Where the sale in future state of completion concerns a property in the protected sector (for residential or mixed use), the preliminary contract, which enables the property to be reserved for construction, must comply with public policy standards that make it different from other promises of sale or preliminary agreements. This preliminary contract is called a "preliminary contract " or, more commonly, a " reservation contract ".
The seller is legally referred to as the "reserving party " and the purchaser as the "reservataire ".
Mandatory information in the reservation contract
According to articles R261-25 and R 261-26 of the French Construction and Housing Code, the preliminary contract must state the approximate habitable surface area of the property that is the subject of the contract, the number of main rooms and a list of utility rooms, outbuildings and corridors. In the case of part of a building, the contract must also specify the location of this part within the building.
The quality of the construction must be sufficiently established by a technical note attached to the reservation contract, indicating the nature and quality of the materials and fittings. If the contract relates to part of a building, this technical note must also indicate the utilities that are of use to the part of the building being sold.
The contract must also indicate :
- the estimated sale price and, where applicable, the terms and conditions for adjusting it
- the date on which the sale can be completed.
- where applicable, the loans that the reserving party declares that he will arrange for the reserving party to obtain or of which he will pass on the benefit, specifying the amount of these loans, their conditions and the name of the lender.
Violation of these rules is often sanctioned by the nullity of the contract.
The security deposit in the reservation contract
Under penalty of nullity of the contract, the security deposit may never exceed 5% of the sale price if the period for completion of the sale does not exceed one year. If this period is between one and two years, the deposit may not exceed 2% of the sale price. After two years, no deposit is permitted.
This deposit will generally be deducted from the first instalment of the price paid when the deed of sale is signed.
The deposit will be returned within three months if the contract is not concluded due to the seller's fault, or if the final sale reveals abnormal differences compared with the reservation contract. In addition, article R 261-31 of the Code de la construction et de l'habitation (French building and housing code) stipulates that the deposit will be returned to the person reserving the property, without deduction or penalty, in a number of different cases:
- If the vendor fails to conclude the sales contract within the period stipulated in the preliminary contract;
- If the sale price exceeds the provisional price revised in accordance with the provisions of the preliminary contract by more than 5%. This applies regardless of the other reasons for the price increase, even if they are due to an increase in the size of the property or an improvement in its quality;
- If the loan(s) provided for in the preliminary contract are not obtained or passed on, or if the amount of the loan(s) is 10% less than provided for in the preliminary contract;
- If one of the items of equipment provided for in the preliminary contract is not to be built;
- if the building or part of the building that is the subject of the contract shows a reduction in value of more than 10% in terms of its consistency or the quality of the works planned.