Buying a flat in a block of apartments
The management and running of flats in France is strictly laid down by the law which provides a safe and efficient means of regulating the rights and obligations between the owners. Under the co-ownership system you become the owner of your flat and the co-owner of the fraction of the common parts attributable to your flat (as stated in the “Etat Descriptif de division”).
The co-ownership scheme is governed by two important documents, the Règlement de Copropriété and the Etat Descriptif de division (which should be read and understood before purchasing the property).
The building is managed by the co-ownership manager (syndic de copropriété) appointed by the co-owners during the Annual General meeting (Assemblée generale des copropriétaires). During such meeting, the co-owners must also approve the budget and agree on any work to be carried out.
The Syndic is responsible for dealing with insurance, recruiting any personnel, dealing with maintenance contracts and obtaining quotes for repairs. In addition, the Syndic is responsible for the accounting side and issues demands for payment of the service charges.
The Syndic must report to the Conseil Syndical which members are appointed each year by the Annual General meeting (Assemblée generale des copropriétaires). It is important to be involved in the management of the building by becoming a member of the Conseil Syndical in order to defend your and the co-owners’ interests against the Syndic’s decision. It is also important to organize from time to time, in conjunction with the Conseil Syndical, a due diligence in order to make sure that the co-ownership is managed properly by the Syndic (and especially that the monies paid to the said Syndic are used in the most efficient manner). More information re those due diligence can be provided by with one of our bilingual French Lawyer.
If you are buying a flat in the co-ownership scheme, there is additional information that it important to see (prior to the signature of the compromis de vente), such as the last three years accounts and the minutes of the last General Meeting of the co-owners minutes. Those supplied by the vendor (or the syndic), will provide you with relevant information such as the level of the current services charges, the sinking funds (“fonds de roulement” or “avance de trésorerie”), if significant building works in the property had been voted, etc.
Please note that the sinking fund (“fonds de roulement” or “avance de trésorerie”) which has been established during the vendor’s period of his/her ownership will have to be reimbursable by the purchaser to the vendor at completion. Unfortunately, this figure is often only revealed very late in the transaction just prior to completion and can represent sometimes a significant sum to pay. You are therefore advised to enquire such information to the syndic at an early opportunity.
This law provides also that a vendor must guarantee the surface area of the flat and, in this regard, he/she must provide with a certificate (Certificat loi Carrez) which states the exact surface of the property. This is quite important as if the agent has advertised a flat for a particular surface area and you subsequently receive a certificate which states that the property has a significantly less area, you may wish to renegotiate the price. This is often the case with apartments where the surface area has a direct bearing on the value of the property.
Buying a property off plan ("Vente en l'État Futur d'Achèvement" or VEFA)
The procedure of buying a property off plan is quite different and sometimes hazardous. As such, as purchaser, you need to be aware of the many uncertainties that you could face at some stage in the process. As such, many things must be checked before buying this kind of property, such as the details of the vendor (Is it a company and if so is it properly registered? Has he got a good track record for building quality constructions? Has he any financial guarantees, so he will be able to start and complete the project? Etc.) as well as details of the specifications of the constructions so you have a precise idea of the property you are buying, especially with respect to the quality, etc. etc. etc.
Fortunately, there are a number of guarantees provided by law which strictly determines the contents of the reservation contract and the purchase deed. As such, legal assistance is highly recommended to make sure that the reservation contract you are signing complies with the regulation.
As a purchaser, you will benefit from a number of guarantees, the most important of those guarantees are:
- Garantie d’achèvement: this is a guarantee given by the developer/vendor that the property will be completed. This can either be supported by an independent bank guarantee (garantie extrinsèque) or will be provided by the developer themself (garantie intrinsèque). Please note that the better guarantee is the garantie extrinsèque;
- A 10-year warranty against structural defects;
- A 2-year warranty against defects which do not affect the structure. This mainly relates to equipment like plumbing or central heating;
- Assurances Dommages-ouvrages which is an compulsory insurance subscribed by the vendor so that in the event of a valid claim being made, you do not have to prove the liability of the developer/vendor. The Insurance Company will then seek to recover from the developer/vendor any payment made to you in settlement of your claim.
So, it is important that you make your own enquiries and do not just rely on the developer’s agent.
Particularity of the reservation contract
Strictly speaking, the reservation contract is in fact a right of preference to purchase the property rather than a pre-contract of sale (such as the “compromis de vente”) And for these reasons, the reservation contract must contain an amount of compulsory information, such as the description of the property, the composition of the building (detailed in the notice technique), full plans, instalments of the price to be paid, date of completion scheduled (and penalty for late completion), etc.
With regard to the deposit, this is limited to either 5% of the total price if construction is to be commenced within one year or 2% if it is to be commenced within two years. Please note that no deposit should be requested if the construction timetable for the start of building exceeds two years. Payment must be made to a stakeholder account. If you withdraw from the purchase due to one of a defined number of circumstances, such as failure to obtain a loan, then the deposit will be returned to you without any penalty. In all other circumstances, if you decide not to proceed with the purchase after the seven day cooling off period, then you will forfeit your deposit. You will not be liable beyond this for any further losses incurred by the vendor.
If the property to be purchased forms part of a larger building development, then provision should be made for the maintenance of the common parts and in that event, the reservation contract will normally refer to a Règlement de copropriété which will be drawn up for completion. In such a case, the property is under the co-ownership scheme (please refer to our section “buying a property in a block of apartment" for more information).
New build legal completion
The draft purchase deed (acte authentique) should be supplied at least one month prior to completion. Again the content of this document is defined by law and should include the description, price, method of payment, payment provision to be made at completion and the guarantees that will be given on completion.
The completion document also contains information as to whether you are making a cash purchase or are financing with a loan. It should include the details of the financing of the project by the developer and the specifications of the building to be constructed, including the layout, the technical specifications and a copy of the co-ownership rules and regulations.
The completion document will specify the stage payments which will be payable as the work is completed (for example 35% may be payable on completion of the foundations, and a further 35% on the building becoming watertight).
You will become the owner of the land and the building on the date of completion, whatever the stage of construction reached. At completion itself, the Vendor can only require to be paid the amount which equates to the stage of completed construction at that time. You will subsequently become the owner of the works as they are completed. The stage payments following completion will be requested directly by the developer/vendor, supported by an architect’s certificate.
When the building is finally finished you will be required to inspect the property and sign a procès-verbal de réception, a document acknowledging your acceptance of the building (a similar document will be signed for the communal parts by the syndic on behalf of all the co-owners). Please note that the final payment (usually 5%) should be NOT be paid before attending such a meeting (even though you are requested by the developer to do so).
The procès-verbal de réception triggers the guarantees mentioned above which will take effect from that date.
You should make arrangements to personally visit the property for the snagging list to be prepared at the handover meeting. You should even be represented by a French professional during this meeting as to ensure that nothing is missed. The procès-verbal will often be appended with a snagging list (for work to be completed). The final payment should NOT be released to the developer until remedial work has been completed to your satisfaction and in accordance with the descriptive notice you originally signed (you are entitled by law to hold this final payment until the remedial works as detailed in the snagging list have been completed).