Thursday, October 25, 2012

Vices cachés

The concenpt of 'vices cachés' (hidden defects) can be troubling for both buyers and sellers of French property. Vendors may be worried they will be later pursued for defects in a property they have sold which unwittingly contains 'vices cachés', while dissatisfied buyers may try and seize on this possibility as an excuse for litigation. However, French law and jurisprudence are fairly clear on the matter.

- In order for a buyer to establish a case of 'vice caché' he would need to prove that the vendor acted in bad faith and deliferately concealed the presence of a fault or defect of which he was aware. The vendor cannot be held responsible for defects in a property of which he was not aware.

- Nor can the vendor be held responsible for defects which are obvious or visible - they become 'vices apparents' rather than 'cachés'. The vendor cannot be held responsible also for defects accepted and agreed by the buyer at the time of purchase.

- French courts have ruled that a 'serious buyer' should take all reasonable steps to assure himself that the property he wishes to buy is free of defects, for example by employing an expert or surveyor to examine and report on the state of the property.

- Any legal action started by a dissatisfied buyer must be within a 'bref delai' - failure to act promptly may persuade the courts that the buyer accepted a 'vice caché' and this his claim is frivolous.

- French law also talks of 'vice grave' - serious defects which prevent the normal use and enjoyment of a property. As with all claims for damages, a litigant must establish a (financial) loss resulting from the fault about which he is complaining.

- It should be borne in mind that purchase agreements stipulate that the buyer accepts the property 'in the state in which he finds it' and the onus is upon him to satisfy himself about the state of the property before commiting to purchase.

- In the case of new-build properties, they are covered by guarantees and insurances against defects, which will be witten into the purchase contract. 

Thursday, October 4, 2012

Tax on sale of second homes - update

Since I posted the information below, the French government of François Hollande has announced that it is studying the question and - 'in the interests of getting the property market moving again' - may introduce proposals some time in 2013.

There is some talk of shortening the 30 year 'no CGT' ownership period to 22 years, and possibly lowering the capital gains tax threshold. However the government's vague talk of reforms has had the opposite effect - instead of stimulating the market, more second home owners are sitting back and waiting to see if they will pay less CGT on sale some time after 2013.

Finally, a reader has pointed out that in my earlier post I omitted to mention that non-EU owners of second homes pay even higher rates of CGT than French and EU nationals, totalling around 50%.

French Property News, October 2012

In this month's issue I have looked at the option of investing in furnished buy-to-let properties in France. This can be an attractive option, using secure annual rental agreements, compared with letting unfurnished long-term or relying on seasonal holiday rentals (a market that is dying in some areas due to the growing popularity of modern campsites featuring chalets and all facilities).

Short-stay furnished studios and small apartments located in city centres appeal largely to single people who may be mature students or on temporary assignment for their employer. They are prepared to pay higher rentals for attractively furnished properties, and there is less risk for the owner than may be the case with long-term unfurnished rentals, where tenants have rights of security of tenure backed by French law.

I have drawn a number of illustrated examples of before and after property conversions in Paris and Lyon, undertaken by Elise Franck, who has witten a book on the subject and has an interesting website ( which includes actual costings - purchase price, fees, conversion costs, rent charged and rate of return, as a useful guide for anyone thinking of investing in this type of French property.