Sales contract to buy a property in France

3097

contract-buying-property-franceKey stage in the legal process when buying a property in France, the signing of the sales contract (or purchase contract) allows sellers and buyers to demonstrate their respective commitments. Although legally this step is not compulsory, it is in practice implemented nearly automatically. There are few sellers who will be willing to continue to deal with you without this contract. Indeed, a preliminary sales contract clearly secures the transaction.

This key document summaries everything previously agreed. Signed by both parties, this contract must forecast, in as much detail as possible, what will be the final deed of sale. Two types of property purchase contract can be put in place in France. You can set up a unilateral promise to sell or a preliminary sales agreement. Both commit you and the seller in different ways. The signature of the sales contract is actually part of the list of pitfalls to be avoided by foreigners. Indeed, many sellers attempt to put in place a contract that better protects their interests than yours.

In thisarticle, we will first describe the role of this contract generally established by a Notaire. Then, we will detail the two types of preliminary sales contracts. You will find out information for each type. First of all, the deposit you will have to pay. Then, we will discuss the commitments and the withdrawal rights available to both parties. Then, we will talk about the list of common elements to be included in both types of contract. We will detail the list of property surveys that the seller will have to provide you with. Finally, we will tell you about our involvement in this key step of the legal process. You may have gathered already…A lot of reading ahead! Let’s go!

The role of the preliminary contract

When buying a property in France, the seller and you must progress through multiple agreements and acts. After negotiating the terms of the sale, the agreement must be set in a preliminary contract. The role of this document is to establish a genuine legal link between the two parties. Therefore, it must contain all the necessary information which will be included in the final act.

The aim of a preliminary sales contract is to conclusively link the two parties. It also allows the three parties involved (the seller, the Notaire and you) to take the time to perform the respective tasks they must fulfil to permanently seal the transfer of ownership. The Notaire must collect the many documents and information necessary for the transaction. On his side, the seller will organise his move from the property sold. For you, this period allows you to take the time to research and find a mortgage to buy the property.

Sète, region Occitanie

The unilateral promise to sell

The seller commits to sell you his property at the price indicated at the time of the acceptance of your offer to buy. He also undertakes to reserve the property for you for a set period called the “option period”. The contract must mention the length of this period. It usually varies between two and four months. During this period, the seller cannot sell his property to another person, even if he receives a more advantageous offer. As a buyer, you also sign this contract. However, your signature does not yet commit you. Indeed, you simply acknowledge the promise to sell.

Deposit to be paid by the buyer

In return for reserving the property for this option period, you must pay a deposit, called “holding fee”. This amount generally equals 10% of the amount of the total transaction. However, it is possible to plan for a lower amount, especially when the price of the property is high. It is preferable to negotiate and lower this amount as you never know what may happen later. Indeed, you may face an unexpected external financial factor.

This payment must be made upon the signing of this promise to sell. You will have to transfer the total amount of this fee to an account belonging to the Notaire. At this stage, the seller does not receive any money. If you decide to exercise the option, you are committing to the purchase. Otherwise, if you decide not to continue with the transaction, three options are available.

  • You decide to give up for personal reasons within the legal withdrawal time-frame given to the buyer. This time-frame is 10 days. This delay starts from the day following the receipt of the registered letter notifying you of the signature of the contract. In this case, you get back the whole of your holding fee. You do not owe the seller anything.
  • For personal reasons, you decide to give up after the legal withdrawal time-frame of 10 days. The holding fee remains with the seller. The French Law considers it as damages for the seller for reserving his property in France for you for a period of time.
  • You give up on the purchase after the legal withdrawal period of 10 days. This cancellations results of the non-completion of one of the suspensive conditions. For example, you did not get the funding needed for the purchase. In this case, you recover the full holding fee. You are acting legally; the seller has no claim against you.

Commitments of both parties

You are slightly committed because of the mandatory payment of the holding fee. Nevertheless, you may withdraw within 10 days of receiving the registered letter notifying you of the signature. This withdrawal must be notified to the seller by signed-for registered letter. After the 10 days, only the non-completion of a suspensive clause will allow you to withdraw without facing financial penalties.

