The notaire doesn’t verify or guarantee the accuracy of statements made by the vendor in a contract or protect you against fraud.
There are a number of different types of preliminary contract depending on whether you’re buying an existing (built) property or a new property off-plan, i.e. yet to be built or under construction.
Buying an Existing Property
There are various types of preliminary contract (generally called a contrat de vente or contrat de vente sous clauses suspensives if there are conditional clauses) used to buy an existing property:
- Compromis de Vente – The most common, most comprehensive and most binding contract, which commits both parties to the sale. With a compromis de vente, a buyer is committed from the start and can legally be forced to go through with a purchase. The contract includes full details of the property, the price to be paid, how the purchase is to be financed, details of the vendor and buyer, the agent’s commission and who must pay it (if applicable) and the date of completion – usually two months after the signing of the compromis. It also states what will happen if either party breaks the contract and includes any conditional clauses.
- Promesse de Vente – A commitment on the part of the vendor to sell the property at an agreed price allowing the buyer a period (usually up to three months) during which he can withdraw and forfeit his 10 per cent deposit. If you’re obliged to use this type of contract, you should ensure that it is carefully worded and includes conditional clauses allowing you to reclaim your deposit if, for example, you’re unable to obtain a mortgage.
- Promesse d’Achat – A commitment on the part of the buyer to purchase a property.
- Offre de Vente & Offre d’Achat – An offer to sell and to buy respectively, neither of which is binding on either party unless accepted.
Contracts other than a compromis de vente offer little protection to the buyer and should generally be avoided. Note, however, that you may not be able to dictate the type of contract used, which may vary according to the agent or notaire handling the sale. Agents and notaires usually have their own pre-printed contracts, although all contracts should follow a standard design. Some French agents or notaires provide an English translation of a contract, although translations are often so bad as to be meaningless or misleading. You should ensure that you understand every clause in the preliminary contract.
You should be given or sent a copy of a preliminary contract signed by you and the vendor, with a notice advising you that a ‘cooling-off’ period of seven days applies; in other words, you may cancel your agreement within that period without penalty. Should you wish to cancel, you must write to the notaire handling the sale, using registered post (lettre recommandée) – your cancellation is valid provided you post the letter within the cooling-off period, irrespective of when (or whether!) it arrives. You don’t need to give a reason for the cancellation. If you’ve paid a deposit, it must be returned to you within 21 days of the date of your cancellation. Note that the right to cancel doesn’t apply to the purchase of land for building.
Buying Off Plan
Buying off plan has its risks, but most of these can be minimised by a good contract. The most common preliminary contract when buying off plan is a contrat de réservation (more correctly called a contrat préliminaire). The contract, which must be in writing, contains full details of the property to be built (including a copy of the plans and drawings showing its exact location within a development and whether it’s part of a co-propriété, the number of rooms and the estimated total habitable area, and the materials to be used in its construction), any services to be provided, the timetable for construction, the price (including any possible variations or additions), a schedule of payments and completion, details of penalties for non-completion and circumstances under which the deposit is to be refunded, and details of any guarantees applicable (see below). The contrat de réservation should also confirm that a draft title deed will be given to the buyer at least a month before completion.
The floor plan and technical specifications are signed by both parties to ensure that the standard and size of construction is adhered to. The vendor is referred to as the réservant and the buyer as the réservataire. Like a compromis de vente, a contrat de réservation is subject to a cooling-off period of seven days from the date of receipt of a registered letter of notification, which usually accompanies a copy of the signed contract.
The developer should provide one of two types of ‘termination’ guarantee: a garantie extrinsèque or a garantee intrinsèque. Both assure you that you’ll be provided with any funds necessary to complete the building on time, but in the case of a garantie extrinsèque the funds are provided by a bank or other financial institution, whereas with a garantee intrinsèque (which is more common) it’s the developer himself who must provide them. As the latter provides less security, you shouldn’t sign the definitive purchase contract (acte de vente) until at least the foundations of the building are finished, whereas with a garantie extrinsèque it’s usually safe to sign as soon as building permission has been granted.
