Off-Plan Property Purchases in France: What You Need to Know

I have seen a building project which interests me for a flat purchase ‘en plan‘. Are there risks involved in buying in this way?

Purchasing property off-plan, or VEFA, can be attractive to buyers who wish to spread the cost of the purchase over a longer period, as only a 5% deposit is due on the reservation, with the balance payable in stages as and when the construction progresses. Also, the Notaire’s fees payable on legal completion are much lower and range from 2-3% as opposed to the usual 7-8%.

Off-plan apartments are typically built to a high standard with the use of modern equipment and the latest technology, and buyers can customise fittings and the layout to match their personal preferences, albeit at an additional cost. The developer must also adhere to strict energy efficiency standards, resulting in lower energy costs.

However, whilst the developer has a general duty to deliver the property as described, the deed often allows a departure from the technical specification in certain circumstances. There is also a permitted 5% tolerance from the plans as to the apartment’s surface area, and the commercial brochure has no contractual or legal value.  It is, therefore, important for any agreement between the buyer and the developer to be clearly stated in the deed.

The buyer is advised to attend the handover meeting in person, where a list of all snags will be made; the developer will have one month to rectify these.

The buyer will also have the benefit of the ten-year structural warranty for major structural defects and the benefit of other warranties for defects or defective equipment, although the timescales for reporting such defects are much lower.
One downside is that the timescales for completion of the development can often slip, and the buyer has little choice but to accept the situation if the delay is caused by an unforeseen event (force majeure) or any other justified reason, such as bad weather, strikes, unplanned additional works, delays in the supply chain etc. This may result in the buyer being unable to honour its commitments, for instance, under a rental agreement, if the apartment is not ready by the starting date.

Finally, one major risk is that the developer becomes bankrupt during the construction phase, and the buyer will be wise to check that the developer has obtained the necessary financial backing (GFA / Garantie Financière d’Achèvement) from a bank or financial institution to ensure that the development will still be completed in such a situation.

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If you have any questions or would like advice on creating a French Will, cross-border estate planning or buying/selling a French property, please get in touch with our specialist French Legal Services team through this website or by calling 0330 404 0768.