Sale before completion (VEFA)

Would you like to own a new home? You have the option of buying a property to be built.

There are two types of building sale:

• Forward sale
• Sale in the future state of completion

The Goldwin Cabinet explains what you need to know about the sale in the future state of completion (VEFA)

First of all, this is a sales contract governed by legal provisions, in particular those of the Civil Code and the Construction and Housing Code.

A VEFA (vente en l’état futur d’achèvement) is a contract under which the seller immediately transfers its rights over the land and ownership of the existing buildings to the buyer.

Future works become the property of the purchaser as and when they are completed.

The purchaser is required to pay the price as the work progresses. The seller retains the powers of the project owner until the work has been accepted.

In other words, this is the contract under which you become the owner of the land on which a building is to be erected.

The very purpose of the VEFA is to build a property that does not yet exist.

WHAT IS THE DIFFERENCE BETWEEN THE PROTECTED AND UNPROTECTED SECTORS?

If the property to be built is intended for residential use or for mixed residential and business use, the contract will be subject to the protected sector regime.

In other words, the applicable provisions will be public policy and the parties will not be able to derogate from them.

WHAT ARE THE MAIN STAGES OF THE VEFA?

1. Drawing up a preliminary contract and security deposit

The only pre-contract authorised for a sale in the future state of completion is the preliminary contract or reservation contract.

This allows you to reserve the chosen home and determine the essential elements of the final sales contract.

The seller who undertakes to reserve a building or part of a building may ask for a deposit.

This deposit must be paid into a special bank account.

if the deadline for completion of the sale is more than two years, the vendor may not request a deposit.

Formal rules to be observed :

The preliminary contract must be in writing and contain the compulsory information stipulated in the French Construction and Housing Code, i.e. :

• Description of the reserved premises,
• Description of the building as a whole
• The projected price
• The planned date for completion of the sale
• The amount of the security deposit
• A reminder of the legal conditions

For your information:

The preliminary contract does not commit the vendor to building the property. He simply undertakes not to sell it to another party in the event that construction takes place.

As a purchaser, can I withdraw from the contract?

YES, YOU CAN.

The withdrawal period is 10 days from the first presentation of the registered letter with acknowledgement of receipt containing the preliminary contract, or from its hand-delivery against receipt.

The Construction and Housing Code also stipulates that the deposit will be returned if :

• the sale in the future state of completion is not regularised within the period specified in the preliminary contract
• If the sale price exceeds the preliminary contract price by more than 5%.
• If the buyer’s loan has not been obtained or if its amount is less than 10% of the said contract
• If the value of the property or part of the property is less than at least 10% of the forecasts initially mentioned.

2. The final deed of sale and payment of the price

In order to protect the purchaser, the law requires the final deed of purchase to be an authenticated deed drawn up by a notary.

The contract must contain the compulsory information set out in article L.261-11 of the French Construction and Housing Code, namely:

• A description of the building or part of the building being sold
• The price and the terms of payment of this price
• The delivery date for the property
• Performance bonds
• The conditions precedent to obtaining the loans
• Notification of the financing plan for the construction project
• Mandatory appendices
• The co-ownership regulations must be sent to the purchaser before the contract is signed.

As regards payment of the purchase price, there is an obligation to pay in instalments as the work progresses:

• 35% of the total price on completion of the foundations
• 70% on completion of waterproofing
• 95% on completion of the work

The balance of 5% must be paid on delivery if there are no reservations about defects in conformity with the contract.

3. Acceptance of the property on completion of the work

• The obligation to build the agreed property within the agreed timeframe

The time limit is an essential element in the sale of buildings to be constructed. The Civil Code and the Construction and Housing Code penalise any failure to meet this requirement.

Failure to comply with the contractually agreed schedule constitutes a lack of conformity, not to be confused with construction defects, which we will discuss later.

The deadline has passed and the property has not been completed. What can I do?

In principle, the contract specifies the cases in which the deadline is interrupted, particularly in cases of force majeure.

In the event of bad faith on the part of the developer, the purchaser can request payment of the late penalties and claim compensation for the loss suffered.

• The obligation to deliver the property as required

The seller must deliver a property that is identical to the one stipulated in the contract.

The building is deemed to have been completed when all the works have been carried out and all the fixtures and fittings have been installed that are essential for the use, in accordance with its intended purpose, of the building that is the subject of the contract, with the exception of work for which the purchaser reserves the right to carry out.

If this is not the case, it is possible to appeal.

4. implementation of construction guarantees by the purchaser

In 1967, the legislator introduced specific warranties for the seller of a building to be constructed.

GUARANTEE AGAINST CONSTRUCTION DEFECTS AND LACK OF CONFORMITY

Conformity defects are discrepancies that may exist between what was stipulated in the contract and what was delivered.

In the event of a construction defect or lack of conformity, the purchaser has three options:

• They can ask for the sale to be rescinded
• They can ask for the price to be reduced
• They can demand compensation in kind

On the other hand, if the seller undertakes to remedy the defect, the legislator has ruled out the buyer’s choice.

The limitation period is one year from the date of signature of the certificate of completion.

WARRANTY AGAINST HIDDEN DEFECTS AND FAULTY WORKMANSHIP

• TEN-YEAR GUARANTEE

From the date of acceptance of the work, the seller guarantees for a period of 10 years any damage, even resulting from a ground defect, which compromises the solidity of the building or which, affecting one of its constituent parts or one of its equipment elements, renders it unfit for its intended use.

• BIENNIAL GUARANTEE

Under article 1792-3 of the French Civil Code, the seller is obliged to provide a 2-year guarantee for all elements that can be separated from the structure.

Under this guarantee, you can request the repair or replacement of a defective component that can be separated from the structure (e.g. the hot water tank).

To do this, you need to send a letter by recorded delivery with acknowledgement of receipt to the seller, asking him to take action within a period set by you.

If the seller refuses or fails to respond, you can take the matter to court.

• GUARANTEE AGAINST SOUND INSULATION DEFECTS

The seller is obliged to remedy any acoustic defects.

He must therefore guarantee that the property complies with the minimum legal or regulatory requirements in terms of sound insulation, for a period of one year from the date on which he takes possession.

Case law authorises the purchaser to invoke the non-conformity of the building with the contractual stipulations in respect of these sound insulation problems.

The lawyers at Cabinet Goldwin will be with you every step of the way, from the signing of the purchase agreement through to delivery of the property, and in the event of any dispute.

When you choose Cabinet Goldwin, you can be sure of having responsive lawyers who can provide answers to your problems, as well as lawyers who are available to listen to you throughout the process.