Climbing the ladder of…

October 2016


This is a very common expression in the USA, where everybody thinks they will climb the ladder of success all the way to the top when in fact few make it..

Not used as often is climbing the ladder of awareness.

For almost a month, I have climbed up and down the steps of my old office during the move, cleaning up before the movers came.

This issue discusses apartments and maids’ rooms on the top floor, some of them accessible only by the service staircase.

Now that all these transformations in my professional life are almost completed, I can again envision somehow climbing a ladder of success, one which will not be measured only by the money I make. I can feel that a new era has started. Sitting on the ground floor, I look at the courtyard and then at the sky, back and forth. Expressions have a way of flavoring life, from here to the sky.

THIS ISSUE IS SHORTER THAN USUAL AS THE MOVE TOOK A SIGNIFICANT TOLL
From the beginning of September until Monday the 26th I was dealing with the move – first the preparations, which include not just packing boxes but also managing the phone lines, internet access and, even more complicated, mail forwarding for me and the many clients who receive mail at my place. The two rooms dedicated to my professional use are now fully functional and decorated to my taste. The third one still needs a final touch. Interestingly, it took me much longer than I expected to arrange the new office space, as this is the first time I have had one room for office work and another for meetings, which meant that I had to fully separate these two aspects of my practice.

I HAVE MOVED!
Even as I send out this column I am still getting used to the new place, which among other things challenged me to find the right decor for each room.

Here is the information my clients will need to come to my new office.

The address:
61 rue de Montreuil
75011 Paris

The nearest metros:

  • 1 – The Rue des Boulets station on line 9 is the closest, a 3-minute walk. From the station, take the small Rue des Boulets. The first street on your right is Rue de Montreuil and the building is a short distance down on the right.
  • 2 – Nation (RER A, lines 1, 2, 6, 9) is a 6-minute walk. From the RER station, take the Boulevard Voltaire exit and the Rue du Faubourg Saint-Antoine escalator, then walk straight onto Rue du Faubourg Saint-Antoine; from the Metro station take the Boulevard Diderot-Avenue Dorian exit to Rue du Faubourg Saint-Antoine. The third street on your right is Rue Gonnet; take it to Rue de Montreuil and the building will be in front of you.
  • 3 – Faidherbe–Chaligny on line 8 is also 6 minutes away. Upon exiting, Rue de Montreuil is in front of you, slightly to your left; just keep walking to number 61.
  • 4 – Reuilly–Diderot, on lines 8 and 1, is about a 9-minute walk. Take the Rue de Reuilly exit. Cross Rue de Reuilly, and on your left take Rue Claude Tillier. At Rue du Faubourg Saint-Antoine, look for the small Rue Gonnet on the other side of the street slightly on your right, and take it to Rue de Montreuil.

At number 61, walk through the hallway and stop by the sign marked “C” (Bât C), on your left, then my door is opposite, on your right. It looks like a tiny house. The name Taquet is on the bell on the right side of the door.

One major advantage is the very large choice of public transportation, including buses.

RENT CAP LEGISLATION IS NOW IN EFFECT, AT LEAST IN PARIS
Government attempts to protect consumers often either fail or take a very long time to kick in because court hearings are required to force people to comply with the law.

More than 18 months after a new law including rent caps was voted in, I explained in my November 2015 issue how it would work. Now many aspects of it have gone into effect and it is working rapidly.

Among other provisions, the law of 24 March 2014 pour l'accès au logement et un urbanisme rénové created a sort of court, the Commission de Conciliation des Rapports Locatifs de Paris, which is somewhat informal but can still rule and have its decisions enforced. It is now possible to get a hearing within a few months, and if the commission rules against the landlord, the rent must be lowered right away.

Of course, landlords continue to fight this procedure and claim that with such low rent they are losing money and will be forced to sell their properties. That is a completely different debate. For right now, I am just saying that the procedure works for normal residential leases, whether for furnished or unfurnished housing. (It does not apply to very short-term rentals of the Airbnb type.)

My experience is that more and more landlords are renting completely outside the law on this type of contract for people who want to settle in France. That means the proof of address that the prefecture and other organizations expect people to have are not available, creating a nightmarish situation.

