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Buying Off Plan Property In France

Buying Off Plan Property In France

March 25, 2014 in Blog, French Property News by

Off Plan Property France

Buying any property is a big decision that requires careful consideration. Buying French property is often a lengthy process with a great many more things to take into account, and buying off plan property France can be even more complex. Every purchase entails necessary and thorough due diligence to be carried out by the investor. Before signing the contract you must be certain that you fully understand all the legal implications and that there are no objectionable clauses. Hire a solicitor who is both an expert in French property law and a fluent French speaker to ensure full comprehension. Seek advice from your solicitor and estate agent, and never allow yourself to be pressured into signing before you are ready.

Difference between buying off plan property in France compared to the UK

In UK conveyancing, you can sign a contract in readiness that does not become a legally binding agreement until exchange. This is not the case in France. On signing a Contract de Reservation, you become fully legally committed to the purchase after 7 day cooling off period. This is why it is so important to ensure that you are completely happy with the terms before applying your signature to the document. An off-plan contract is known as a vente en état future d’ achievement (VEFA). The clauses contained in VEFAs differ to those set out in normal Contract de Reservations, but the legal commitment remains the same.

Amount Of Money For Deposits

On signing the VEFA, you will be required to pay an initial deposit upfront to the developer. On off plan property France that will be completed within 12 months, this deposit is capped at 5%, whereas on developments that will take more than a year to complete it is capped at 2%. The amount of the deposit is set at the developer’s discretion.

The deposit paid should be held either by the solicitor involved in the purchase or by the developer in a bank account set up in your name until the legal title to the property is transferred into your name. This is a legal requirement and should be stipulated in the contract. It is important to ensure that this clause is in the contract, in order to avoid any later disputes. If developers fail to comply, they will be punished by law – either receiving a fine or being sentenced to a term of imprisonment. However, this does not necessarily mean that you will get your deposit returned.

Contracts

The contract should further stipulate that you are entitled to request the return of your deposit if you are unable to obtain a mortgage offer, or if the developer fails to complete the build within the agreed timescale.

The VEFA commits you to purchasing the property at a later agreed date. This is the date that the legal title of the property is transferred into your name, which is not when the building works are completed, but when the property becomes available for occupation.

In the UK system, a developer must own the legal title to the land they are developing before a contract can be issued, but this is not the case with VEFAs. The developer can issue a VEFA for land that they do not currently own in anticipation of becoming the landowner. The VEFA will specify a date of transfer, and if the legal title has not passed to the developer by this time, they will be able to withdraw from the contract providing that your deposit is returned to you within a 3 month period.

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