The definitive contract may be a contrat à terme, whereby you undertake to pay for the property once it’s finished, or (more commonly) a contrat en l’état futur d’achèvement, which transfers ownership progressively as the property is constructed. If the property is to be a co-propriété, you should also be given a copy of the rules of the owners’ association.
You should, of course, make regular checks (if possible in person) to ensure that everything is going according to plan, although it’s unlikely that you will be allowed onto the construction site itself for safety reasons (accompanied site visits are sometimes permitted). When the property is finished, you will have a site meeting to check its condition; you may wish to engage a surveyor or architect to accompany you, although this isn’t normally necessary, as an independent inspector will already have approved each stage of the construction (you can ask for copies of the inspector’s attestations).
If you aren’t happy with anything, you should make your complaints in writing (known as a procès-verbal) and send it to the developer by registered post (lettre recommandée); you have 30 days in which to do so. In extreme circumstances, you can refuse to go through with the purchase, in which case a new completion date must be agreed by the developer; failing this, you can take him to court, although this is obviously a last resort.
Various guarantees apply to the finished building and installations such as plumbing and electrical systems.
If you’re buying a plot and engaging a builder, you should take out a contract known as a contrat de construction d’une maison individuelle (CCMI). There are two types of CCMI: with and without plans (fourniture du plan). The former might apply when you have plans drawn up by an architect or design the home yourself; the latter applies when the builder draws up his own plans.
As with a vente en état futur d’achèvement (see above), the builder must provide a financial guarantee but in this case it must be a garantie extrinsèque (i.e. backed by a bank or other financial institution). Stage payments are similar to those made when buying off plan.
The preliminary contract is usually binding on both parties, so it’s important to obtain legal advice before signing it. Although it isn’t necessary to employ a notaire when signing a preliminary contract, it’s recommended, as he lends extra legal weight to a deal. Note, however, that a notaire won’t necessarily protect your rights or interests. A notaire will rarely point out possible pitfalls in a contract, proffer advice or volunteer any information (as an estate agent might). If you need additional legal advice, you should employ an experienced lawyer, either locally or in your home country (who must naturally be fluent in French and be an expert in French property law). He must also speak English or a language that you both speak fluently. Employing a lawyer is wise in any case if you don’t speak French fluently (even if you do, your understanding of French legal jargon may be limited!).
Tip: Most experts advise that you have a preliminary contract checked by a legal adviser before signing it.
One of the main reasons to engage a lawyer is to safeguard your interests through the insertion of any necessary conditional clauses in the preliminary contract, which are of little concern to a notaire, and you could employ a lawyer just to check the preliminary contract.
There are various other reasons to employ a lawyer: for example, the best way to buy a property in France is sometimes through a French company, or you may wish to make special provisions regarding inheritance.
The method used to buy French property has important consequences, particularly with regard to French inheritance laws, and it can be difficult or expensive to correct any errors later.
Before hiring a lawyer, compare the fees charged by a number of practices and get quotations in writing. Check what’s included in the fee and whether it’s ‘full and binding’ or just an estimate (a low basic rate may be supplemented by much more expensive ‘extras’). A lawyer’s fees may be calculated as an hourly rate (e.g. €150 per hour) or a percentage of the purchase price of a property, e.g. 1 to 2 per cent, with a minimum fee of €600 to €1,200. In the case of an off-plan purchase, there may be a basic fee based on the value of the property plus an hourly charge for unforeseen extra work.
When you sign the preliminary contract, you must pay a reservation fee (réservation) or deposit (acompte/dépot de garantie, also known as an apport personnel). This is usually 5 per cent when buying a property off-plan and 10 per cent for an existing property. The safest and fastest method of paying the deposit is usually to make a bank-to-bank transfer from your bank to the notaire’s or agent’s bank account. Note that an estate agent must be bonded to hold clients’ monies.
