4. Contract Conditions in France
In this section we review the main aspects of the sale and purchase agreement within France.
There are seven main issues that we shall examine, as follows:
- 4.1 Conditional Clauses
- 4.2 Cooling Off Period
- 4.3 Options to Buy
- 4.4 Deposit
- 4.5 Statutory Disclosures
- 4.6 Local Rates
- 4.7 Fixtures/Fittings
4.1. Conditional Clauses in France
The sale and purchase agreement will always be a conditional contract, in the sense that the wishes of both parties are subordinate to certain legal requirements, and the need to establish good title to the property before it can be sold.
The purchaser may also add their own conditions.
So if you want confirmation on matters that do not form part of the formal searches to be carried out by the Notaire, then you need to include them in the sale and purchase agreement.
A conditional clause in French is called a condition suspensive.
Perhaps the most common and the most important condition is that relating to a mortgage.
If the property is being purchased with a mortgage then it is important there is a condition that makes completion subject to a satisfactory mortgage being secured.
Even if by some oversight this clause is not included, provided the agreement does not expressly state that the property is being purchased without a mortgage, the law grants a presumption that a mortgage is being obtained. However, to ensure complete clarity, better to rely on an unambiguous conditional clause in the contract!
It is likely the notaire will insist that any conditions are stated with a degree of precision, in order to reduce the scope for later disagreement and potential litigation.
In relation to a mortgage, for instance, the information should include the length of time during which the clause should remain valid and the main details of the mortgage - amount, duration, maximum rate of interest.
It is not unusual for the purchaser to be granted 45 days to obtain a mortgage offer, after which the contract can lapse. If you are resident, and with a stable income, this is normally ample time, but it may be all too short for an overseas buyer seeking a French mortgage so, if this applies to you, try and negotiate a longer period in the contract.
Top Tip!
As mortgages are cheap in France, and can offer tax advantages, you should consider buying with a French mortgage. You can read more in our Guide to French Mortgages.
Other conditions may relate, for instance, to planning consent, the purchase of adjoining land, and servitudes to the benefit of the property, or to third parties over the property.
As a general rule, the use of a 'subject to survey' clause is not used in France. Accordingly, if there is an issue converning the condition of the property that you need to verify, you may need to be very specific about it, or resolve the issue before you sign the contract.
Neither is it normal for the sale to be subject to obtaining full planning consent, as a planning application is likely to take some time to prepare, and a planning consent, once obtained, can be later quashed if it breaches planning regulations.
Accordingly, where planning is an issue, it is normal for the sale to be conditional on obtaining an 'in principle' planning certificate called a certificat d’urbanisme, which you can read more about in our pages on the Planning System .
The agreement may well also stipulate the manner in which the buyer will demonstrate, or not, fulfilment of the conditions, e.g. offer or refusal of mortgage, copy of planning consent or refusal.
The law only offers protection to a buyer who has acted in good faith.
If a buyer withdraws from a contract because one of the conditions has not been fulfilled, they can be asked by the seller to demonstrate that they made suitable efforts to get the condition fulfilled.
In short, a buyer cannot use conditional clauses as a way of merely giving them more time to decide whether or not they want to proceed with the purchase!
4.2. 'Cooling Off' Period
The buyer is entitled to a seven-day cooling off period, following the signing of the sale and purchase agreement.
This is a fairly new provision and it is proving to be a major source of dispute in property transactions.
Notaires report that up to 25% of sales do not later proceed because the buyer changed their mind within the cooling off period!
The option to withdraw from the contract is only available to the buyer. Once the seller has signed they are legally bound by the contract.
The 'cooling off' period is also only available for the purchase of a house or flat and any other buildings or land which may be associated with the residence, at the time of the purchase.
It is not available for the isolated purchase of any other land (including building land), or of a garage, or other ancillary buildings. So if you are buying a single building plot (other than within a housing development), there is no cooling off period available to you.
Neither is it available if you are buying as a registered property professional in France, engaged in the buying and selling or development of property.
The starting point for the seven day cooling off period commences when you receive the contract.
If you sign in front of a notaire, then you will normally be given a copy of the contract, and the seven day 'period of reflection' commences the following day.
However, if you sign the contract through an estate agent (or you are not handed the contract by the notaire), then they are obliged by the law to send you the contract by recorded delivery letter, and the start of the cooling off period begins the day following receipt of the contract.
If the next day is a public holiday or weekend, the cooling off period starts from the first working day.
At the end of the seven day cooling off period the contract becomes binding on both parties, subject to any conditions that may have been included in the contract.
If you wish to withdraw from the sale prior to the expiry of the seven-day period then, prior to the expiry of the seven day period, you need to send a recorded delivery letter to the estate agent or notaire giving notice of your withdrawal. You are not obliged to give reasons.
In practice, if you signed in front of a notaire, it normally sufficient for you to visit their offices, at which time they can provide you with an appropriate letter of withdrawl for you to sign.
4.3. Options to Buy
It may well be that you are interested in other land or property owned by the seller, which is not being sold with the main property.
This may well occur, for instance, where other land is being retained for farming use, or there is an adjoining property occupied by a tenant.
