The French Estate Agent

 

Crowd funding renovations - What happens when you need to sell?

There is something undeniably compelling about watching somebody renovate a ruined French château on YouTube.

You know the sort of thing. It is a cold winter evening, you are sitting comfortably at home, and on the screen a courageous couple are battling leaking roofs, rotten windows, collapsing floors and a renovation budget that appears to have developed a life of its own.

At the beginning, it is difficult not to admire them.

They have looked at a building that most people would quietly walk away from and decided, somehow, that they can save it.

And increasingly, they are not doing it alone.

I looked at this question in my video “Crowd funding renovations - What happens when you need to sell?” because while crowdfunding a château renovation can seem wonderfully straightforward when the money is being raised, the situation can look rather different several years later if that property has to be sold.

But for those who prefer reading, let's look at what could actually happen when a crowdfunded French renovation eventually comes back onto the property market.

When the viewers start paying for the renovation

Crowdfunding has become part of the story for some of these renovation projects.

Hundreds or even thousands of viewers can contribute towards the work. Sometimes it is relatively small amounts from individual supporters, but collectively it can pay for something substantial.

Roof slates. Windows. Floors. Rooms. Occasionally entire sections of a building.

That is part of the attraction.

The people contributing can actually see where their money has gone. A few months later they watch another video and there is the roof, window or room they helped finance.

It creates a community around the renovation.

But there is a question that tends not to be discussed when the project is beginning:

What happens if the owners eventually need to sell?

Because however permanent a project might feel when it begins, life has an inconvenient habit of changing the plans.

Renovation Past

At the beginning, nobody is thinking about resale.

Why would they?

The building is improving, subscriber numbers may be increasing, sponsorship opportunities are appearing and perhaps the YouTube income is beginning to help with the bills.

The next roof, bathroom or bedroom is far more important than something that might happen ten years in the future.

Selling can almost feel like admitting defeat.

But circumstances change.

Renovation costs can explode. YouTube income may never reach the level expected. Personal circumstances change. Energy disappears. Relationships change. Work intervenes.

Or the numbers simply stop adding up.

And suddenly the château that was never going to be sold is on the market.

That is when the romantic story of the renovation meets the considerably less romantic world of French property conveyancing.

Renovation Present

Imagine the eventual sale.

The sellers are sitting in the notaire's office opposite their buyers.

On the desk is a substantial file representing years of work, money, enthusiasm and probably more than a few sleepless nights.

To the sellers, the property may have a story known to thousands of people.

To the buyers, however, it is a property they are about to own.

And the questions suddenly become very practical:

Who paid for what?

What was promised in return?

Does anybody else have rights connected with the property?

This is where the exact way crowdfunding was structured becomes important.

Crowdfunding itself is not automatically a problem. In many cases there will be absolutely nothing to worry about.

The important issue is what, if anything, the contribution created in return.

A donation is one thing. A promise is another.

Suppose somebody simply contributed €20 towards restoring a château.

Nothing was promised in return other than perhaps a thank-you.

Generally speaking, there is an obvious distinction between that and somebody contributing money on the understanding that they receive some continuing benefit connected with the property.

Symbolic rewards are also very different from property rights.

Having your name mentioned in a video, written in a supporters' book or displayed somewhere as a thank-you does not automatically give you an interest in the building.

But things can become less comfortable when crowdfunding starts being connected with specific physical elements of the property.

Perhaps supporters have sponsored individual roof slates.

Perhaps somebody funded a particular window.

Perhaps a room was restored using contributions from a group of followers.

That does not automatically mean those contributors own the slate, window or room.

But depending on exactly what was said or agreed, questions may need answering when the property is sold.

And unanswered questions are something buyers and notaires generally dislike.

The real danger is what was promised

This is where owners need to be particularly careful.

There is a considerable difference between:

"Thank you for helping us restore the library."

and:

"If you contribute, you'll always be able to come and use the library."

