This article looks at the sale of a property occupied by a tenant. Only sales of property subject to a furnished or unfurnished residential lease will be dealt with here. We will therefore not be dealing with, for example, the sale of commercial premises with an existing tenant.
In the case of the sale of an occupied property, there is no problem as long as the buyer wishes to keep the occupant on the premises. In this case, no notice will need to be given to the tenant and no right of pre-emption will need to be exercised.
When the deed of sale of the property is signed, a pro rata share of the rent already paid or still to be paid will be divided between the vendor and the purchaser. The issue of the security deposit will also need to be resolved. The security deposit paid to the vendor at the start of the residential lease must be paid to the purchaser. The buyer will then subrogate the seller's rights and obligations to the tenant.
In addition, the notary will notify the tenant of the change of ownership, so that the tenant is aware that the security deposit has been transferred to him and that he will be required to pay the rent in future.
The security deposit must not exceed one month's rent (excluding charges) if the parties are bound by an unfurnished residential lease. On the other hand, if the landlord and tenant are bound by a furnished residential lease, it should be remembered that the amount of the security deposit is freely fixed. This difference can be explained by the fact that in a furnished lease, the security deposit is not limited to protecting the value of the property, but also that of the furniture.
If the owner wants to sell the property free of all occupation, he or she must ensure that the tenant is given notice to vacate the premises before the future buyer takes possession.
The tenant must therefore be given notice to vacate the premises when the residential lease expires. It is important to know the legal status of the landlord and tenant. In the case of an unfurnished residential lease, the lessor must give notice at least six months before the end of the lease. As a reminder, an unfurnished residential lease is for three years (or six years if the lessor is a legal entity).
If the parties are committed to a furnished residential lease, notice must be given at least three months before the end of the lease. The term of a residential lease for use as a principal residence is one year if the property is furnished.
Between the signing of the compromis and the final sale, it is important to make it a condition precedent that the tenant vacates the property, to ensure that the buyer has immediate use of the property. If the vendor wishes to sell before the end of the lease, only an express agreement between the lessor and the lessee will allow this. In the absence of such an agreement, the landlord cannot force the tenant to leave the property before the end of the lease.
Notice to sell
In addition to complying with the notice period as described above, a notice to sell must include certain information in order to be valid.
Firstly, it must state the reasons for the notice. In this case, the notice will state the lessor's intention to sell the property free of any tenancy.
Secondly, in order to start the notice period and for reasons of proof, the notice must be served by registered letter with acknowledgement of receipt or served by bailiff. The period runs from the date of receipt of the registered letter or service of the bailiff's writ.
Lastly, in the case of an unfurnished residential lease, the notice of termination must state the price and conditions of the proposed sale, failing which it will be null and void. This enables the tenant's right of pre-emption to be waived, as we shall see below.
It is important to note that a notice to sell will be ineffective in certain cases. For example, the landlord cannot oppose the renewal of a residential lease with a tenant who is over seventy years of age and whose annual income is less than one and a half times the annual amount of the minimum growth wage. In such cases, only a notice of termination that also offers accommodation that meets the tenant's needs and capabilities can be valid. In addition, the new accommodation offered must be located within certain geographical limits.
This exception, based on the tenant's age and resources, does not apply if the landlord is a natural person over the age of sixty, or if the tenant's annual resources are less than one and a half times the annual amount of the minimum growth wage.
The tenant's right of pre-emption
The sale of a property occupied by a tenant with a residential or mixed-use lease is likely to give rise to a right of pre-emption, i.e. the right to buy the property they occupy in preference to any other (or almost any) buyer. There are exactly three pre-emptive rights, which are quite different from one another.
The tenant's main right of pre-emption is established by the law of 6 July 1989. This right of pre-emption only applies to the sale of a property occupied by a tenant who holds an unfurnished residential lease.
This pre-emptive right arises when the landlord issues a notice to quit for the purpose of selling the property. If the future buyer wishes to keep the existing tenant, no pre-emptive right needs to be exercised.
A notice to sell issued by the landlord at the end of the lease must also be regarded as an offer to sell in order to remove the tenant's right of pre-emption. The offer must state the purpose of the sale (which must correspond exactly to the property rented), the price and the conditions of sale. If the property is located in a co-ownership, there is no obligation to state the surface area.
The notice of sale remains valid for two months. If the tenant fails to accept or respond, all title to the property will lapse at the end of the unfurnished residential lease.
If the offer is accepted within the two-month period, the tenant is given a further two months to complete the final sale. This period is extended to four months if the tenant indicates in his acceptance that he will be taking out a loan.
To be valid, the acceptance must be pure and simple. The price must be that proposed by the lessor in the offer to purchase. If the tenant accepts the offer at a lower price, his position will be considered as a refusal of the offer.
To avoid any fraudulent use of the tenant's pre-emptive right, a subsidiary pre-emptive right must be exercised if the landlord decides to sell on more advantageous terms or at a more advantageous price.
There are two other tenant pre-emption rights. They apply to all furnished and unfurnished tenancies. In addition, these pre-emptive rights can be exercised during the term of the lease, unlike the right of pre-emption under the law of 6 July 1989.
The first of these pre-emptive rights is set out in the law of 31 December 1975, and gives the tenant priority to buy in the first sale following the division or subdivision of the building into co-ownership lots.
The second was introduced by the law of 13 June 2006. This autonomous pre-emptive right benefits existing tenants in the event of a one-off sale of the entire building comprising at least ten units.
In this case, the offer to sell will only be binding on the landlord if the buyer does not undertake to extend the current residential leases for a period of six years from the date of signature of the deed of sale.
The urban right of pre-emption may enable the local authority to purchase the property for sale in order to maintain the existing occupants.
It should be noted that in the case of the sale of a property to a relative up to and including the fourth degree, these pre-emption rights do not have to be exercised, provided that the future purchaser has occupied the property for at least two years.
Written by Jérémy LOUIS / NEW DEAL IMMOBILIER Agent - Qualified notary