FRANCE Law and Practice Contributed by: Antoine Mercier, Myriam Mejdoubi and Gabriel Dalarun, DLA Piper France LLP
parties, or judicially, if no agreement can be reached. If the loan agreement has not been contracted in the form of a notarial deed, or if the obliga - tion to pay under such loan agreement has not been reiterated in the mortgage deed, the mort - gage will not constitute an enforceable title. This implies that, prior to the enforcement of the mortgage, the secured creditors will have to obtain a court judgment stating that their receiv - able is certain, of a fixed amount, and payable. 3.7 Subordinating Existing Debt to Newly Created Debt A creditor may agree to contractually subordi - nate the existing secured debt to newly created debt by entering into a subordination or inter - creditor agreement. In addition, in the event of insolvency proceed - ings of the debtor, the existing secured debt will be legally subordinated to super-privileged debts and privileged debts, ie, new debts quali - fied as “useful” (contracted for the purpose of the running of the insolvency proceedings or the observation period, or as consideration for services provided to the debtor in relation to its business activity) and contracted regularly after the opening of the insolvency proceedings. 3.8 Lenders’ Liability Under Environmental Laws A lender holding security over a real estate asset will not be liable for environmental damage, pro - vided it does not itself cause, or knowingly per - mit, damage to the environment. In the event of enforcement of the security over a real estate asset by way of appropriation, the lenders may incur a risk of liability under envi - ronmental laws since, in some circumstances,
owners of a real estate asset can be liable for environmental damage of such asset or an emanation from it, even if they did not cause the damage. 3.9 Effects of a Borrower Becoming Insolvent In principle, a validly granted and perfected security interest may not be made void if the borrower becomes insolvent. However, if insolvency proceedings are opened against a debtor, most of the security interests will be inefficient for the duration of such insol - vency proceedings, and creditors whose receiv - ables are not privileged by way of law will be prohibited from commencing or continuing any individual legal actions against the debtor. Moreover, any new security granted by a debtor during the “hardening period” ( période sus- pecte ) – a maximum of 18 months from the date determined by the court as being the date of suspension of payments ( date de cessation des paiements ) and ending on the date of the open - ing of the insolvency proceedings – to secure pre-existing debts is deemed null and void. 3.10 Taxes on Loans See 3.4 Taxes or Fees to the Granting and enforcement of Security 4. Planning and Zoning 4.1 Legislative and Governmental Controls Applicable to Strategic Planning and Zoning Most national regulations regarding zoning and planning are contained in the French Planning Code (Code de l’urbanisme) and local regula - tions are usually prescribed by the relevant
255 CHAMBERS.COM
Powered by FlippingBook