Société simple: three party agreement

The Reef
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Hello Reeflings,

First of all, let met introduce myself. I am Teun and together with a couple of other families we’re in the process of setting up a small scale co-housing in the Antwerp region. Like you, we’ve enlisted the help of Mark Van den Dries.

One of the things we’re currently doing is putting together the statutes of our Maatschap (Société Simple) and like you, we’ve started from the template of Illot De Spiegel and also looked at the document of Zwarte Arend. We’ve made changes to better suit our smaller co-housing, but one thing we’re not all agreeing on and that is the three party agreement between the creditor (bank), co houser and the maatschap.

According to Mark, it is very useful to include a notion that the Société simple should be able to ask the bank to wire the funds to their account without specific agreement of the member of the société simple. This could be either the standard procedure or could be invoked if the member should refuse to do it themselves. This arrangement makes it impossible for any specific co-houser to block the building process by not providing the funds necessary to pay the invoices. The only way this is possible is by a three party agreement (drie-partijen-akkoord) between bank, société simple and lendor that states the above and is signed by the three parties involved. The idea is simple and does grant a bit more security to the group.

However, we’ve had to conclude that this is not a standard way of working and we’ve not been able to find a bank willing to sign such an agreement. So far, we only know of Triodos who has signed such an agreement in the past, but is no longer providing mortgage loans to individuals. That was also before 2017 when new legislation was put in place.

So far, we know that such an agreement is not an option for Argenta and Crelan. They simply refuse to provide a loan. Crelan states that it violates their internal policies and doubts that such an agreement is in line with the ‘2017 law on the prevention of money laundering and terrorist financing’ (antiwitwaswetgeving) as the societé simple is by nature hard to identify.

The bank clerk of Argenta we spoke with even stated that he’d be very surprised if we should find a bank willing to set up such an agreement. We also spoke with VDK. They also had their doubts and they’re currently discussing this issue internally, but we’re not holding our hopes up.

We know that the Zwarte Arend included this clause in their statutes after 2017, but no one signed such an agreement, leaving it a hollow clause. The majority of the households did take out their loans with Triodos.

This causes two major problems if we were to include this clausule.

  1. The choice of banks is very limited for people taking out a new loan (if any)
  2. For those people who are already home owners and have a low interest mortgage with a bank that refuses to sign such an agreement it would mean having to refinance their current low interest loan with a different bank at the current rates, which for the two cases we have in our group would mean an additional cost of ±€60k over 25 years, which roughly equates to a €40k lower available budget.

As your documentation and project has been very inspirational for us, I wanted to ask your current position on the matter. It’s not entirely clear if you’ve already set up the Société Simple, or still in the discussion phase? Have you encountered this problem yourselves? How did you handle this? Do you know of any banks willing to sign such an agreement?

I firstly asked this as a private message to @Lee as I didn’t want to ‘pollute’ your forum with questions from other co-housings, but she specifically asked to post this question in public as it is easier to gather different opinions on this.

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Hello Teun,
thanks a lot for reaching out, this exchange is indeed valuable as we can learn a lot from each other. Here my thoughts on the issue you brought up:

We did not encounter the problem you are describing as of yet, as we have not presented our project to that detail to banks. We are currently in the final stages before submitting our file for permit to the urban administration and our current thinking is to create mortgage files with banks when we are a bit closer to receiving the permit and having established the acte de base / basisakte.

Our société simple (SoSim) does already exist (see the page of the Kruispuntbank van Ondernemingen by searching for Coral Reef) and we also included the specific clause you mention in our statutes. We explained / referred to it internally as Mark’s hack. As we may encounter the same experience you had when banks start looking into our statutes, our group may need to discuss a way forward in function of the feedback we receive from banks.

We are also in touch with co-housings that follow other consultants and I’m thinking it would be interesting to see how they deal with the unlimited liability of a SoSim. I’d be happy to take this up on a next occasion and then report back to this thread. In the meantime, don’t hesitate to come back on the statutes, we’d be eager to learn how your discussions continue with banks and more broadly any other points you feel worth sharing.

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Thanks!

We’ve got rid of the cap at €100k before we knew that the three party agreement was not really feasible as this would allow the families paying everything with their own money to block the building process should they stop wiring money to the blocked accounts versus those who’d finance the project with a loan. In any case we’re still going to have the separate accounts belonging to the SoSi and we’re still asking the banks to transfer the money to thise accounts. Legally and practically it will probably need to be the families themselves asking the bank to pay their share of the bills and signing the document for every payout.

We’ve asked our notary for additional ways of making sure everyone cooperates that we can include in the statutes. I’ll report back with their reply.

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Thanks a lot for sharing all this, @TeunD. It’s very thoughtful.

Agreed.

Much appreciated.

This one is a bit of a mystery to me. “Russian doll” architectures of limited companies owned by limited companies owned by subsidiaries of limited companies incorporated in the Cayman Islands, that’s hard to identify. A société simple is very very easy to identify. They are directly descended from the joint venture in trading caravans in the merchant cities on the shores of the Indian Ocean in the 8th century. Did they say why they find them opaque?

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They said it’s because a maatschap is by nature not a ‘rechtspersoon’, meaning it will have to be identified by the people making up the maatschap, meaning every member needs to be identified individually. It would at the very least mean that everyone in the société simple should visit each bank and have their eid read.

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