Tough Choices, But All Are “Nice”

Earlier this week, our Search Consultant and I trekked all over the “Quartier des Musiciens” and the “Carré d’Or” in Nice visiting about 10 properties with our clients – an American woman living and working in Munich and her Portugese partner. They want to purchase the usual home-away-from-home apartment that is wonderful for their own usage, but rentable and revenue-generating to make it pay for itself. It’s the typical scenario we see time and time again. She’s from Miami and is missing the sun and surf that her hometown offered while living in the cold/wet climate of Munich, hence Nice is the perfect answer for them.

Two weeks before their arrival here in Nice this week, we had found a great apartment for them on rue Berlioz in the Quartier des Musiciens on which they made an offer and it was accepted, all “sight unseen.” It’s something we do regularly – make the offer on behalf of the client to “tie up the property” because we don’t want a great property to pass through our fingers just because the buyer isn’t present. They then planned to come to Nice to verify the purchase and while in town, visit other comparable properties to justify the purchase of this one.

Timing is everything and time is what you have in France thanks to all the consumer protection laws in place. When you make an offer on a property in France, it’s an informal process when an agreement is reached, in writing or verbally. Even an offer on a napkin can do, but once the two parties have agreed, the Notaires get involved to amass the documentation for a formal signing of the pre-sale agreement: a “Promesse de Vente” (mostly used in Paris) or “Compromis de Vente.” This can easily take several weeks during which there is still no formal signed written agreement.

The “Promesse de Vente” and “Compromis de Vente” are two types of preliminary contracts or pre-sale agreements that differ slightly. The Compromis de Vente involves both parties, the buyer and the seller. Legally speaking, the parties are in agreement on the principle, the property and the price, and that it is “worth selling.” Only the practicalities of the operation remain to be discussed (article 1589 of the Civil Code). The Promesse de Vente, by comparison, commits the owner to the potential buyer (known as the “beneficiary”) to sell his/her property at a certain price. The purchaser thus benefits from a privileged right for a fixed period of time for the final “closing” (generally two to three months) or “Acte de Vente.” The seller can not retract the sale in this case, but the buyer can, within a 10-day cooling off period after the signing of the pre-sale agreement.

This operation allows the person interested in a property, but not certain to be able to acquire it (delay, obtaining a loan, etc.) to ask for an “option.” Both agreements are signed before a Notaire. Both require a deposit of 5% to 10% held with the Notaire on deposit and both benefit from the “délai de rétractation” or cooling off period (Article L. 271 -1 of the Construction and Housing Code). With the Compromis, the buyer can force the sale via the courts, but with the Promesse, the buyer can sue the seller, but the results differ depending on the time of withdrawal. Why Paris, specifically,  exercises a Promesse de Vente, while all other parts of France generally use the Compromis de Vente, is a mystery, at least to me.

The clients arrived and the other visits were set up. They saw the rue Berlioz property first and really liked it. Then, we saw others that got them even more excited. In typical House Hunters International style, after two days of visits in the intense summer heat, we sat down together, compared the three final properties and eliminated one, narrowing it down to the two best – the rue Berlioz apartment remaining at the top and another one located on rue de France in the heart of the Carré d’Or that they also really liked.

They made an offer lower than asking price on the rue de France apartment to help them decide, since it was quite a bit more expensive – smaller, but better located. It was accepted, making the decision even tougher!

We amassed the documents for each to do the due diligence to help in the decision-making: building by-laws, maintenance costs, taxes, assembly meeting notes, etc. Then we compared them again. We found nothing to skew the advantages of one over the other.

The two properties were totally different, but equal when weighed:

Rental revenue is a guestimate, but because of location, it can be expected that Rue de France will normally out-perform Rue Berlioz. But because of the patio on rue Berlioz, making the apartment pet-friendly, it will augment the rentals. So, ROI can be predicted to be about equal.The bottom line is that the decision/choice came down to lifestyle and gut reaction. In which would they want to live and enjoy Nice?Which one would you choose? Which one do you think they chose?I’ll give you one hint: I predicted the outcome from the beginning, but didn’t influence it.

A bientôt,
Adrian Leeds
Adrian Leeds Group

Respond to Adrian  P.S. Speaking of…friends of Parler Nice, Parler Paris and French Property Insider are welcome to stay in Le Matisse – at least when I’m not there. It’s cooler in summer and warmer in winter! Contact us to secure your stay!