3. Sale and Purchase Contract
- Types of Sale & Purchase Contract
- Preparation and Signing the Contract
- Role of French Notaires
- Use of Legal Advisors
- Pre-Contract Enquiries
3.1. Types of Sale & Purchase Contract for French Property
There are two main different forms of contract that can be used:
- Promesse de Vente
- Compromis de Vente
In practice, there is little to choose between them, and we describe each in more detail below.
One major difference lies in the process itself, in that a promesse can only take place through a notaire, whereas a compromis can be directly between the parties or via an estate agent.
Notaires use both forms of contract, but increasingly the compromis is being used, and is to be preferred, as there is a clear reciprocal obligation in the contract, whereas this is technically not the case with the promesse.
However, whilst the substance of the two types of contract may be very similar, notaires and estate agents do use their own, or different standard forms of contract, which may be to the advantage of one or another of the parties.
This is notably the case in relation to conditional clauses (conditions suspensives), or latent defects (vice cachés) so you need to have your wits about you as to the conditions that may be contained in the contract and, perhaps equally as important, those conditions that may not be in the contract!
We have seen contracts that vary substantially in the level of detail contained in them, so do not be misled that all of these contracts are all the same; they are not.
Despite the variation, each notaire will have their own template, which they will use for most transactions. There is concern in many legal circles that the use of standard clauses of contract is too widespread, with critics of the view that all contracts should be drafted unambiguously to reflect the clear intentions of the parties.
So do not be persuaded that just because it is a standard form of contract you need to accept it or that it is neutral. You need to ensure it contains all such conditional clauses as you require, eg mortgage, planning, condition, access, easements, etc.
Be careful also of the terminology that is used. These contracts are sometimes referred to as an avant-contract, implying somehow that the documents precede the actual contract itself. This is not true, so do not be misled by mis-interpretation of the term.
Once you have signed either form of contract you are obliged to purchase the property, subject to any conditions that may be included in the contract, and expiry of the 10-day 'cooling off' period. It is no idle gesture, so act with care.
3.1.1. Promesse de Vente
A promesse de vente is, in effect, an option to buy the property granted to the buyer by the owner,
However, since October 2016 the sale has become legally enforceable by the seller, so it has really lost a great deal of its original purpose for the buyer.
It's full title is the promesse unilatérale de vente, or a 'unilateral offer to sell' made by the seller for a specified price and for a specific duration.
The duration of the option in routine purchases is agreed between the parties, normally around three months. In other cases it may be a year or more, particularly in relation to development properties.
The promesse de vente unilatérale is frequently used by property professionals seeking to obtain an 'option' to buy land or property on which they may be seeking planning consent, or land assembly
A deposit of up to 10% of the purchase price is made on signing of the agreement. The purchaser has ten days during which time they may withdraw from the contract without penalty.
If they do not withdraw by this time they are legally bound to purchase the property within the option period (subject to any conditions contained in the contract).
So be warned, whilst the option may be available for several months, after ten days you may lose the deposit if you later decide not to proceed. The seller can also enforce the sale.
You should also ensure that the contract provides that in the event that the seller changes their mind you can enforce execution of the contract.
If the above clause is not included, and the seller changes their mind, you would otherwise only be able to obtain damages.
You can read more on this issue in an article from our Newsletter When is a Promesse (de Vente) Not a Promise?
3.1.2. Compromis de Vente
A compromis de vente is what may more commonly understood as a sale and purchase agreement, as there is a clear bilateral obligation.
That is why the technical term for this type of contract is called promesse synallagmatique de vente.
A deposit of up to 10% of the purchase price is made on signing of the agreement and the purchaser has seven days during which time they can withdraw from the contract without penalty.
Under the contract the owner agrees to sell to the purchaser and the purchaser in turn agrees to buy from the owner, subject to any conditions that may be stipulated in the contract.
Here is an example of a standard form of compromis de vente. Remember, these contracts do vary in the form that they take, but the above is a fair example of such a contract, although shorter than some we have encountered.
Next: Signing the Contract
Back: Offer to Buy
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