Once the reservation contract has been signed and the buyer has secured the necessary finance and all the conditions precedent have been lifted, the parties will sign a deed of sale before a notary.
This deed of sale can be signed before any work has begun if the seller provides an extrinsic bank completion guarantee. If the buyer provides an intrinsic completion guarantee, the deed of sale can only be signed once the foundations have been completed.
You can find out more about completion guarantees in the vefa by clicking here.
Notification of the draft deed of sale
One month before signing the deed of sale, the vendor must notify the purchaser of the draft deed of sale. This draft must be sufficiently precise and in line with the final deed of sale. This notification must enable the purchaser to check that the property they are buying corresponds to the provisions of the reservation contract and that the vendor has taken out the compulsory damage and liability insurance.
In practice, buyers are often in a hurry and want to sign as soon as they have received the project, without waiting for the one-month period to elapse. This is possible if they expressly and unequivocally waive their right to wait until the end of this period in the deed of sale.
Content of the deed of sale
Article L261-11 of the Code de la construction et de l'habitation (French Building and Housing Code) sets out a number of compulsory details to be included in the deed of sale:
- A description of the building or part of the building being sold;
- The price and payment terms;
- The delivery date;
- a guarantee that the property will be completed or that any payments made will be reimbursed if the contract is terminated for lack of completion.
In addition, the contract must contain appendices, or references to documents filed with a notary, providing useful information about the building 's contents (using plans and elevations with floor area details) and technical characteristics(specifications or descriptive note).
Where applicable, the vendor must submit the co-ownership regulations no later than the date of the notarised signature.
The sale price
The sale price must be paid in instalments as the building progresses. Payment of the purchase price is governed by legislation. Article R261-14 of the French Code de l'Urbanisme et de la Construction stipulates that payments or deposits may not exceed a total of :
- 35% of the price on completion of the foundations ;
- 70% on completion of the waterproofing ;
- 95% on completion of the building. The property is deemed to have been completed "when the works have been carried out and the fixtures and fittings have been installed that are essential for the use, in accordance with its intended purpose, of the property that is the subject of the contract. For the purposes of assessing completion, any lack of conformity with the provisions of the contract shall not be taken into account if it is not of a substantial nature, nor shall any defects be taken into account if they do not render the above-mentioned works or items unfit for use.
The balance is payable when the premises are made available. However, it may be deposited if there is any dispute as to whether it complies with the terms of the contract. Only non-substantial defects in conformity will allow this balance to be deposited.
The sums to be paid or deposited during the course of the work are payable :
- either in constant periodic instalments ;
- in successive instalments, the amount of which is determined according to the progress of the work.
If the contract provides for a penalty for late payment, the rate may not exceed 1% per month.
It is possible to stipulate in the contract that the price may be revised. In this case, the revision can only be calculated on the basis of the change in a national index for all building trades measuring the change in the cost of production factors in the building industry and published by the minister responsible for construction and housing (BT 01 index). The revision may not exceed 70% of the change in this index.