6. Sale and Purchase Contract
1. Types of Contract
There are two types of sale and purchase contract:
- Promesse de Vente
- Compromis de Vente
In strict legal terms there is not a huge amount to choose between them, as the conditions contained in them which generally be the same.
More importantly, many contracts are in a standard form, so you need to be careful that you do not, by default, agree to a set of terms that do not reflect the actual terms you have agreed with your buyer. This is particularly the case with any conditional clauses that you may have agreed with the buyer.
You also need to be clear on the duration of the contract, so that if conditional clauses are included, then there is a date by which you can terminate the contract if the buyer does not fulfil these terms eg mortgage, planning consent.
2. Drafting of the Contract
A sale and purchase contract can be prepared either by an estate agent or by a notaire.
Our general view is that both buyer and seller should each appoint their own notaire, and that the responsibility for drafting the initial contract rests with the buyers notaire.
That said, it is frequently the case that a single notaire is used, but in these circumstances you need to be aware that, strictly speaking, choice of the join notaire is at the prerogative of the buyer. If they insist on a particular notaire with whom you are not happy, then the only solution is to appoint your own notaire.
The buyer is responsible for all notaire fees, but the use of two notaires does not normally increase the fee payable, as the standard fee is merely shared between the two notaires.
3. Conditional Clauses
The sale and purchase contract may contain one or more conditional clauses, a condition suspensive.
Indeed, the contract will always be conditional on satisfactory title being established.
But it may also conditional on the buyer obtaining a mortgage or planning consent, or subject to other conditions.
You need to satisfy yourself as to the precise terms of these conditional clauses, so as to minimise any later any uncertainty as to whether or not the buyer has complied with them.
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.
4. Cooling Off Period
The buyer is entitled to a ten-day cooling off period, following the signing of the sale and purchase agreement. It is not available to the seller, who is bound by the terms of the contract.
The ten-day cooling off period only commences when the buyer has actually received the contract, not when they sign it. So if it is not handed to the buyer at the time of signature, the ten days only starts when they receive it from the notaire. If handed to the buyer when they sign it, then it starts the next day.
If the buyer withdraws within the ten days, then they are entitled to a full refund of their deposit.
The purchaser is required to pay a deposit of up to 10% on signing the sale and purchase agreement.
It is quite legal for the buyer to pay a lesser amount. Indeed, it is increasingly the case that a 5% deposit is being adopted.
It is even possible to pay no deposit at all, although the agreement will contain a penalties clause that will apply in the event the buyers withdraws outside of the terms of the contract.
Thus, although a buyer may pay only 5% deposit, the contract may well contain in it a damages clause of 10%.
The only problem for the seller were this to be the case is that in the event there is a breach of contract by the buyer it would be more difficult to obtain full compensation, as it is likely court proceedings would be necessary.
The deposit is paid to the notaire, not to the seller.
The deposit is placed in ‘escrow’ and does not earn interest, unless it is held by the notaire for over three months.
Where the buyer defaults on the purchase, then, subject to any conditional clauses in the contract, the deposit is payable to the seller.
It is normal practice for responsibility for the taxe foncière to be spilt pro-rata to period of ownership in the year between the buyer and seller.
As the taxes for the year in question may not be known (as bill not received) the notaire will normally use the bill for the previous year as the basis for the spilt, but practice does vary.
7. Fixtures and Fittings
We are frequently surprised at how the final decision on the sale/purchase of a property worth possibly several hundred thousand euros can come down to whether or not the cooker or carpets are included in the price.
Perhaps of greater concern is the frequency with which seller and buyer leave unstated just what is to be included in the sale.
Sometimes the buyer can be pleasantly surprised at just what the seller has left behind, but in recent years sellers do seem to be taking a less generous view of what they leave.
The result is that when buyers take occupation they can feel short-changed about the extent to which the property has been stripped of what they considered to have been 'fixtures'.
Fitted bedroom furniture and kitchens in particular are often a source of uncertainty in law, and between buyer and seller.
In general terms such items, which may be attached to the walls of the property, and which fit the dimensions of the space they occupy, would be construed as a ‘fixture’ by a court of law.
However, that is probably of little solace if you are faced with the cost and stress of legal proceedings to seek redress from the seller.
Another potential grey area concerns wood burners, particularly if the wood burner itself is removed, and the flue left in situ.
The same level of uncertainly applies to garden sheds that may not be built on a concrete foundation.
So the golden rule in these matters is to ensure that the sale contract makes clear just what is to be left in the property, particularly if you are uncertain whether it is a 'fitting' or a 'fixture'.
The less confidence a buyer has in the seller, then the longer the list of such items might need to included, e.g. boiler, bathroom and kitchen fixtures.
If fittings are to be left in the property, then one advantage of making a separate inventory of such items in the sale contract is that their value can be reduced from the purchase price of the property, which in turn reduces the level of fees and taxes payable
To avoid any ambiguity you would be best advised to arrange for an inventory to be prepared and attached to the sale and purchase agreement.
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