FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
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In most cases, the information contained in the Certificates of Title does not establish whether the Permits<br />
are definitive. As a result, they could in theory be challenged by an interested third-party (such as a<br />
neighbouring property owner), although an action challenging a permit after the building is completed is<br />
rare in practice.<br />
Absence/incompleteness of compliance certificate<br />
After works are completed on a property in accordance with the relevant Permit to the satisfaction of the<br />
local authority, a compliance certificate (certificat de conformité) is delivered.<br />
According to the Certificates of Title, the Notary has not been provided with the compliance certificates<br />
or evidence of the existence of the relevant compliance certificate, with respect to nine Secured <strong>Properties</strong><br />
of the <strong>Proudreed</strong> France Borrowers and 11 Secured <strong>Properties</strong> of the Paris Property Borrowers. The<br />
Certificates of Title indicate that the compliance certificates issued with respect to 17 Secured <strong>Properties</strong><br />
in the portfolio of the Paris Property Borrowers and nine Secured <strong>Properties</strong> in the portfolio of the<br />
<strong>Proudreed</strong> France Borrowers do not cover all the works mentioned in the Certificates of Title as having<br />
been carried out on the relevant Secured <strong>Properties</strong>, or are not clear as to whether all compliance<br />
certificates (or evidence of their existence) regarding the works carried out in the Secured <strong>Properties</strong> have<br />
been provided.<br />
A compliance certificate is not compulsory, but in the absence of a compliance certificate, the Borrower<br />
has the burden of proving that the works complied with the relevant Permit in the event of a dispute.<br />
Consequences of absence/incompleteness of Permits and compliance certificates<br />
As a result of the missing or incomplete information concerning the Permits and compliance certificates<br />
in relation to the Secured <strong>Properties</strong> referred to above, it is not possible to determine whether the<br />
buildings on those Secured <strong>Properties</strong> were built pursuant to, and in compliance with, valid building<br />
Permits. If no building Permit was issued at the time the relevant buildings were built, or if the building<br />
works were notcarried out in accordance with the terms of the Permit, the relevant local authority and/or<br />
an interested third party (such as a neighbouring property owner) could (among other things) require the<br />
building to be demolished.<br />
In relation to seven of the eight Secured <strong>Properties</strong> where Permits are missing or incomplete, the<br />
Certificates of Title indicate that the relevant building works were undertaken more than 10 years prior<br />
to the Closing Date (which is in most cases the statutory limitation period for commencing legal action).<br />
Furthermore, compliance certificates have been obtained for all Permits issued with respect to works<br />
completed during the 10 years prior to the Closing Date except with respect to seven Secured <strong>Properties</strong><br />
in the Property Portfolio of the <strong>Proudreed</strong> France Borrowers and four Secured <strong>Properties</strong> in the Property<br />
Portfolio of the Paris <strong>Properties</strong> Borrowers. Even if the period for taking legal action has expired,<br />
however, the relevant local authority could refuse to deliver a new building permit in the future (for<br />
example, for the purpose of extending the building or re-building if the building is destroyed or damaged)<br />
unless the original Permit is produced and/or any non-compliance is remedied to the satisfaction of the<br />
local authority, or the issue is otherwise addressed to the satisfaction of the local authority.<br />
The fact that the Notary has not been provided with certain Permits, or evidence of the existence of the<br />
relevant Permits, does not mean that the Permits have not been obtained. Nor does the absence a<br />
compliance certificate mean that the relevant building works have not been carried out in accordance with<br />
the relevant Permit. The Borrowers have represented that, based on the due diligence carried out at the<br />
time of acquisition, they believe that the absence of or incompleteness of the Permits in relation to the<br />
Secured <strong>Properties</strong> referred to above has no other cause than the original Permits having been lost or the<br />
inability to obtain copies from the relevant authorities. Furthermore, the Borrowers have represented that<br />
they are not aware of any matter which would suggest that the works carried out on those Secured<br />
<strong>Properties</strong> in relation to which the compliance certificates are incomplete were not performed in<br />
accordance with the corresponding Permits.<br />
Partial unauthorised use<br />
According to the Certificate of Title with respect to the Secured Property located at Alfortville, no<br />
building permit authorising the change of authorised use (affectation) has been issued in respect of that<br />
Secured Property. The current legal authorised use is light industrial activity although one third of its<br />
surface area is currently leased as office space. According to the Certificate of Title, a double tax for<br />
creation of offices may be due by the Borrower owning this Secured Property on the grounds that the<br />
change of use has not been subject to prior authorisation. Furthermore, according to the Certificate of<br />
Title, the local authority could require that the premises revert to light industrial activity.<br />
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