13. Protection Against Arrears of Rent on a French Rental Property

1. 13.1. Rental/Demage Deposit
   13.2. Insurance
   13.3. Government Rental Guarantee
   13.4. Guarantor

13.4. Rental Guarantors on a French Rental Property

It is possible to ask a prospective tenant to provide a guarantor for the rent, particularly if the prospective tenant is young, and/or on low income.

The guarantee is called a Caution and may be either 'personal' or 'institutional'.

13.4.1. Personal Guarantors

Personal guarantees are more often used for students, or young persons in insecure employment, when their parents act as the guarantor.

There are a number of specific formalities that must be adhered to, failing which the undertaking may be unenforceable.

The agreement to act as guarantor must be in writing and must be either part of the tenancy agreement or a document annexed to it.

Clearly, the guarantor must also be resident in France, so this option is unlikely to be available if you are letting to someone from overseas.

The guarantee may either be one that is solidaire or simple. It is far more desirable to obtain the former as it allows immediate recourse against the guarantor, whereas this is not the case with a caution simple.

The guarantee may be for a maximum amount and a definite period or it may be for an indeterminate amount and period.

If the latter is the case the landlord is obliged to notify the tenant of the state of the account at least once a year.

If the tenant develops any arrears of rent then the landlord is obliged to advise the guarantor without delay or risk losing the guarantee.

There are standard letters that can be used but you would be best to have the agreement prepared and signed through a notaire as part of the contract procedure.

13.4.2. Institutional Guarantors

As the number of family members willing to act as guarantors has declined in recent years (other than for students), some institutional options have emerged.

There are two main institutional options available:

1. i. Fonds de Soldarité Logement (FSL)
;
2. ii. Loca-pass

Whilst these institutional guarantees have some merit, they do have their limitations, notably in relation to the period of cover that they offer.

As a general rule, they are only available for the first three years of the tenancy, and for a maximum rental period of eighteen months.

As these guarantees are offered by different organsisations on a decentralised basis, the precise terms will vary as between one and the other.

With the introduction in January 2007 of the new government backed rental guarantee, called Garantie des risques locatifs (GRL), the future of these existing guarantees is uncertain.

1. i. Fonds de Soldarité Logement (FSL)

The Fonds de Soldarité Logement (FSL) make available grants and loans for the costs of the rental deposit, pay the initial rent or transaction costs, relocation costs, insurance.

They can also act as a guarantor for rental payments and may also give assistance in the form of grants or loans with rental payments, and utility costs.

The assistance may take the form of either a loan or a grant.

The detailed regulations and availability of funds varies between départements.

You should contact the local mairie or the préfecture for details of the FSL in your area.

1. ii. Loca-Pass

The loca-pass is a separate fund, referred to as 1% logement because it is funded by a 1% housing levy on large employers.

The aim of loca-pass is to help prospective tenants to obtain access to housing though the provision of an interest free loan for the rental/damage deposit and/or to act as guarantor against the non-payment of the rent.

The loan for a rental deposit used to be restricted to specific groups of persons, but, since February 2008, is now available to all prospective tenants.

However, the rental guarantee continues only to be available to unemployed young people under 30 years of age, grant-aided students and to anyone employed by a private (non-agricultural) company employing less than 10 people.

The funds are managed by agencies that have been established or mandated for the purpose.

You can also contact the one of the organisations responsible for distributing the funds by visiting Loca-Pass .

You can also make enquiries about the provision of a loca-pass in the first instance to the Chambre de Commerce in your area.