The market is swift to move away from unwelcome legislation. If you plan to live in Paris or another major city in France, expect to go through several lodgings before finding the right place with the right lease.

To find out how much the rent for a particular apartment should be, according to the government, check this site:www.encadrementdesloyers.gouv.fr

For more information (in French), see http://abonnes.lemonde.fr/societe/article/2016/07/01/encadrement-des-loyers-c-est-un-chateau-qu-elle-veut-aux-frais-de-la-princesse_4961887_3224.html?xtmc=encadrement_des_loyers_c_est_un_chateau_qu_elle_veut_aux_frais_de_la_princesse&xtcr=1

A STAIRWAY TO HELL
I would like to share an experience my daughter, Lucille, had. For about ten years now she has helped me choose the titles of my columns and sometimes the topics, and has reviewed sections before the final editing. For 25 years, we have lived in an apartment right above the ground floor shops in a building that is small but dates from the Haussmannian era. The maids’ rooms are accessible by a tiny elevator installed so that it fits the staircase.

During an internship last year, Lucille became friends with a young woman of about the same age who came from the countryside and ended up renting a tiny room in another building that was only accessible by the service staircase. Lucille went to see her friend, and that first visit made quite a powerful impression on her. Lucille had thought she knew Paris, the city she was born in, but then she discovered a dark side of the City of Light.

“We entered through the majestic main door and immediately crossed the courtyard and opened a tiny door. Suddenly, I was in a little courtyard, and in front of me was the narrowest staircase I had ever seen in a building. I got scared just looking at it; it was steep and very badly lit. My first thought was how do we manage if someone comes down? Do we get run over? Then I hoped that only healthy young adults lived up there. Even though I was 24 and used to climbing stairs, climbing like this completely drained me, both physically and mentally, because of the fear of slipping and stumbling down.

“The day I helped this friend move out, we carried down her bags and suitcases. No description needed: we were drenched and totally exhausted by the time we got the last bag down to the last step. Then the gardienne saw us. She scrutinized us intensely, checking the bags we were carrying as if we were stealing things. She kept an eye on us all the time, then reminded us of the rules about leaving furniture in the common areas, apparently afraid we would leave a chair or something like that behind us. My friend had told me that the gardienne had looked at her suspiciously from the minute she moved in, keeping an eye on her all the time.”

WHAT IS HAPPENING TO MAIDS’ ROOMS IN HAUSSMANNIAN BUILDINGS
In the old days, when Baron Haussmann was rebuilding Paris, wealthy families lived in grand apartments of around 100 square meters (1,076.4 square feet) or more and had one or more maids’ rooms so their servants could live in close proximity. I addressed an aspect of this issue in the second Q/A of the February 2013 issue. Here was the question (I will send a copy of this issue upon request, as it is too old to be found on my website):

“I have been surviving in Paris as a student for several years now. In my mid-20s, I enjoy the physical exercise of walking in the city, taking public transportation and carrying everything, including my grocery shopping. I do not need aerobic sessions since I have always lived in a maid’s room on the top floor, which is most of the time inaccessible by the elevator. So climbing six or seven flights of stairs keeps me in shape.

“I recently moved into a very upscale building in the 7th district of Paris where there is the main entrance, with the large staircase and the elevator, and there is the service entrance, which is an iron door on the side of the building; the related staircase is tiny, steep and poorly lighted and it is absolutely the only way to access the last floor, where my room is.

“I have been asked to tutor several children in the building who live in the nice residential apartments of the lower floors. I earn some money this way, and I like it. One of the families is my landlord, and this is how it started! The problem is that the concierge has declared war against me and she screams at me that I do not belong there every time she sees me in the main staircase. She does not believe that I tutor children in English. She is now threatening to get me evicted since I do not comply with the bylaws of the building, which would be a violation of my lease. Now I am getting really scared. What should I do?”