The seller, meanwhile, is fully committed. He cannot cancel the sale and he gives you an option on his property. It means that he is no longer allowed to offer his property to another buyer during the period mentioned in the contract.

Withdrawal rights of both parties

SellerYouYouYou
WhenAny timeIn the legal withdrawal period of 10 daysOutside the legal withdrawal period of 10 daysOutside the legal withdrawal period of 10 days
ReasonDoes not matterSuspensive ClausePersonal
Option
PenaltyPayment of damages and interest to the purchaserNoneNoneNon-return of the holding fee paid
(between 5 and 10% of the cost of the property)

The preliminary sales agreement

The preliminary sales agreement is a different contract to the unilateral promise to sell. Indeed, it commits the two parties. The seller agrees to sell his property in France at a set price. As the buyer, you commit to buy it. This compromise is a sale, but a clause in this contract delays the effects of the sale to the signature of the deed of sale.

Deposit to be paid by the buyer

Like for the unilateral promise to sell, the seller will ask you to pay a deposit to confirm your commitment. This deposit is generally between 5 and 10% of the value of the property. You will need to pay this amount after the signature of the contract. This signature will take place at the expiry of your legal withdrawal deadline of 10 days. As the buyer, you will have to transfer this sum directly to the Notaire and not to the seller.

You can also complete the preliminary sales agreement by private deed with the seller. In this case, choosing a Notaire to entrust him with the money is a wise decision. Indeed, it is better to transfer the money to the Notary rather than directly pay to the seller. This solution provides a guarantee for the seller and you. The seller is reassured that you are serious. On your side, you know that your deposit will be retained by the Notaire until the conclusion of the sale. At the time of the signature of the deed of sale, the seller will collect the deposit. It will, of course, be deducted from the remaining amount you must pay.

Commitments of both parties

french-property-contractYou have a legal period of 10 days after signing the preliminary sales agreement to decide to cancel your purchase. Just notify the seller by signed-for registered letter. You do not have to justify your decision. The seller cannot claim any payment of compensation against you. Potentially, the deposit will not have been paid before the expiry of that time limit. But if it was the case, you recover your down-payment in full.

Your situation is different if you decide to cancel the transaction after the expiry of your legal withdrawal period. You will be, in this case, contractually committed to the seller. A penal clause in the contract mentions that the seller has the right to keep your deposit.

The preliminary sales agreement often links the conclusion of the sale to certain conditions, called “suspensive conditions”. For example, obtaining a mortgage or the authorisation from the local Council to perform specific work. When the sales agreement mentions such conditions, their non-completion automatically renders the contract null and void. Both parties are therefore free of any commitment. The seller cannot claim against you. You retrieve your deposit in full.

On his side, the seller can no longer withdraw. He must sell you his property if you do not retract. The Cour de Cassation (Supreme Court) considers that by signing this contract, the seller consents to the sale. So, a withdrawal by the seller from his commitment results in the payment of damages and interest for you.

Withdrawal rights of both parties

SellerYouYouYou
WhenAny timeIn the legal withdrawal period of 10 daysOutside the legal withdrawal period of 10 daysOutside the legal withdrawal period of 10 days
ReasonAnySuspensive ClausePersonal
Option
PenaltyPayment of damages and interest to the purchaserNoneNoneRetention by the seller of the deposit paid (between 5 and 10% of the amount of the property)

Elements to be included in the contract

The preliminary contract must include several elements to be legally valid. Regardless of the type of contract in place, the list of elements remains the same.

  • The identity of the two parties, their details and their marital status
  • The complete address of the property in France and its type
  • The origin of the property (date of the previous deed of sale and name of the previous owner)
  • The detailed description of the property, its equipment and its potential outbuildings
  • The existence (or not) of a mortgage
  • The complete file containing the property surveys
  • The documents and information specific to the condominium (only for the apartments concerned)
  • If the file related to the property surveys has not been provided, add a clause indicating that you will benefit from a new withdrawal period on receipt of these surveys
  • You can also add a suspensive clause in the case of detection of a defect in the surveys
  • The amount of the fees due to professional(s) in France linked with the sale (estate agent, Notaire)
  • The selling price and the payment terms (with or without a mortgage)
  • If applicable, the characteristics of the mortgage that you plan to put in place (duration, rate)
  • The validity date of the preliminary contract and deadline for the signing of the final deed of sale
  • The date of availability of the property
  • The suspensive clauses

