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Property in France

Paying Under the Table

Thursday 02 July 2015

Buyers who refused to honour a payment ‘under the table’ have had their case upheld in the French courts.

The practice of the 'dessous de table' in property transactions in France is as old as the Republic itself and is not uncommon.

It is of course illegal, but buyers and sellers are frequently tempted to do it in order to reduce taxes and fees payable on the sale and purchase of a property.

It is also sometimes used to sweeten the transaction for one or more owners of a property in multiple ownership.

Notaires know it goes on, and many simply turn a blind eye to it.

However, sometimes it does not quite work out as planned.

In a recent case heard by the French Supreme Court, the Cour de Cassation, a couple signed a contract for the purchase of a house, simultaneously agreeing in a side agreement to pay a sum of €20,000 in the form of cheque to the seller.

The private written agreement made between the buyers and the seller stated the payment was for ‘works and diverse services' in connection with the sale of the house.

The agreement further stated that the cheque was not to be cashed until completion of the sale of the property some months later.

The cheque itself was actually dated months prior to the agreement, which was manifestly untrue.

Pending completion of the sale the cheque was held in escrow by an independent third party, who also acted as witness.

The notaire who undertook the sale and purchase process was not made aware of the side agreement.

Following completion of the sale the buyers refused to honour the cheque.

Although the payment was clearly a dessous de table (but denied by both parties) the buyers stated that the reason they refused to honour it was because the seller was required to have undertaken works to the property prior to completion, which they failed to do.

This is despite the fact that they bought the property on as ‘as seen’ basis.

The court ordered that a copy of their judgement be conveyed to the French tax authorities!

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