The seller may also be holding on to other land in the hope that they may be able to obtain planning permission and later sell it with planning consent.
Top Tip!
If you are buying a rural property we recommend you ask the seller whether or not they own adjoining land or property and, if so, whether they would be interested in including it in the sale, or granting an option to buy.
In France, as elsewhere, you would be wise to obtain control of as much land around you as is possible.
Planning permission is generally easier to obtain in France than in the UK and, unless you control the land around you, there is always the risk that you will later end up with an unexpected neighbour!
If the seller is unwilling to sell at the present time or you are interested in the later purchase of this property, then you can ask that a right of first refusal is granted to you as part of the sale of the main property.
The right of first refusal is called a pacte de préférence.
The terms of such an option to buy are for negotiation between you and the seller, but they will include the price (or formula) that will be payable for the property and the duration of the option. Normally, no fee is payable for the option itself.
Whilst the inclusion of an option to buy is useful, it is important to note that this right is subservient to the statutory right of first refusal of sitting tenants and, in certain circumstances, the local Council and the national land agency called 'SAFER' - Société d’Aménagement Foncier et d’Etablissement Rural.
Accordingly, if the owner later decides to sell the property, but there is a tenant farmer on the land, or a sitting tenant in the property, then they will have the right of first refusal.
This right of first refusal of a sitting tenant only exists at the same price as that offered by the prospective purchaser, but public authorities have the right to purchase at a lower price, if the asking price is considered above the market value.
However, even if a tenant does not take up their right of first refusal, this does not affect their tenancy, so you would buy the property with a tenancy on it.
Tenants have very strong rights of occupation in France (particularly tenant farmers), so you should not too readily assume you will later be able to get freehold possession of the property.
4.4. Deposit
The purchaser is required to pay a deposit of up to 10% on signing the sale and purchase agreement.
Whilst 10% is the normal deposit, it is quite legal to pay a lesser amount. Arguably, the higher the value of the property being purchased then the more justified you are in proposing that a lower percentage figure is sufficient.
The deposit is not paid to the seller, but to the estate agent or notaire.
Under no circumstances should you hand over any monies to the seller at any stage of the proceedings.
The deposit will be held by the notaire in 'escrow' as part of the purchase proceeds.
If you are handing over a deposit to an estate agent, as part of the process of signing a sale and purchase agreement, ask to see and write down the number of their carte professionelle.
Their professional card should clearly state that they have appropriate registration to deal with property sales with the words de transactions sur immeubles et fonds de commerce.
If all conditions in the contract are met, but the buyer does not proceed with the purchase, then the deposit is payable to the seller, who may also take legal proceedings for additional damages.
It is even possible that the seller could take court proceedings to oblige the buyer to sign the contract, although this is extremely rare, and there is always the risk that the court would not agree to the demand.
Alternatively, it is possible for the contract to state precisely the damages that would be payable on default by the buyer.
Conversely, if completion is subject to one or more conditions, which are not realised, then the buyer is entitled to a full refund of the deposit. The law requires that the deposit be returned within 21 days.
In these circumstances, it is not unusual for there to be conflict over the repayment of a deposit, either because the notaire or estate agent delay in repayment, or because there is some ambiguity as to whether or not the condition has been fulfilled.
Accordingly, if you do sign a conditional contract, you would be well advised to go for the minimum deposit possible, and to also ensure precise legal drafting of the condition(s).
It is also a good reason for using your own notaire, as we argued earlier.
In the event of default by the seller then the buyer can take legal proceedings to oblige them to proceed with the sale and/or for damages. The judge may also declare the sale to have been realised.
However, each case is considered on its merits and, if there are mitigating circumstances, then enforcement of the sale may be waived by the court.
It is also possible for a penalty clause to be included in the contract to the benefit of the buyer so that, if the seller withdraws from the sale, they are liable to compensate the buyer.
Whilst such a clause may have a dissuasive influence on the seller, there remains the problem of enforcing the clause, which may necessitate legal proceedings.
4.5. Statutory Disclosures
The law requires that the seller is obliged to provide all relevant information about the property to the buyer.
In particular, they must provide information on the following matters.
- 4.5.1. 'Hidden Defects'
- 4.5.2. Property Size
- 4.5.3. Servitudes
- 4.5.4. Tenancies/Licences
4.5.1. Hidden Defects
This is an important source of statutory protection for a buyer against a seller who may not have disclosed important information about the condition of the property.
A ‘hidden defect’ is called a vice caché.
It must be something of a profound nature of which the seller was aware at the time of the sale and about which, if the buyer had known, they would not have proceeded with the purchase, or would have offered a lower price.
The defect must also be something that was not reasonably apparent at the time of the sale and a court of law will assume the buyer adopts a degree of vigilance in the whole process.
It is, therefore, a difficult rule to enforce in the courts.
The clause does not apply where it can be demonstrated that the seller informed the buyer at the time of the sale.
This may be best evinced by inserting a clause in the contract that makes clear that the buyer has been informed about the defect and accepts full knowledge and responsibility.