If the deposit is described as a dédit, the buyer will lose his deposit if he withdraws; similarly, if the vendor defaults, he must pay a penalty equal to the amount of the deposit. If the deposit is described as acompte, neither party can withdraw and the sale can be legally enforced. The deposit is refundable under strict conditions only, notably relating to any conditional clauses such as failure to obtain a mortgage (see below), although it can also be forfeited if you don’t complete the transaction within the period specified in the contract, e.g. 90 days. Note that, if you withdraw from a sale after all the conditions have been met, not only will you you lose your deposit but you must also pay the estate agent’s commission.
Tip: Make sure you know exactly what the conditions are regarding the return or forfeiture of a deposit.
All preliminary contracts, whether for old or new properties, contain a number of conditional clauses (clauses/conditions suspensives) that must be met to ensure the validity of the contract. Conditions usually apply to events out of control of the vendor or buyer, although almost anything the buyer agrees with the vendor can be included in a preliminary contract. If any of the conditions aren’t met, the contract can be suspended or declared null and void, and the deposit returned. However, if you fail to go through with a purchase and aren’t covered by a clause in the contract, you will forfeit your deposit or could even be compelled to go through with a purchase. If you’re buying anything from the vendor such as carpets, curtains or furniture that are included in the purchase price, you should have them listed and attached as an addendum to the contract. Any fixtures and fittings present in a property when you view it (and agree to buy it) should still be there when you take possession, unless otherwise stated in the contract.
There are many possible conditional clauses concerning a range of subjects, including the following:
- Being able to obtain a mortgage (see below).
- Obtaining planning permission, e.g. for a septic tank.
- Plans to construct anything (e.g. roads, railways, etc.) which would adversely affect the enjoyment or use of the property.
- Confirmation of the land area being purchased with a property.
- Pre-emption rights or restrictive covenants over a property (such as rights of way).
- Dependence on the sale of another property.
- A satisfactory building survey or inspection.
The most common conditional clause states that a buyer is released from the contract should he be unable to obtain a mortgage. This condition is compulsory for all property purchases under the Scrivener Law (Loi Scrivener). If you don’t intend to obtain a loan, you’re expected to endorse the contract to this effect in your own handwriting, meaning that you give up your rights under the law. This isn’t always wise, even when you have no intention of obtaining a mortgage (you don’t have to obtain a mortgage, even if you state that you’re going to). If you give up your right to obtain a mortgage and later find that you need one but fail to obtain it, you will lose your deposit.
The mortgage clause should state the amount, term and interest rate expected or already agreed with a lender, plus the lender’s name (if known). If you cannot obtain a mortgage for the agreed amount and terms, you won’t lose your deposit. You must make an application for the loan within a certain time after signing the contract and have a specified period in which to secure it (e.g. six weeks). If you’re unable to obtain a loan for reasons that could reasonably have been foreseen, you can still lose your deposit.
Once you’ve signed the preliminary contract, the notaire will need to establish your marital status (état civil) before processing a sale.
This isn’t simply to verify your identity, but also to satisfy French inheritance law. To do this the notaire needs to see your passport, birth certificate, marriage or divorce certificate (or if widowed, a death certificate), and a copy of an electricity or telephone bill verifying your permanent residence. If you have a marriage contract, the notaire will require a copy or a certified French translation.
If you don’t have a contract (e.g. if you were married in the UK), you should say so but specify that your marital status is similar to the French séparation de biens, which means that each of you is considered to own assets separately, rather than the French communauté universelle, whereby all assets acquired since your marriage are considered to belong to both of you, and a ‘transfer clause’ (clause d’attribution) should be added to the contract.
TIP: French inheritance law is complicated, and you’re strongly advised to take legal advice before deciding in whose name to register a property.
Before registering the title deed of a home, you should carefully consider the tax and inheritance consequences for those in whose name the deed will be registered. Ownership of a French property can be registered in a single name, the joint names of a couple, their children only or in the names of the whole family. In the case of joint names, you must choose between ownership en division and ownership en tontine, which may have important consequences in the event of the death of one partner, particularly if you haven’t made a will. Unmarried and previously married couples must take particular care with regard to inheritance when buying a property jointly in France.
Make sure you register ownership of a property correctly at the time of purchase, as it may be prohibitively expensive (or even impossible) to change it later.