4. Contract Conditions when Buying Property in France
- Conditional Clauses
- Cooling Off Period
- Options to Buy
- Statutory Disclosures
- Local Rates
4.3. Option to Buy Additional Land/Buildings
It may well be that you are interested in other land or buildings 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.
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.
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!
Strictly speaking, obtaining an 'option' to buy property is called a promesse unilatérale de vente, but such contracts normally require payment of a deposit that is lost if you do not take up the option. They also assume the seller is willing to sell.
Accordingly, if the seller is unwilling to sell at the present time, or you do not wish to commit yourself so strongly, 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.
A pacte de préférence does not mean the seller is bound to sell the property to the beneficiary; it merely means that if they decide to sell they are obliged to offer it to the beneficiary when they put it on the market.
If the owner puts the property on the open market, and they sign a contract of sale with another party, the beneficiary of the pacte de préférence must be offered the right to buy the property at the price and on the same other terms as stated in the sale contract, or as may have been determined in the pacte de préférence.
In this manner it prevents the seller insisting on a high price to the beneficiary of the right of first refusal, which they might not be able to obtain from another buyer!
The terms of a pacte de préférence are entirely at the discretion of the parties, although you would be well advised to get the agreement prepared under the auspices of a notaire, and for it to be registered as a charge on the land. That way, no future notaire or prospective third party purchaser can claim to be ignorant of it.
Particular issues that need consideration are:
- The duration of the agreement;
- Whether the right of first refusal operates in the event of only partial sale of the land or property;
- The penalty that might apply in the event that the owner sells the land to a third party, and whether execution of the pacte could be enforced;
- The basis on which the purchase price will be determined, as the price is unlikely to be stated at the time of the agreement;
- Whether successors to the owner and beneficiary will have an entitlement;
- Any conditional clauses that might apply, eg planning.
Normally, no fee is payable for the option itself.
A word of caution is needed about farmer's rights - as always.
If there is currently a third party on land who is a farmer it is likely that on disposal of the land they have priority rights to purchase it over the beneficiary of a pacte de préférence.
Whether this occurs will depend on the nature of the farmer's rights; if they hold a ‘bail fermier/bail rural’ they have an automatic right over anyone else to purchase the land if the owner decides to dispose of it.
This right is called a droit de préemption du fermier.
So if you hold a pacte de préférence your contractual right of first refusal will come after the statutory rights of the tenant farmer.
Statutory Rights of Pre-Emption
Whilst the inclusion of an right of first refusal is useful, it is important to note that this right is subservient to the statutory right of first refusal of sitting tenants.
In certain circumstances, the local council and the national rural land agency called 'SAFER' - Société d’Aménagement Foncier et d’Etablissement Rural and other public agencies also have a right of pre-emption, which we discuss later in this guide.
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, they will have priority over you in the purchase.
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 can contest the price in a court of law, although they have no right of compulsory purchase, other than in exceptional circumstances.
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, so you should not readily assume you will later be able to get freehold possession of the property.
You can read more on this issue, particularly on SAFER at Pre-emption Rights on French Property.
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