In fact, we previously mentioned suspensive clauses, but what are they? A suspensive clause suspends the execution of a contract until the completion of the event. If the expected event does not occur, you are legally free to cancel the contract. If the event occurs, nothing can stop the contract from going ahead. Among these conditions, the most important one relates to you obtaining a mortgage. If you buy with the help of a mortgage, you automatically benefit from this condition. It allows you to only buy if you find your mortgage within a certain period. Generally, a period of 60 days is granted to you to get a mortgage offer from a bank in France. In other words, you will have about two months to obtain your finance and inform the seller.

Property surveys related to the contract

A few years ago, to improve the transparency of the real estate transaction, the Government decided to modify the Law. Now, the seller is under obligation to provide you with various property surveys grouped together in a single file. You can then, before you fully commit to buy, be more informed on some aspects of the property. The preliminary contract must now include this file.

To provide these property surveys does not force the seller to carry out any work. If one of the documents reveals a problem, it is better to confirm in writing in the preliminary contract which one of the parties will assume the consequences.

Be aware that, in the event of a problem with one of these property survey, you will always have the option to withdraw without being accountable to the seller. The list of documents to be provided to a buyer by the seller gets longer every year. In 2017, there is a total of nine property surveys, ten if purchasing a condominium apartment!

  • Report on the risk of lead exposure
  • Status relating to the presence of asbestos
  • Status relating to the presence of termites
  • The condition regarding natural and technological risks.
  • The property survey relating to the energy performance of the French property
  • The property survey relating to the presence or not of dry rot
  • The condition of the interior gas installation
  • The condition of the interior electricity installation
  • A document relating to the private sanitisation
  • The “Métrage Loi Carrez” property survey relating to the surface of a condominium apartment in France

A professional must carry out these property surveys. The seller risks a fine of €1,500 if he cannot provide you with these surveys. As said previously, the results of these property surveys do not force the seller to carry out any work. They are only there to provide you with better information, even if one of the property surveys indicates the gas or electric installation seems dangerous. Nevertheless, the Mayor or the local Prefect can force the seller to perform the necessary work in the case of lead or termites. This is the list and the validity of the property surveys that the seller will provide you. Do not forget to study each property survey passed on to you. Also, insert additional withdrawal clauses in the preliminary contract if you have any doubts.

Property Survey Properties includedDuration of validity of the document
Risk of exposure to leadProperties built before 01/01/19491 year if lead is present. Unlimited otherwise
Presence of asbestosProperties built before 01/07/1997If no trace of asbestos detected, unlimited duration. If presence is detected, 3 years
Presence of termitesAll properties6 months
Natural and technological risksAll the properties covered by the prefectural order for their municipality6 months
Energy performanceAll properties10 years
Presence of dry rot (optional)All propertiesUnlimited
The condition of the interior gas installationProperties where the installation was performed more than 15 years ago3 years
The condition of the interior electricity installationProperties where the installation was performed more than 15 years ago3 years
Installation of private sanitationProperties not connected to the public network3 years
Métrage Loi CarrezCondominium apartmentsUnlimited

Our involvement through the implementation of this contract

For the foreign buyers who have chosen to work with us, we will, of course, support you closely during this crucial step. Our role during the implementation of this contract is to assert all of your rights. Everything starts with the selection of the type of contract. The seller may want to put in place a preliminary sales agreement. On the other hand, you may instead want to use a unilateral promise to sell. We argue to get the preliminary contract type that will be the most favorable to you according to the situation.

Generally, we make this choice as early as the negotiation of the purchase/sale price of the property in France. Then, we indicate our choice of preliminary contract in the written offer to purchase that we transmit to the seller on your behalf. The aim is for you to have the option to withdraw as easily as possible in the event of unexpected events in your life. All within the law, and without being financially liable to the seller.

