FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
this judicial procedure. The judgment so rendered can be challenged before a court of appeal and then<br />
the French supreme court (Cour de Cassation).<br />
The owner of the expropriated property must receive fair compensation for the loss of its property. This<br />
is compensation for the full direct loss suffered by the relevant owner, including the fair market value of<br />
the property as at the date of the first judgment relating to the expropriation based on all relevant<br />
circumstances as at one year prior to the beginning of the preliminary public enquiry. The compensation<br />
(initially offered by the expropriating authority) may be in kind, i.e. a replacement property. Such<br />
compensation may also be offered to other occupiers of the property (e.g. tenants). In practice, the<br />
payment of the compensation due to the relevant owner does not generally occur at the same time as the<br />
compulsory purchase of the relevant property since both parties need to agree upon the open market<br />
value of the relevant property. The expropriating authority may not enter into the premises until the<br />
decision of the judicial courts has been rendered and the compensation due has been paid to the relevant<br />
owner or placed in escrow for a period of one month. Under French law, the compensation due to the<br />
relevant owner may never be higher than the actual loss suffered by it but nothing prevents such<br />
compensation from being lower than the open market value of the relevant property. The compensation<br />
is determined at the sole discretion of the Courts.<br />
In the event that only part of the property is expropriated (in accordance with Articles L. 11-1 and L.<br />
13-10 of the French Code de l’expropriation), the non-expropriated portion of the property may diminish<br />
in value as a result. In this case, the compensation due to the owner may exceed the value of the<br />
expropriated portion of the property on its own. In the event that only part of the property is expropriated<br />
and the judicial court decides in its discretion that the partial expropriation is likely to render the<br />
remainder of the property ‘‘unusable under normal conditions’’, the owner may request that the whole<br />
property be acquired (in accordance with Article L. 13-10 of the French Code de l’expropriation).<br />
In the event that a whole Secured Property is expropriated, both the legal title to the Secured Property<br />
and the leases related thereto would automatically be terminated. The relevant tenants would then cease<br />
to make any further rental payments to the Borrower under the relevant leases but would pay<br />
compensation in lieu of rent until they vacate the premises. Therefore, there is a risk that the amount<br />
received by way of compensation for the compulsory sale of the Secured Property may be insufficient for<br />
the Borrower to repay its Commercial Mortgage Loan or any other amounts due with respect to the<br />
Commercial Mortgage Loan Agreement. In such event, the Noteholders, or the holders of certain classes<br />
of Notes, may receive by way of principal repayment an amount less than the face value of their Notes<br />
and the Issuer may be unable to pay in full interest due on the Notes.<br />
Under the ‘‘direct and ascertainable loss’’ principle, no compensation would be due to the Borrower in<br />
consideration for the loss in rent resulting from the early termination of the relevant leases related to the<br />
Borrower by the relevant tenants during the run-up to the actual expropriation.<br />
Permits, Compliance, Use and Planning<br />
Absence of Permit<br />
Construction works may only be carried out pursuant to a building permit (permis de construire)<br />
(a ‘‘Permit’’).<br />
According to the Certificates of Title, the Notary was not provided with the relevant Permits, or evidence<br />
of the existence of the relevant Permits, for two Secured <strong>Properties</strong> in the portfolio of the <strong>Proudreed</strong><br />
France Borrowers (Valenciennes and Orly/Chaudronniers) and for one Secured Property in the portfolio<br />
of the Paris <strong>Properties</strong> Borrowers (Venissieux).<br />
According to the Certificates of Title, the Notary has been provided with incomplete Permits with respect<br />
to one Secured Property of the <strong>Proudreed</strong> France Borrowers (Valbonne) and to four Secured <strong>Properties</strong><br />
of the Paris <strong>Properties</strong> Borrowers (Argenteuil/Poulmarch, Evreux/Jacquard, Mer, Saint Pierre en<br />
Faucigny/Aravis).<br />
Absence of Posting of Permits<br />
Once a Permit is obtained, it must be published at the relevant town hall and posted at the building site.<br />
If no objection has been filed by any interested third party within 60 days of the later of the publication<br />
of a Permit at the relevant town hall and the posting of the Permit at the building site, the Permit becomes<br />
definitive and cannot (in most cases) be challenged.<br />
48