This clearly indicates that even though all social classes lived in the same building there was strict segregation between the maids (later au pairs) and their employers, with different staircases. Usually the elevator only served the large family apartments. The maids had to climb around six floors using dirty, shabby staircases that were often narrow, steep and poorly lighted. The main apartments’ kitchens each had a door opening onto that dreadful staircase so that the servants could start work in the kitchen without bothering the rest of the family.

Now, however, even though au pairs are still quite popular, they rarely live in the same building as their employers, and the so-called maids’ rooms have completely changed tenants. For about 30 years or so, poor students lived there, but an accumulation of laws narrowing the definition of a decent lodging determined that most of those rooms were unfit to live in.

According to the current definition, to be considered habitable, a space must have at least one room measuring 9 square meters, with a height of at least 2.2 meters and total volume of 20 cubic meters. It must have a functioning heating system, as well as a WC with a door, and either a bathtub or a shower – unless it is a maid’s room, in which case the WC must only be in the building and easily accessible.

Given the difficulty of installing functional plumbing in many such rooms, over the years people have taken to buying contiguous maids’ rooms, knocking down the walls and creating decent-sized apartments. Or people who live one floor below may create a duplex. Either way, owner-occupants in these new apartments are asking to have the elevator go all the way up and to have the common areas outside their apartments look decent, instead of bare hallways on the last floor and disgraceful staircases. These owners belong to the same social class as other owners in the building and they feel unfairly discriminated against.

The problem is that these buildings were never designed for such amenities, and the changes involved are very expensive, if they are feasible at all. In most cases, it is only possible to open a small corridor so that people living on the top floor can reach their apartments via one flight of the service staircase after taking the elevator up to the next-to-last floor.

The Paris Court of Appeal ruled on November 5th 2000 that owners on the top floor of a building in the 7th arrondissement of Paris had a right to have the elevator extended to the last floor since they were offering to pay for the work needed. They owned and lived in a 50-square-meter apartment there. The owners’ council had systematically voted against the project at its annual general meetings.

More recently, however, court rulings have gone against such modifications, partly out of fear that the new apartments will be used for very short-term Airbnb-type rentals. This shows that the courts are pre-emptively enforcing the city regulation against such rentals. It has reached the point where the city of Paris may envision expropriating such rooms.

There is another twist to the situation. There are still many maids’ rooms, most of them with a shower but only one common toilet for the entire floor. The rooms are often rented to maids, nannies or caretakers, often foreigners, who may live crowded together into a 9-square-meter room with bunk beds sleeping 3 people or more. I know, for example, that Filipinos often live in these rooms, and their rent is still quite high. The monthly rent for a 15-square-meter room with shower and WC is about 600€, which is close to half the net monthly French minimum wage. The high rents explain why the rooms are so crowded.

Maybe it is time for the tenants of these rooms to take their situation to the authority I mentioned above, the Commission de Conciliation des Rapports Locatifs, to get the amount of rent adjusted to a more reasonable amount reflecting the size and comfort offered. I urge people to spread this information to people in this type of situation.

MY FEES ARE GOING UP ON OCTOBER 1st 2016
It has been about six years since my fees last increased. On October 1st, I am raising my initial retainer from 250€ to 270€ and the hourly rate from 100€ to 110€.

Best regards,
Jean Taquet

FRENCH BANKS HAVE A SERIOUS PROBLEM WITH CASH BEING DEPOSITED IN AN ACCOUNT

QUESTION

Last summer, a teller at my bank, Société Générale, told me that as of September even my own branch of Société Générale would no longer accept cash deposits. Cash deposits would have to be made via automated teller. This would require my having a Carte Bleue – something I do not have and do not need, which would cost me money. I have plenty of American credit cards. The point of acquiring a Carte Bleue (which, again, is only to be had for a fee) would simply be to enable me to put money on my French checking account. American checking accounts pay interest (albeit nominal). French checking accounts, these days, not only do not pay interest (they have not done so in my lifetime), but charge you a fee to maintain them. American credit cards are mainly free, and even pay the holder benefits for using them. French credit cards not only offer no benefits, but come with a fee. The differences are great, and so I wonder, are French banking procedures regulated by legislation, or do the banks simply do as they please? And if the latter, how do they get away with it? Too little competition?


