Buying Property? Look before you sign
The expat dream is to buy a little, or not so little, stone house in France for the cost of a garage in Knightsbridge and enjoy the sunshine and still moderately low prices. In many cases, the estate agents say, couples arrive in Bergerac, fall in love again at the local bistro and buy a house on the way to the market the next day.
And in most cases, they live happily ever after.
But, must there always be a ‘but’?, a hasty purchase can lead you into a legal storm if you change your mind on day number nine. The house is not really up to your expectations, you didn’t see the cows come home (and the flies with them), Bergerac is too far from the sea.
The legal question is ‘Can I change my mind?’ Consider David and Amanda. The couple visited a nice farm surrounded with vineyards through an estate agent and signed the sales agreement, promesse de vente, or compromis for €250,000 plus €15,000 for the estate agent.
They wrote a cheque to the notaire for €25,000 as a deposit. There was a contractual condition allowing David and Amanda to first obtain a loan for €200,000 with a 5% interest rate within four months of signing the sales agreement.
If they failed to find the loan, the contract could be rescinded without losing the deposit. Four months later, David and Amanda informed the sellers that they needed another six weeks to obtain the loan. In truth, Davis and Amanda had lost their enthusiasm to purchase the house, and hadn’t even applied for the loan.
Six weeks later, the sellers ask the couple to state their position, threatening to keep the €25,000 deposit. At this stage, David and Amanda assure the sellers they still want the property and will be ready to sign within three months. They even agree to pay an extra €3,000 for the delay.
Happy again, the sellers empty their home and move all their furniture intoa new house they had bought on the basis of the sale of their old farm. Trouble is, Davis and Amanda still can’t decide. And they still haven’t approached a bank for the loan. They mistakenly believed that that if they didn’t get the loan, they would not be compelled to purchase the farm.
A year later, the sellers have finally figured out the plot and called an avocat. The avocat obtained a court decision granting the sellers the €25,000 deposit, the €3,000 payment for the delay and €2,000 in damages to cover their lawyer’s fees.
To make matters worse, the estate agent joined in and sued David and Amanda and obtained damages for €15,000. The court ruled that because the purchasers failed to take the appropriate steps to obtain the loan, the contractual condition did not apply. And therefore the estate agent was entitled to receive his commission.
In the end, David and Amanda’s indecisiveness cost them €45,000. So, before you sign, read the following:
First, you have seven days to repent! French law provides for a period of reflection of seven days, during which you can decide to withdraw from the sale. This right to withdraw must be notified to you by registered letter and you can decide to opt out within seven days after first presentation of the letter.
If you withdraw, your check must be returned to you without any question at the latest 21 days after your withdrawal (which of course, you will also notify by registered letter avec accusé de réception. You don’t have to explain. You can just change your mind.).
After this period, your only chance to pull out lies in the conditions suspensives, in English: conditions precedent. The conditions are there to protect you, but you must show good faith to fulfil them.
You can also negotiate with the seller to obtain his acceptance to withdraw from the sale. Perhaps another buyer has offered more. But, beware the estate agent is entitled to obtain his commission, even if the seller has agreed to let you out of the deal!