Reserving your home

In France, purchasing a home you can’t visit yet doesn’t mean buying “sight unseen.” Au contraire! This kind of “off-plan” or “sale on completion” transaction – known as a VEFA sale (for Vente en l’Etat Futur d’Achèvement) – is tightly regulated by Articles L.261-1 et seq. of the French Building and Housing Code. After choosing your house or apartment, the developer will ask you to sign a reservation agreement giving you the first opportunity to purchase the home when it is completed. You have to pay a deposit equivalent to 5% of the purchase price if the contracts are to be exchanged within one year after the order agreement is signed. If the home will take between one and two years to build, the deposit is lowered to 2%. No deposit is required if the home is expected to take more than two years to be completed. The deposit is paid into an escrow account opened by the notaire (real estate attorney).
Once you have been notified by registered mail with return receipt that the preliminary contract has been signed by the seller, you have a seven-day “cooling-off” period, during which you can withdraw from the purchase without any penalty. If you proceed, you will then have to make progress payments that are defined according to a very precise schedule: 35% of the total price when the foundations are completed, 70% of the total when the property is weatherproof, 95% of the total on completion of construction. The remaining balance is paid when the property is delivered and contracts are exchanged.

The order agreement specifies the surface area, the number of rooms and dependencies. It includes a technical description of all fixtures and features, including both the shell and finishings, as well as the construction materials used. It specifies the sales price and the date on which the contracts are to be exchanged.

Note that if you are financing your property with a loan, the preliminary contract contains certain conditions precedent (clauses suspensives) enabling you to withdraw from the purchase and recover your deposit should you fail to obtain the loan. The deposit is also returned if any of the fixtures or features stipulated in the contract are not delivered.

Signing the deed of sale

The second important step in your purchase is signing the deed of sale, or acte de vente, witnessed by the notaire. The notaire will send you the deed a month prior to the signature date. Read it very carefully. While often lengthy and complicated, it provides details on the property’s compliance with the terms of the order agreement. It identifies the lot, describes the apartment or house in detail, and contains information on the condominium property rules, your ownership interest in communal areas, the price and terms of payment, the delivery timetable, etc. On the signing date, the seller must also give you a dimensioned plan of the housing unit and a copy of the condominium rules. Remember that the final contract must include guarantees covering reimbursement or completion. VEFA contracts call for progress payments that you make as work advances to the next stage of completion.