5. Payments for 'Off Plan' French Property

Under the terms of the contract you will be required to make stage payments to the developer.

The schedule is referred to as l'échelonnement du paiement du prix.

The payments will be a percentage of the total purchase price, which will vary depending on whether it is an apartment or a house.

Table: Payment Schedule

Stage Apartment House
Foundation 35% 20%
Superstructure 70% 45%
Final Completion 95% 85%
Handover 5% 15%

The sum paid by way of deposit when the preliminary contract was signed should be included in these figures. Thus, if you handed over a 5% deposit for the purchase of an apartment then, on completion of the foundations, the developer is due a further 30%.

The contract will contain a penalty clause in the event of late payment by the buyer, up to a maximum of 1% per month on the outstanding sum.

If not paid within one month the developer can terminate the contract and seek legal action for compensation.

One of the problems that can sometimes arise with stage payments is determining whether the developer has reached the stage where a further payment becomes due.

This is a point you need to discuss with the developer and your architect at the outset so that there is no doubt as the how satisfactory stage completion will be determined. If necessary, provide for recourse to an independent arbiter.

As a general rule, you should not make any stage payments without receiving a written certificate (attestation) from the supervising architect or similar, confirming completion of the relevant stage of the development. Indeed, if you are buying with a mortgage the lender will require you produce the stage completion certificate before funds are handed over.

Our strong advice would also be that you seek a right of site access (preferably with your architect) for inspection purposes before you make any stage payments.

If you have not done so, and you find at handover that there are material defects or non-conformities on the property, your only financial leverage on the developer is the retention sum of 5%. You could refuse to accept the property and seek to withdraw from the contract, but this may result in costly and time consuming legal action against the developer to obtain proper redress.

You will need to negotiate the right of access to the site for you and your professional advisor in the VEFA contract, as you are otherwise unlikely to be permitted access, if only on grounds of health and safety. The terms of the access arrangements will need to be mutually agreed.

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