10. Financial Guarantees in French Building Contract (CCMI)

If you use the CCMI building contract, then the law requires the builder to provide a bond, or financial guarantee, that secures completion of the dwelling in the event of bankruptcy or liquidation of the business. The guarantee also covers a failure to complete by the due date, or at all.

The guarantee is arranged via a bank or insurance company and takes one of two forms:

1. 10.1. Garantie de remboursement
2. 10.2. Garantie de livraison

10.1. Deposit Guarantee - Garantie de remboursement

The garantie de remboursement provides for reimbursement of all sums paid by the client in the event of default by the builder before works have started on site.

Thus, where the builder is seeking planning permission that does not arise in time, or the builder does not start on site on the due date, the contract can be terminated by the client.

This insurance is not obligatory.

The best advice in these circumstances is not to pay over any deposit until there is a start on site, in which event the builder is also relieved of the need to take out this insurance.