Just three months after the ALUR Act came into force, on 22 July the French National Assembly adopted an amendment authorising the government to take any measure by ordinance to amend the Act, in particular to streamline the formalities of property transactions. Continuing with the same backward-looking approach, we should also point out that the so-called Pinel Act of 28 June 2014 has already ousted certain provisions of the ALUR Act.
This step backwards can only be encouraged. Since the law passed by the former Minister for Housing and Territorial Equality, Cécile DUFLOT, the deadline for selling a property in a condominium has been extended by one month. Furthermore, this reform, which demonstrates the former minister's total incompetence, opens up numerous legal loopholes that call into question the security of contracts. Finally, Cécile DUFLOT has undermined the credibility of a party defending a cause of great importance, namely the environment, by introducing a law that glorifies waste! A testament to a politician whose upward mobility is matched only by her incompetence, buyers are sometimes sent over a thousand pages of information to serve their 7-day cooling-off period.
The ALUR law is a real legislative disaster on many levels, and it's time to turn back the clock. When there is a transport strike, the cost of slowing down the economy is often quantified. In the same vein, it might be interesting to make a similar estimate for this type of legislation, which is extremely time-consuming and certainly slows down the growth of a country that is already short of growth.
To understand this reconsideration of the law, we need to look at what it has initially changed. We will confine ourselves here to looking at the ALUR law from the angle of co-ownership lot transactions.
The ALUR Act and co-ownership
The approach of the ALUR law is to inform the purchaser. To do this, it will swamp the buyer with information that is sometimes totally unnecessary, at the risk of causing him to miss out on important information.
This law has an impact on the sale of a co-ownership lot right from the advertisement stage.
At this stage, the potential buyer must already be made aware of the following information
That the property is co-owned;
the amount of annual charges. This is perfectly normal, which is why, in the vast majority of cases, this information is already included in the advertisements;
The number of lots in the co-ownership... But why this information? It might be interesting to have this explained to us. Moreover, the ALUR law provides for the buyer to be given an explanatory note on co-ownership at the time of sale, so that he is aware of his rights and obligations (this measure is still awaiting an implementing decree). Perhaps the government itself needs an explanatory leaflet. In concrete terms, the advert should state the number of lots in the co-ownership, whether it's a cellar, a parking space or a five-room flat. This information serves no purpose. It would have been more sensible and interesting to show the co-ownership percentages attached to the lot sold. In this way, the buyer would know how much of the co-ownership he or she owns. If the lot sold has 250/10,000ths of the common parts, the buyer knows that in the event of work costing €10,000 on these parts, he will have to pay the sum of €250. This would have been more appropriate than simply stating the number of lots;
If the syndicate of co-owners is the subject of proceedings under articles 29-1 A and 29-1 of the law of 10 July 1965, i.e. if the financial equilibrium of the syndicate of co-owners is seriously compromised or if the syndicate is unable to provide for the conservation of the building.
In addition to this information provided in advance, the ALUR law requires a large number of documents to be appended to the preliminary sales agreement, the majority of which are needed to serve the 7-day cooling-off period for purchasers.
In addition to the technical diagnostic file, the following documents must be attached to the preliminary contract of sale:
1) The co-ownership regulations and the descriptive statement of division (EDD), as well as any deeds amending them, if they have been published; This is the main problem with the ALUR law. Without going into the potentially disproportionate number of pages, this provision easily opens up legal loopholes, as it is difficult in some cases to be exhaustive and attach all the documents. All the more so as the law makes no distinction between amendments to the descriptive statement of division relating to the lot sold, and other lots. For example, in a co-ownership dating from the 1960s with 250 lots, a very large number of amendments to the EDD may have been made, particularly to lots not affected by the sale. All of this information must be notified to the buyer, who could care less that the two ground-floor studio flats were joined together in 1972, when he or she is buying a 3-room flat on the fourth floor! It should be noted that some changes to the EDD are made at the time of a property sale, which makes it even more difficult to obtain this document.
