The Compromis de Vente…When Both Buyer and Seller are Mutually Committed

It’s August, it’s hot and everyone is on vacation. It’s easy to understand why the entire country virtually shuts down for the month…you can’t accomplish anything anyway, so what’s the point of working? You might as well join ’em rather than fight ’em and just go with the flow. We are likely to officially close our own offices for one week in August next year for this very reason, so stay tuned about that and try to avoid making moves to France between July 15th and August 31st, or getting much of anything accomplished, especially looking for property!

You may have read in previous Nouvellettres® that I’ve been in the process of purchasing an apartment in Nice ever since signing a “Compromis de Vente” in May. No, we haven’t closed the sale yet, even though so many months have passed, because of the questions surrounding the responsibility of the seller and the Copropriété for the leaks caused by the terrace in the past.

There are two types of pre-sale agreements when you purchase a property in France: 1) a “Promesse de Vente,” where the seller reserves a purchase option for the buyer in return for a fixed sum and 2) a “Compromis de Vente,” where both parties make a formal commitment to conclude the sale. In practice, the difference between the two pre-sale contracts is minimal, and it depends on whether they are signed before a notary or a real estate agent.

We NEVER recommend signing either of these documents with a real estate agent and ALWAYS with a Notaire for your own protection. We also find that in Paris, the document is almost always a Promesse, whereas in Nice and elsewhere in France, it’s usually a Compromis.

With my current purchase situation, it’s a Compromis de Vente, and that means we are both obligated to see through the purchase/sale, the seller and the purchaser. Should one of us default, 10% of the purchase price would be obligated to pay the other. This is the reason that the Notaire holds 10% of the purchase price in an escrow account from the signing of the pre-sale agreement provided by the buyer. When the amount is significant, often the seller will agree to holding only 5%, but should one party default, they are still “on the hook” for 10%.

Translation: RECIPROCAL DUTY TO INFORM “Pursuant to article 1112-1 of the French Civil Code, which imposes on the parties a pre-contractual duty to provide information, which does not, however, relate to the price, the SELLER declares that he has brought to the BUYER’s attention all information in his possession which is directly and necessarily related to the content of the present contract, and which could be of such importance as to determine the BUYER’s consent. This duty applies to all information on the legal, material and environmental characteristics relating to the PROPERTY, as well as to its use, of which he has personal knowledge by himself and by third parties, without such information being limited in time. The SELLER acknowledges and agrees that any failure to comply with this duty will result in the SELLER being held liable, with the possibility of cancellation of the contract if the SELLER has vitiated the BUYER’s consent. In the same way, the BUYER declares that he has fulfilled the same commitments, any breach of which may be sanctioned as indicated above. The duty to provide information is thus reciprocal. Furthermore, in accordance with the provisions of article 1602 of the French Civil Code, the SELLER is required to clearly explain what he is obliged to do, any obscure or ambiguous agreement being interpreted against him. The PARTIES attest that the decisive information known to them, given and received, is contained herein.”

As it seems that I am prone to having more issues with my property ventures (and adventures) than any of our clients (!!), this one seems to be no different. Thanks to our Nice Notaire, Carole Vangioni, she made a point of addressing the issues with the terrace of the apartment which started years ago leaking into the neighbor’s apartment below. The seller’s agents tried to “whitewash” the problem in order to get the final “Acte de Vente” (deed) signed quickly, but Maître Vangioni refused to ignore the issues and wrote into the Compromis de Vente that they were the responsibility of the seller, not me, the buyer and must be addressed. The seller agreed to this.

The Syndic (managing agent) was called in and hired experts to flood the terrace to determine where the leaks were coming from. If coming from the structure, it would be the responsibility of the “copropriété” (co-owners). If coming from the surface of the terrace, it would be the seller’s. The seller made the mistake of canceling his insurance when he put the property on the market—which is actually illegal. Under French law, having “assurance responsabilité civile” (civil liability insurance) is mandatory to cover damage caused to others or their property. This coverage is included in all our home and contents policies and serves as the minimum insurance requirement for property owners, including landlords, as well as tenants. And because of the lack of insurance, the risk for me as the buyer became even greater.

Translation: STIPULATION DE PENALITE “In the event that all conditions relating to the execution of the present contract are fulfilled, and in the event that one of the parties does not regularize the deed of sale, thereby failing to meet the obligations then due, it shall pay the other party the sum of XXX (XXX EUR) by way of damages, in accordance with the provisions of article 1231-5 of the French Civil Code. The judge may moderate or increase the agreed penalty if it is manifestly excessive or derisory; he may also reduce it if the commitment has been performed in part. Except in the case of definitive non-performance, the penalty is incurred only when the debtor is put in default. The present penalty stipulation may not, in the same hypothetical case, deprive either party of the possibility of suing the other in execution of the sale.”

The experts reported that the leaks were the fault of the building and not the seller’s surface materials, letting him off the hook of responsibility. The “ravalement” (resurfacing) of the building is scheduled for the fall, so the repairs can be made at that time, but in order for me to confidently sign the deed, Maître Vangioni wants written proof and acknowledgment from the Syndic. Again, this is in the interest of protecting me as the buyer. I certainly don’t want to inherit problems that I didn’t cause!

All this took quite a bit of time and even more time because of summer vacation. Normally, these requests wouldn’t be too much to ask, but in the height of the summer season, the Syndic is on vacation…of course! There is nothing we can do until they return to their desks and issue the proper documents. It is not under our control.

Meanwhile, the seller is annoyed by the delays and is trying to “force my hand” by accusing me of defaulting from the purchase because it has exceeded the 90-day closing stipulation in the pre-sale agreement, meaning I would owe the seller the 10% default amount. But, he’s defaulted, too, because he has not satisfied the requirements of the pre-sale agreement to provide the necessary documentation. So, it’s a funny kind of stalemate. And regardless of who is at fault, he can’t sell the property and I can’t buy it until this is resolved.

This is where we stand at the moment…in no man’s land. And because it’s August and many are on the beaches or hiking in the mountains, we can do nothing but play it out and see how it all unfolds.

The morals of the story are to 1) lower your expectations of accomplishing much of anything in the summer in France, 2) have patience because everything takes time in France, 3) be sure to work with buyers’ agents (such as us!) who will protect you from the sellers’ agents who will do just about anything to make their sale, and 4) be sure have a good Notaire representing you who will legally ensure your protection.

This is the main reason you should not be making a purchase in France on your own. The sellers’ agents only care about making the sale. They do not care at all what risk they pose the buyer, and there are things you cannot know without the assistance of professionals. A good Notaire is also crucial, but the Notaires are not designed as advisors. They are trained to process the transactions and ensure the legality of the documents. I’ve made my own mistakes in the past, even with qualified Notaires, because at the time, I didn’t have a “me” to protect me. Don’t make the same mistake.

We say you “don’t know what you don’t know” and we know what you don’t know. So trust in that, because our only goal is to protect the buyer—you—and that means everything.

Stay tuned for the rest of the story…coming soon (hopefully).

A bientôt,