In the case of illegal withdrawal on the part of the seller, we defend your rights until you get gain of cause. With the support of French property lawyers, we build your case and monitor it until a favourable legal decision. We always refer to French property law and never begin legal proceedings on your behalf without being sure that the vendor has infringed your rights. Conversely, we never begin legal action likely to infringe on the rights of the seller.

lyon-france
Lyon, Region Rhone-Alps

When the Notaire draws up the preliminary contract, we make sure of its content and validity. We also ensure that the contract includes all the suspensive clauses you require.
Finally, if you wish, we can translate the full preliminary sales contract into your mother tongue. This translation allows you to gain full understanding of its contents before signing. We, of course, also pay close attention to the property surveys. We check the validity of each and every one and we alert you in the event of a problem.

Should you wish to withdraw, we assert your rights. Within the legal time limit of 10 days, a withdrawal is never an issue. It becomes almost impossible, for personal reasons, without financial penalty, beyond this deadline. Nevertheless, we have previously managed to have this financial penalty cancelled by sellers or real estate agents with whom we had very good relations.

The package you need!

 

THE LEGAL PACKAGE

  • Property surveys

  • Full support process

  • Buy cheaper

  • Conform with Law

  • Protect your interests

  • Legal advice from lawyer

 

Feel free to use the comment box below to discuss the preliminary purchase contract in France with us. This is a complex and wide-ranging subject. It is totally understandable that you may still have questions on the matter. We will be delighted to answer them!

About the author

Samir Grattery is the creator of French Property Connection. Holder of a Master in Property Law from the University of Sorbonne in Paris, Samir first worked as an estate agent. He was then working on behalf of sellers and defended their interests. He then decided to solely collaborate with buyers. Working as a property finder in Paris, he accompanied non-residents throughout their purchase project and protected their interests against sellers.

In 2015, after moving to the United Kingdom, he created French Property Connection to enable non-residents wishing to buy a property in France to simplify their purchase process, particularly by avoiding the pitfalls and problems usually faced by foreign buyers.

Share this post
Rate this post
4.83 avg. rating (96% score) - 18 votes

Comment or ask us something about the preliminary contract

16
  1. Rachel ebu says:

    Hello Samir,

    Thank you for creating this website. It’s the most comprehensive I have come across.

    I need your help, I paid a deposit as a married but single buyer, and signed a compromis. A few days later, my husband was diagnosed with cancer. Though I emailed the notaire, I was late reaching the agents. Long story, shortened: the agent refused to listen even after sending him numerous hospital letters. Then I just left it when it added more pressure to my life. This all happened Mar-June 2016.

    Then Yesterday, the agent sent me a letter to sign so that he can release my deposit to the seller! The letter stated that only the can the seller re-list theproperty!

    I’m in debt at the moment from my husband’s cancer issues and this agent is reminding me of another bad experience. I could really do with the 3400€ deposit right now though.

    What would you advise these situation?

    I apologise for the long email.

    • Dear Rachel,

      Thank you for your comment. If you have backtracked beyond your 10 days legal withdrawal period for another reason than a clause suspensive inserted in the sales contract, the seller can keep your deposit as a compensation.

      Unfortunately, it will be difficult for you to take your down-payment back in your situation.

      Best regards,
      Samir

  2. Lulu says:

    I find your information the best and most informative. question – I am in France looking to buy a place for 60.000Euros and have not yet made an offer. I am nervous! Very! I have a line of credit against my Canadian home which gives me sufficient funds, but I want some “wiggle room” in my process. ie. can I put in subject to a loan (which is true as it will be a loan against my Canadian home) , I am confused at to during the 10 day cooling off period how I can withdraw if I have put subject to a loan (which I actually would have) but the loan is not here in France. I hope this is not too confusing. My funds are very limited and I have to get a quote from a builder as to how much “les travaux” would cost, hence my nervousness if it is going to cost beyond my means. Merci, Lulu

    • Dear Lulu,

      In France, you are entitled to a legal period of 10 days to withdraw once the contract signed, whether you are requiring a mortgage or not.

      By inserting a suspensive clause in the contract related to the agreement from a Canadian bank to grant you a mortgage, you will be able to legally withdraw beyond the 10 days period without having any penalty. Nevertheless, you will have to provide the seller with a proof of the mortgage refusal.

