Tuesday, June 30, 2009

Property buying: the 'compromis'

Part of the French property buying process involves signing a pre-contract, known as the compromis de vente. This is very like the final sales agreement you will eventually sign before a notaire handling the transaction and in the presence of the other parties or their representatives. However, the compromis is different in that, although it commits you to the purchase and the vendor to the sale, it allows the buyer to withdraw from the sale subject to certain conditions.
The first level of protection for the buyer is the seven-day 'cooling off' period, introduced as part of the law protecting consumers from high pressure selling at home. This is applied in the case of the compromis for seven days after receipt of the document, signed by buyer and seller, which is sent by recorded post to your home address in France or elsewhere. At this stage you have seven days for reflexion and can cancel the deal by notifying the agent or notaire promptly of you inention not to proceed.
The compromis also allows you to introduce certain conditions attached to the sale, one of which can be - if you are not payng cash - that the sale is subject to your obtaining a loan or mortgage. Such a clause, known as a clause suspensive effectively allows you a further six weeks or so to arrange a suitable mortgage. If funds are not forthcoming, you can withdraw from the sale without penalty, provided you can demonstrate due diligence in your effors to find a loan.
Other clauses might include that the deal is subject to a satifactory survey or obtaining planning permission. Both parties have to agree to suspensive clauses, and not all vendors are happy with sales subject to your obtaining a loan (because of the additional delays and uncertainty) and would probably reject a clause saying that the deal relied on your selling another property - such as your home in Britain - again due to the undertainty and risk involved.
The compromis can be prepared either by an estate agent handling the sale or the notaire. An initial deposit is usually asked for at this stage but it is not obligatory. If a deposit is paid, it would be refunded if the sale does not proceed, for example if one of the suspensive clauses was not met.
Attached to the compromis will be a number of documents including the report of the expert surveyor (known as the expertises) covering things like asbestos, lead, termites, state of gas and electrical installation etc which the seller has to have done (and pay for) when putting the property on the market. For properties located within a co-ownership building, such as an apartment, the reports include confirmation of its official dimensions (known as the surface loi Carrez). These will also be attached in due course to the final sales act.
It is advisable at this stage also to have copies of the latest meeting of the co-owners, to see what has been voted for - such as external painting or major repairs - as the new owner will inherit the cost, as well as the benefit, of these. You can read more about this subject under the heading The Syndic.
Note also that an initial offer to buy or sell, whilst being little more than a statement of intent by both parties to proceed to the next stage - the preparation of the compromis - has in some cases been ruled as a binding document. It is unwise therefore to sign an offer unless you really intend to proceed and certainly never sign several offers, in the hope of 'reserving' a property or several.
Finally, sellers should note that the seven-day reflexion period and right of withdrawal applies to buyers only.