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ANSWER

I believe there is a lot of misunderstanding here. Either this banker does not know his/her job at all, or you misunderstood several important points. Nevertheless, the bottom line is accurate: one should never deposit cash on a personal bank account. I have addressed this topic several times in my column as the regulation has grown ever stricter, including the ability to pay in cash above a certain amount, currently 1,000€. The banks themselves often add stricter rules to make sure they cannot be held responsible for clients’ wrongdoings involving the deposited cash. To explain the banker’s answer and what I understand from your account of what happened, I must first review the current legislation regarding money laundering so you can see what is due to the law and what is imposed by the bank.

The most important point is that unless the client runs a business, either as sole proprietor or as a corporation, French banks do not want any cash deposited on an account – although some branches may tolerate it because they have a large number of clients who are foreigners and function with cash. American banks also have to enforce very strict regulations regarding incoming and outgoing wire transfers from and to foreign countries. Therefore, using an ATM in the foreign country is just about the cheapest and, more importantly, simplest way to transfer money to a foreign account.

FATCA has added a huge hurdle by forcing foreign banks (in this case, French banks) to declare all their American clients. The result is that many Americans living abroad, including in France, have a very hard time opening a bank account. More and more often, American expatriates see their accounts closed with 30 days’ notice. The reason generally given is that the bank does not trust the client anymore and therefore feels the commercial relationship cannot continue. In nearly all such situations, the Americans had deposited cash on their account.

One consequence of the French law is very harsh: the branch manager is personally held criminally liable for any money laundering happening in the branch. This makes everybody working at a French bank extremely nervous about behavior that is not considered normal. Taking money out of an ATM and putting it on a personal account is the most basic and most common way to launder money, especially if the money has a foreign source and it is a relatively large amount. So this immediately raises a red flag, and the manager must decide what to do. The manager’s options are to:

  • 1 – send the information to the police,
    2 – meet with the client to explain the regulation,
    3 – close the account,
    4 – do nothing, knowing who the client is and having agreed that the client be permitted to function this way.

The last used to be quite common with branches that had a lot of foreign clients. It has become extremely rare. The main reason is that managers do not want to be investigated by TRACFIN and asked to explain the situation.

I hope this explanation gives you a much better understanding of your situation. This topic is now critical, in light of the terrorist attacks that have occurred in France in recent years.

Now I would like to carefully review your message. Your banker most likely told you that you are no longer allowed to deposit cash on your bank account since you are a private individual. Only professional accounts can receive cash and they use a special procedure, which seems standard for all banks in France, of putting an envelope containing cash and a deposit slip into a machine dedicated to professional accounts.

I am not sure why your banker added the obligation of holding a credit card (which in France is always a debit card anyway). My guess is that this was to emphasize the fact that you need to have a full service account.

You are wrong about some things regarding French banks: they do offer interest-bearing checking accounts, and opening accounts and using them is totally free of charge. But bank employees are increasingly more salespeople than bankers; the banks push their employees to sell services that cost money and bring in revenue for the bank, and therefore the bank employees give less and less advice that is in the clients’ best interest. These services may be good for some people, but are not worth the fees for most clients.

Some bank cards used in France come with benefits similar to those that exist in the USA. Amex in France offers a point benefit. Online banks offer cards free. But even though the situation is not exactly as you say, you have described what major banks with a lot of branches do.

I do not want to get into an argument but I believe the French banking system offers better service than in the USA. The competition is fierce between banks in France, and 100% online banks have shaken the market enormously.

Bear in mind that it is now an obligation to have a bank account, and in cases where a client is refused by everybody, there is a special procedure whereby the Banque de France assigns the client to a bank, where he or she gets a saving account.

So, to answer the question as you asked it: “are French banking procedures regulated by legislation, or do the banks simply do as they please?” The answer is that French banking is heavily regulated and French banks definitely cannot do as they please.

DISCLAIMER
Please forward this message to all those who would be interested in its contents. The information contained in this newsletter is intended only as general information. I strongly urge readers to seek professional guidance concerning the legal and tax matters mentioned. This newsletter is intended as a general guide and is not to be taken as professional advice.


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