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Off-plan purchase (‘VEFA’)

Off-plan purchase allows you to become progressively owner of an apartment or a house in a house area as the building goes along and to pay its price depending on the progress of work.

Definition and legislative framework

Almost all new buildings are sold off-plan.
The interest for the developer is to finance the operation with the funds paid by the purchasers. The construction is actually launched once the sale has achieved 30% or 50% (necessary percentage for the developer to obtain financial guarantees).

According to Article 1601-3 of the Civil Code
‘A sale in a future state of completion is the contract by which a seller transfers at once to the buyer his rights in the ground as well as the ownership of the existing structures. The works to come become the property of the buyer as they proceed; the buyer is bound to pay the price of them as the work proceeds. The seller keeps the powers of a building owner until approval of the work.’

The off-plan transaction takes place in 3 phases

The signing of the reservation contract,
The signing of the final sale contract,
The delivery of the property.

The reservation contract (or preliminary contract)

The reservation contract commits the developer to book an accommodation for the purchaser if the development has been launched. It already determines the conditions under which the sale will take place.
This contract may not be a deed (signed in front of a notary) but the presence of the purchaser’s notary is recommended.

Contents

The compulsory mentions (under penalty of the agreement being declared null and void) provided under articles R261 and R261-25-26 of the Construction and Housing Code include:
  • The living surface, the number of principle rooms, passages and outbuildings,
  • The situation of the property in the building (floor, building) or of the house in the house area,
  • The quality of the construction (description of the nature and the quality of materials used),
  • The description of the equipment,
  • The description of the collective elements and their conditions of use,
  • The price,
  • The date when will be signed the sales contract at the notary’s office,
  • The deadline for executing the work.
The contract may also contain special clauses precedent:
  • Relating to obtaining a loan (in case the loan is refused, the deposit will be refunded to the purchaser),
  • Relating to the purpose of the building (ex: lack of commercial premises).
The seller may make complementary commitments to those provided by law. Since they are mentioned in the reservation contract he must absolutely respect them (and even if those commitments are no longer mentioned in the final sale deed).
The price indicated in the reservation contract can be shown in three different ways:
  • Firm and final. This formula is the safest (but also the rarest) because it is without any surprise.
  • Projected. In this case, the final price may be higher than that stated in the reservation contract but the purchaser has then, under certain conditions, the option not to proceed with the transaction.
  • Revisable. The price may be increased without exceeding 70% of the variation of the National Building index (BT01). This index is published monthly in the Official Gazette and available on the website of the French Building Federation.
It is quite possible to write in the reservation contract itself changes requested by the purchaser in order to customize the property as well as the impact of these changes on the property price.
The seller commits to book accommodation to the buyer in exchange of a security deposit paid by the purchaser, it is not a sale commitment. The seller does not undertake to build, or to comply with the program provided in the reservation contract.

The deposit

The amount payable depends on the period of time forecasted between the date of the reservation contract and the signature of the final sale contract.
The amount cannot exceed the following limits:
  • 5% of the price when the period is less than one year,
  • 2% if this period is between one and two years,
  • Beyond this period, no security deposit may be requested.
The seller may not charge more than the limits set by law at the risk of criminal penalties.

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