      Should you manage to get your mortgage, you will not be able to withdraw beyond the 10 days period without having any penalty. The seller will be able to keep the deposit that you would have paid once the contract drawn up (usually 10% of the amount of the property).

      We hope this is clear to you and feel free to get back to us if you have any further request.

      Best regards,
      Samir

  3. Claire says:

    Samir – thank you for your quick reply.
    I wanted to clarify whether the notaire would need proof of funds. Our estate agent said they can provide a letter or the solicitors we will appoint, to say how much we expect to get from our sale.
    Once aagain, thank you for your help.
    Best Wishes
    Claire

    • Claire,

      Sorry for forgetting to answer a part of your initial question!

      The seller might ask you how you plan to finance the purchase.

      You will be able to tell him that you plan to sell a property in London providing him with a certificate from your UK estate agent showing the market value of this property.

      Afterwards, in the event both parts agree on the conditions of the sales contract, you will need to make a bank transfer to the Notaire.

      The Notaire might ask you for a proof of the source of funds. In this situation, the best is to have a certificate from your UK bank attesting that this money comes from a real estate transaction.

      We do not know how far you are in the buying process but in your situation, we strongly advise you to include all of the information related to the finance in your written offer to buy in order to ensure you a maximal cover when the Notaire will draft the sales contract.

      We stay available for any further request you may have.
      Regards,
      Samir

  4. Claire says:

    Hi Samir
    I have been reading your entire website with great interest. It is extremely informative. We are about to go and view a property in the Lot region and have just put our house on the market in London. However, although there will be no problem selling our property, how does that work with the notaire and agreement of funds to purchase in France? I think a substantive clause would only be for a mortgage?
    We are 99.9% sure this is the property for us as we have been actively looking for 6 months. It is a gite business, being sold as a going concern by a British couple. We would not have the funds or income to sell our place, move and then rent in France whilst we look and complete a cash purchase.
    I look forward to hearing from you.
    Claire

    • Hi Claire,

      Thank you for your comment.

      You can insert all suspensive clauses you wish in the preliminary sales contract drafted by the Notaire.

      So, if you want to suspend the purchase until your property in London is sold, there is no problem as long as the seller agrees with this. You can also add in the contract that the payment will be cash once your property in London sold.

      The mortgage suspensive clause is the most common but definitely not the only one that you can insert in the contract.

      I hope this is clear for you!
      Regards,
      Samir

  5. Alicia says:

    Dear Mr Grattery,

    In the comment section of your article dealing with the notaire fees in France, I read that it was possible to take off the price of the furniture of the property I am about to buy to reduce the fees of the notaire. How to proceed and how to write it into the contract?
    Thanks Alicia

    • Dear Alicia,

      Thank you for your question. That is an interesting matter and no many foreigners are aware about this “trick”. Indeed, you are able to deduct the total amount of the furniture belonging to the property you are about to buy.

      First, you need to assess the total value with the seller. You must do a real assessment of this value as the French tax administration may check this evaluation.

      Then, you need to insert the breakdown in the French sales contract. For example, if you are buying a property for 500 000 € including 10 000 € of furniture, this breakdown must appear in the contract. You will then pay the Notaire’s fees on 490 000 €.

      Feel free to contact us if you have any other query.
      Regards,

      Samir Grattery

  6. Hello,
    Is there any possibility in France to draw up a buying contract in German or at least in English?
    I am a bit scared to sign something in French that I don’t fully understand…
    Is it really impossible to backtrack once the contract is signed?
    Many thanks in advance for your time and replies.
    Carsten

    • Hello Carsten,

      Thank you for your question. Unfortunately not, your buying contract in France will be automatically draw up in French. We fully understand your fears to sign something you do not understand. In this case, the best option for you is to have this sales contract translated into German. There are many professionals able to translate a French preliminary contract into your mother tongue.

      Regarding your second question, unfortunately (again!) you will not be able to backtrack except if you are will to lose your deposit (usually between 5% and 10%).

      Hope our answers are clear to you and feel free to contact us again if you have any query.

      Regards,
      Samir

  7. Write more, thats all I have to say!

  8. Jodi says:

    Keep on writing, great job!