an owner in my Cotswolds fractional ownership house whose personal circumstances changed to sell their 1/8th share to a new buyer, returning over 20% on his investment in less than 18 months!

However, you must be aware that this is not an openly or easily tradeable asset. Anyone wishing to sell a share has to first of all notify the other owners, giving them the first opportunity to buy another share. If such a sale occurs before the house itself in toto is sold, an administrative fee is payable by the seller to Authentic Management of €4000. This is reduced to €1000 if the sale is to another current owner. This administrative fee is over and above any legal and other costs that may be incurred by the seller or buyer.

16. WILL YOU BE RETAINING A SHARE IN THE PROPERTY?
Absolutely. I intend to maintain at least 1/8 share of the property throughout the period.
17. CAN I SWAP WEEKS AFTER THE ROTA HAS BEEN DONE, FOR EXAMPLE IF MY PLANS CHANGE?
Yes absolutely. This is up to each owner to negotiate with other owners. Who is allocated which weeks will be transparent in the owners’ section of the website.
18. CAN I RENT OUT UNUSED WEEKS?
I’m afraid not. The intention of this arrangement is for the property to be used by owners, their families and friends. Once renting is involved, then deposits have to be taken and inventories checked. This adds a cost and time burden to the arrangement. There are also implications for health and safety regulations, as well as insurance. Moreover, there naturally has to be a decent level of mutual trust and reciprocation involved in fractional ownership which will naturally be diminished once the house becomes available to rent. However, if you want to informally ask your guests for a contribution to the annual running costs, then that is your choice…
19. TAX IMPLICATIONS

This is how I understand the situation but please take your own tax advice as I am not an accountant in either country!

All purchase costs (inc property taxes) have already been paid, and that has been factored into the €166,000 investment amount for 1/8th (see FAQ1), except for the buyer to pay a (UK) share transfer duty of 0.5% (€830).

All annual taxes will be paid from the annual running costs and have been factored in (see FAQ5).

The new French “import sur la fortune immobiliere” has replaced the wealth tax, but only applies to properties valued above €1.3m, meaning Le Mas is currently excluded. as explained in FAQ 1, we are using a house valuation of €1.064m (€133k x 8).

There should be no income tax liability as we are not renting the property out.

You should seek inheritance tax advice: it is worth considering creating a standalone French will to cover these and other French assets (inheritance works differently than the UK!).

The Double Taxation Treaty between France and the UK means that any capital gains on the sale will be payable in France (not the UK) given that is where the property is physically situated.

Happy to discuss and update further, but all investors are naturally responsible for your own tax advice and payments! I can readily refer you to a London-based UK / French tax expert.

20. LEGAL STRUCTURE

The house (le Mas du Figuier) is 100% owned by an SCI, which is a French company specifically used to facilitate multiple ownership of French properties.

www.french-property.com/guides/france/sci-societe-civile-immobiliere/

The SCI is, in turn, owned 87.5% by a UK limited company (Authentic France Limited) and 12.5% by G.S.Pearson (my father). Authentic France Limited is currently 100% owned by myself. It is necessary to have two distinct owners of the SCI due to the SCI formation rules. €166,000 means you own 12.5% of the SCI (and hence 12.5% of the property) via owning 14.28% of the UK limited company. Ultimately, 7 owners will own 100% of the Authentic France Limited (UK limited company), with the eighth owning 12.5% of the French SCI directly.

21. WHAT IF AN OWNER FAILS TO PAY THEIR SHARE OF THE ANNUAL RUNNING COSTS?
All owners will be asked to pay their share of the anticipated running costs ahead of the start of the usage (calendar) year. If any owner fails to do so, they will (1) be not allowed to use the house until the monies are paid, and (2) will be charged an interest rate equivalent to 20% APR on the outstanding monies. The service charge they owe will be temporarily covered by Authentic Management whom will be the recipient of the interest when the monies are eventually paid. If monies are still outstanding when the house sale is completed, the outstanding monies will be repaid out of that owners’ share of the sale proceeds.
22. What is the role of the House Manager?
The house manager its simply in charge of house security, and will live in the 2-bed separate apartment (gites). All cleaning, maintenance, gardening etc will be coordinated between Authentic Management and him, although most likely carried out by a local third party.