2) The minutes of the general meetings held over the last three years. In practice, it was not uncommon for buyers to obtain these documents long after they had signed the preliminary contract. That's why, to protect the buyer, the compromis or promesse stipulates that any works that have been voted on remain the responsibility of the seller, whether or not they have been carried out. This ensures that the buyer has no unpleasant surprises. However, this provision of the ALUR law is a good idea, as the minutes of the general meeting can inform the buyer of any problems within the co-ownership, such as the existence of a procedure or works that have been put on the agenda but not yet accepted. What's more, if the preliminary contract makes no provision for this, the legal rules will apply, i.e. the person liable for the cost of the works will be the owner at the time they fall due.
These reports therefore provide the buyer with the necessary visibility.
3) The amount of current projected budget charges and charges outside the projected budget paid by the selling co-owner for the two financial years preceding the sale. Once again, this is an essential provision to ensure that the buyer is fully informed before making a final commitment.
4) The sums that may still be owed by the selling co-owner to the syndicate of co-owners and the sums that will be owed to the syndicate by the buyer. This information does not need to be provided to the purchaser if the syndicate of co-owners has fewer than ten lots for residential, office or commercial use, and its average projected budget over a period of three consecutive financial years is less than €15,000.
5) An overall statement of unpaid charges within the association and the debt owed to suppliers; as previously, this document does not have to be submitted if the association has fewer than ten residential, office or retail units and its average budget over a period of three consecutive financial years is less than €15,000.
6) Where the syndicate of co-owners has a works fund, the amount of the share of the works fund attached to the main lot sold and the amount of the last contribution to the fund paid by the co-owner of the said lot.
7) The building maintenance log ;
Other items are supposed to be brought to the attention of the purchaser, but are currently awaiting decrees before being appended to the preliminary contract. These include
- The co-ownership summary sheet; this is a summary document produced by the syndic, the content of which is to be specified by decree. This is a good idea if it means that some of the documents that must be attached to the preliminary contract can be avoided. In fact, by trying too hard to inform and infantilise purchasers, the legislator is misinforming them. The mass of documents is so great, particularly with ESDs that have no bearing on the buyer, that there is a risk of the buyer missing out on crucial information. A document summarising the financial, material and legal information on the co-ownership would be useful for the buyer, who would be able to see the important points at a glance, without having to sort through a 500+ page book!
- A certificate stating the surface area of the private area and the living area of the lot or fraction of a lot. The legislator wants to create a new habitable surface area, different from the Carrez surface area or the habitable surface area for rental properties. This provision will not inform the purchaser, but rather confuse him. There are far too many different methods of calculating surface areas to make it easy for buyers to understand.
- Information on the rights and obligations of co-owners and the workings of the syndicat de copropriété. This is either a misplaced disavowal of the government's position towards property professionals, particularly notaries, or an admission of incompetence in the face of the disaster that is the ALUR law. What's more, how much will this kind of superfluous document cost the taxpayer?
- The overall technical diagnosis provided for in article L. 731-1 and the multi-year works plan provided for in article L. 731-2.
It should be noted here that the information leaflet, the overall technical diagnosis, the multi-year plan and the building maintenance booklet are not among the documents required to purge the withdrawal period for non-professional purchasers of a property.
What should be changed in the ALUR law
The government has therefore been authorised by the National Assembly to amend the ALUR law by ordinance, with the aim of facilitating the sale of a property in co-ownership. The following should be affected
- The terms and conditions for informing purchasers, as set out in articles L. 721-2 and L. 721-3 of the Code de la construction et de l'habitation, with regard to the annexes required to purge the purchaser's right of withdrawal, and their scope;
- The procedures for bringing into force the measures set out in b of 1° of article L. 721-2 of the same code, i.e. attaching the co-ownership regulations and the descriptive statement of division to the preliminary contract, as well as the deeds amending them, if they have been published;
- Obligations to mention surface area and surface area in promises or deeds of sale of a co-ownership lot, to ensure harmonisation;
Among the first changes, the co-ownership regulations and the descriptive statement of division, as well as any deeds amending them, should be removed from the documents to be appended to the preliminary contract in order to purge the buyer's cooling-off period.
I hope that this approach will be pursued.