2. Preliminary Contract for 'Off Plan' French Property

1. 2.1. Purpose of Contract
2. 2.2. Deposit
3. 2.3. Cooling Off Period

2.1. Purpose of Preliminary Contract

If you buy a property off-plan, it is normally a two stage contract process.

In the first stage you will sign a preliminary contract, before you enter into the final VEFA contract itself.

Before you sign the initial contract, you would be wise to establish how far the developer has reached with the development, so that you can be more or less certain that it will proceed, and that it will do so on the basis as set out in the plans.

While the larger developers may well be able to offer you a well-delineated product with a high degree of certainty, this is not universally the case with all developers.

Thus, it may well be that detailed plans of the proposed development are not available. The developer may not even yet own the land, and full planning permission may yet not have been granted.

The developer may still be seeking funding, and may simply want to get as many buyers as possible in place, in order that the banks will release the funds.

The developer is under no obligation to sell the property to you, even though you may have signed a preliminary contract.

Of course, if they did not do so, you are entitled to a full refund of your deposit, and instances of developments not proceeding do sometimes occur.

A new consumer law introduced in 2009 may bring an end to the one sided nature of these transactions, as contracts for products or services that do not impose a reciprocal obligation on buyer and seller are now deemed to be unfair. It remains to be seen just what impact this new law has on off-plan preliminary contracts.

More usually with preliminary contracts the timescale for start and completion may drift.

If so then, depending on the precise circumstances, you may be entitled to withdraw from the contract and/or seek damages. The detailed grounds for withdrawal are set out in later pages, when we review the VEFA contract itself.

The law prescribes only a minium level of information need be provided in the preliminary contract although, to assist with marketing of the properties, most developers will generally offer a contract that provides an appreciable level of detail on the specification.

If the developer has received full planning consent, ask to see the plans, or visit the local mairie to see them. They may tell you more about the development than is contained in the preliminary contract, e.g. scale of proposed development.

Strictly speaking, there is no legal obligation to sign a preliminary contract before you sign the final VEFA contract. In theory, if you have any concerns about signing a document that lacks precision, you can choose to proceed directly to the final contract.

However, as the detailed final contract is not normally available at the time the development goes on the market, this may, of course, mean that you risk losing the possibility of buying into the development (or at least the particular property you wish to purchase), as others who are prepared to reserve a property step in before you. It is a choice you have to make.

The developer may take unkindly to you doing so, and find a pretext not to proceed with the contract. You then need to make up your mind if you wish to proceed on any other basis.