The second statement potentially introduces an entirely different question.

Was that simply an informal comment?

Was it part of the crowdfunding offer?

Was anything written down?

Was access promised?

Was any right of use created?

Was anything intended to continue if the property changed hands?

The answers matter.

A casual promise made during an enthusiastic YouTube video can look rather different several years later when a notaire is trying to establish exactly what obligations exist before completing a sale.

Renovation Future

There are essentially three ways this can play out.

Future One: everything was clear

The crowdfunding arrangement was properly thought through.

Contributions were unconditional. Nothing permanent was promised. Supporters understood exactly what they were contributing towards and what, if anything, they received in return.

The owners eventually sell.

The notaire checks everything.

The buyers are satisfied.

The sale completes.

It is thoroughly boring.

Which is precisely what you want from the legal side of a French property sale.

Future Two: things are a little fuzzy

Nobody did anything deliberately wrong.

They simply never imagined they would sell.

Money was raised for particular parts of the building and the language surrounding those contributions was perhaps a little too enthusiastic or ambiguous.

Now the notaire wants explanations.

The buyers want reassurance.

Emails have to be found.

Old crowdfunding pages may need checking.

The sellers have to explain arrangements made years earlier.

The sale may still proceed perfectly normally, but it can slow down.

And slow property transactions have consequences.

A nervous buyer can become a disappearing buyer.

Future Three: genuine rights were promised

This is potentially the difficult one.

Suppose contributors were promised continuing access, use of part of the property or some other lasting benefit.

Now you have something that needs proper legal examination.

Exactly what was created?

Is it enforceable?

Was it personal to the original owners?

Could it affect a future owner?

Can it be terminated?

Those are questions for the notaire and, depending on the circumstances, potentially lawyers.

At that point, the cheerful crowdfunding campaign from several years earlier can become a rather important part of the sale.

If you're crowdfunding a French renovation

None of this means crowdfunding a renovation is a bad idea.

It means you should think about the end of the story while you are still writing the beginning.

Be very clear about what contributors receive.

Be particularly careful about promising access, use or anything that sounds permanent.

Keep records of the terms under which money was contributed.

And perhaps most importantly, assume that one day you might sell the property.

Even if today you are absolutely certain that you never will.

People who bought houses twenty years ago and said, "They'll carry me out of here in a box," occasionally discover that life has ordered a removal van instead.

And if you're buying one of these properties...

The same principle works in reverse.

If you are buying a château, manor house or other property that has been extensively renovated through crowdfunding, Patreon, YouTube supporters or another online community, ask questions.

Don't assume there is a problem.

There probably isn't.

But establish whether any third party was promised anything connected with the property.

Look particularly for references to ongoing access, use or other benefits that were intended to continue into the future.

Your notaire can then establish whether any of it has legal significance.

Because there is a fundamental difference between being part of someone's online renovation story and having an actual right connected with their property.

You want to know which you are dealing with before you buy.

The paperwork eventually wins

A renovation project can have thousands of followers.

People can watch every roof tile being replaced, every wall being plastered and every room slowly returning to life.

They can become emotionally invested in the building and, through crowdfunding, financially involved as well.

But eventually every property changes hands.

And when that happens, the notaire sitting behind the desk may never have watched a single episode.

They are not interested in subscriber numbers, dramatic drone shots or how many people followed the restoration.

They are interested in something considerably more mundane:

What does the paperwork say?

And when it comes to buying or selling property in France, that is ultimately what matters.

So crowdfunding can be a fantastic way of bringing an ambitious renovation project to life. Just remember that today's generous supporter, today's casual promise and today's heartwarming YouTube moment may eventually have to be explained across a notaire's desk.

Plan for that possibility from the beginning and there may never be a problem.

Ignore it completely, and one day the ghosts of crowdfunding past may come knocking.

Humbug.

I'm Dan Newton, The French Estate Agent.