Cap Ferrat Invest
gives you answers about real estate business

Everyone has the right to purchase an accomodation in France, whatever his/ her nationality is. However, if he/she wants to be financed by a French bank or a French credit institution, an address in France will be certainly required.

This purchase may be risky. If the purchase agreement mentions that the accomodation should be handed over vacant, it’s still time to cancel the sale, for one of its main conditions has not been satisfied. If such a clause has not been provided for, it will be up to the buyer to ask the French court for an eviction judgment of the illegitimate occupant. This may last several months.

A lease-option agreement will allow to achieve this. It’s a contract ruled by the French law of 12th July 1984, stating that « a seller commits himself towards a homeowner to transfer him the property of all or part of a real estate, for a defered payment or a payment in instalments of the selling price, such as the payment of dues until the withdrawal of the option. His intention shall be showed subsequently by recorded delivery with aknowledgement of receipt and after an enjoyment period against payment. » The accomodation sold in this way may be new or ancient, and the seller may be a private individual or a company. The lease-option contract has to include five distinctive features :
- the seller’s commitment to transfer the property of the accomodation on an agreed date,
- the homeowner’s right to purchase later the real estate, showing his intention subsequently (this will say that he has the right not to purchase it on the agreed date),
- the right to occupy, during this first period, the accomodation against payment,
- the obligation to pay dues during this period, until the withdrawal of the option,
- the first indication of a selling price which will be paid in instalments (in periodic payments during the first period) or will be defered (in one go at the withdrawal of the option).

The sales of plots in co-ownership must include, since June the 19th 1997, the indication of the area which is going to be sold. The definition of this area is given by the French decree of May the 23rd 1997. The area which has to be taken into account corresponds to the floors of the close and covered premises after deducting the areas taken by the walls, partitions, stairs and stairwells, plinths, doorways and windows. The floors in parts of premises with a height under 1,80 meters are not taken into account. The plots or parts of plots with an area less than 8 squaremeters are also excluded of the measuring. This area differs from the living space (article R. 111-2 of the French construction and housing code).

A cancellation of the sales agreement is possible if the consent given at the conclusion of the agreement has been invalidated. That means for instance that the seller has not exactly mentioned the extent of the renovation work that the real estate needs. Moreover, the amount of this work must have been determining for the consent, which means that if the future buyer had known the real extent of the renovation work he would not have signed the agreement.

Among others, it is possible to get such a cancellation if the consent given at the sale has been invalidated. The consent’s defect can result from a mistake about the substantial qualities of the sold product. That means that the product does not have any features which are significant to the buyer although the seller is in the know. Theft can also be put forward. It can be interpreted to that extent every time the seller has not disclosed to the buyer some facts or informations that would have deterred him from purchasing the product.

There is no legal time limit but usually 3 or 4 months go by between the signing of the sales agreement and that of the final sale. The extent of this time limit depends on the achievement of some suspensive conditions and on the obtainig by the notary of various informations (such as the personal identification and the contractual capacity of each side, the property and the features of the accomodation which is for sale) and of the documents required for the drawing up of a bill of sale.

The pre-contract leads the signer to incur legal obligations. He is bound to what he has signed and may be liable if he finally renounces the purchase. Then he may be liable for damages towards the seller. But on no account he may be forced to purchase the real estate. The seller has to give all the information that may be significant for the buyer and may be liable if he doesn’t disclose some facts. Moreover, the seller is under the obligation of enquiring in order to inform prospective buyers at best. Apart from these informations, it’s up to the future buyer to contact the seller and to enquire about the general condition of the real estate. The pre- contract is usually drawn up by a notary (most often the notary hired by the seller). He is also bound to advise and inform. The costs generated by the drawing-up of this pre-contract are included in the real estate agent’s commission or in the notary’s fees (the one who will come to the sale). In practice it is required to pay 10% of the selling price. This amount has to be entrusted to a third party chosen by both sides and deposited on a special account. Can I pass the sale with an agency after having signed a visiting bond with another agency? The visiting bond forbids to deal directly with the seller, but thus allows to pass the sale with another agency.

Theoretically the seller and the buyer are not bound to resort to a notary. But a legal document (what a deed actually is) is required to proceed to the contract’s publication (according to the French law for contestability purposes to a third person). In addition to a freely appointed remuneration, the notary gets contingent fees in case of achievement. If the price share amounts to (or less than) 3 048,98 €, the percentage to apply comes up to 5% before tax. If the price share lays between 3 048,98 € and 6 097,97 €, the percentage to apply comes up to 3,3% before tax. If the price share lays between 6 097,97 € and 16 769,39 €, the percentage to apply comes up to 1,65% before tax. If the price share amounts higher than 16 769,39 €, the percentage to apply comes up to 0,825% before tax. In addition to this remuneration there is the French value-added tax of 19,60%.

The visiting bond is a contract between the signer and the real estate agent. It usually mentions that the potential buyer aknowledges having visited the real estate thanks to the agency and thus commits himself to purchase it exclusively through this agency. If the real estate agent has been granted with an exclusivity mandate but learns that the signer has dealt with the seller while the visiting bond was valid, he may claim his commission through legal proceedings. However, the French ultimate appellate court has judged that if an agent has been granted with a purchasing mandate without any right of exclusivity, he cannot lead potential buyers to sign a visiting bond with an exclusivity clause in his favour.

The seller can put forward the author’s liability and then claim damages. But it’s up to the seller to prove that the withdrawal has caused him damages.

If you are in possession of a real estate and want to sell it or if you are a potential buyer, you are about to sign a sales agreement. A sales agreement is a contract stating that after having come to an agreement on the product and the price, the two sides put the sale back to an already given or determinable date, this period being long enough to remove some preliminary obstacles specified as such in the contract (for instance the obtaining of a loan). If you are purchasing dwellings as a non- professional buyer, you can withdraw within seven days. This time limit begans only the day after the first presentation of the deed that notifies you the sales agreement. The service of documents has to be sent by recorded delivery with aknowledgement of receipt or by any means allowing to determine the date the deed has been received or delivered. If the service of documents has been sent by recorded delivery in your absence, the withdrawal period starts the day after the postman’s advice and not the day after the collection at the post counter. The right to withdraw is enforced in the form allowed for the service of documents. You must know that if a sales agreement or a one-sided agreement precedes the bill of sale, you are granted with a right to withdraw which applies only to this pre-contract. Be careful: the right to withdraw shall not be mistook for the time to think you have for legal documents. Legal documents may be signed only after a time to think of seven days starting at the service of documents or at the delivering of the future deed by the notary. An identical right to withdraw exists for the construction of dwellings, the subscription for shares allowing to possess or to enjoy the use of a real estate but also for the selling of real estates to build such as lease-option agreements.