Alternatively, a clause in the sale contract effectively stating that the property is sold 'as seen' would exonerate the seller, unless it could be proved that they had acted in bad faith.
Unfortunately, the use of such a clause is becoming an increasing practice, with many notaires now automatically including an exoneration clause in a sale contract.
Top Tip!
Ask the notaire about the vice caché clause. Insist that any clause that exonerates the seller from hidden defects is not included in, or removed from, the sale contract. If the seller is unwilling to agree then you clearly need to make further enquiries.
If a court decides that a property was sold with a hidden defect it can reduce the sale price, or declare the sale null and void.
The rule does not apply to the sale of new dwellings, which are subject to separate regulation (a guarantee against major defects for ten years).
Neither does it apply if the buyer is a property professional, engaged and registered on a professional basis in the construction, buying, selling and/or renting of property in France.
4.5.2. Surface Area
In relation to the sale of apartments or other grouped property, the seller is required to declare the overall internal surface area of the property, under a law called loi carrez.
If this figure is omitted, or incorrect by greater than 5%, then the sale can be annulled.
The seller can carry out the measurement survey themselves or engage a professional.
It is rare indeed that any contractural guarantees would be offered on the surface area of a house or on the land surface.
If you are in any doubt, you need to do your own measurements.
You can try and insist on a guarantee, but it is more likely to be the case that the seller will want a clause that grants waiver in relation to all dimensions!
4.5.3. Servitudes
A ‘servitude’ is a restriction on the right of use or possession of property agreed to by one party for the benefit of another party.
Once in place the servitude normally applies to the benefit of the property, rather than any particular owner. So it is normally binding on future owners.
If the restriction, or right, is merely to the benefit of a person, rather than to the property itself, then it is an 'authorisation', not a servitude, and is not binding on future owners.
The most common servitudes are a right of way, flow of water, right of light and right of planting. There are also public servitudes relating to the presence of cables, pipes and roads etc.
An investigation into the existence of public servitudes should be undertaken by the notaire, but their enquiries may not always be as comprehensive as may sometimes be required.
In addition, sellers are not always entirely forthcoming about servitudes, some of which may be so longstanding that they are not even recognised as such!
It is important, therefore, that you request specific information from the seller, in front of the notaire, on the existence or not of any servitudes on the property and that the sale contract deals with the issue. You should also question the notaire on the existence of public servitudes.
You need to ensure that, if you are reliant on a servitude, then the sale contract makes clear your rights. Thus, if access to all or part of the property is dependant on a servitude, it is paramount that this is clearly enshrined in the legal documentation for the sale. Do not rely on verbal assurances, or imprecise legal drafting.
You should ensure, in particular, that your successors have the benefit of the servitude, failing which you may have problems passing it on, should you wish to later sell the property.
The contract should also make clear that completion is subject to your unencumbered ownership of the property.
4.5.4. Tenancies/Licences
The seller is required to state whether or not there are any other legal interests over the land, including tenancies or licences.
However, sellers have been known to omit to mention, for instance, an informal licence granted to a local farmer on part of the land, which may not be known to the notaire.
Just because a farmer cuts the grass on the land for hay does not mean an agricultural tenancy is created, but if the owner receives some kind of payment in return, then it is quite possible a tenancy is in existence.
Once again, therefore, it is important to ask, in front of the notaire, as to whether or not there are any tenancies (informal or otherwise) on the property.
You should also ensure that the contract makes it clear that, on completion, the seller is required to grant vacant possession of the property. There have been cases in the past where family members or lodgers have refused to move out of a property and the buyer has only found out once the sale has been completed!
If there are any doubts, then insist that a penalty clause is included in the contract if the seller does not grant vacant possession. It is also possible to include a clause that states all the funds will not be released to the seller until you have obtained vacant possession.
4.6. Local Rates
As a home owner in France you are liable to two local taxes – taxe foncier and taxe d’habitation.
The amount of both taxes will depend on where you live and the size of the property. In the past, properties located in the countryside have benefited from a generally low level of rates.
However, local rates (and particularly the taxe fonciere) have risen sigificantly in recent years. So ask the seller for a sight of the most recent tax demands.
Top Tip!
It may also be the case that the seller has carried out major improvements to the property, which have not been declared to the tax authority, as a result of which the current rates payable are lower than they should be. If the house has not changed hands over many years, the tax authority do routinely send a new owner a demand (Form H1) for information on the characteristics of the property, which may result in an increase in the rateable value.
On the sale of a property, it is not unusual for the purchaser to be asked to pay their proportionate share of the taxes (and other charges if a copropriété). The applicable date for the spilt is the completion date of the sale.
4.7. Fixtures/Fittings
If you are buying any fixtures or fittings, then you should arrange for an inventory to be prepared and attached to the sale and purchase agreement.
If the items are being purchased separately from the sale price of the house then, in collaboration with the seller, you should price each item.
Top Tip!
Do not let things go unstated between yourself and the seller concerning fixtures and fittings in the property.
You need to be absolutely clear about what is and what is not being sold to you. You discussions should be verified in front of the notaire.
Next: Surveys
House Buying Process in France