General information on beginning the search / Where would you like to buy real estate?
House or apartment?
New building or old building?
What does the price of the object depend upon?
Who is your negotiating partner for acquisition?
The current market situation on the Cote d’Azur
Acquisition of an old building / Viewings / Appraisals
Preliminary Contract ( „avant contrat“)
Role of the notary / „acte authentique“
Additional expenses for the purchase („frais de notaire“ or „frais d’acte“)
Purchase of a new building
Purchase of land
Financing
Foundation of a S.C.I. („société civile immobilière“)
Purchase on the basis of pension („viager“) as a special form of property acquisition of real estate
Taxation of the gain („plus value“) from sale
Right of succession
Monaco
Conducting a sale / Preparations for the sale
SELLING A PROPERTY / USING AN AGENT?
SELLING A PROPERTY / PREPARING THE PROPERTY FOR THE SALE
Landing stage for your boat: Buy or rent?
Preliminary Contract ( „avant contrat“)

If you would like to buy an old piece of real estate or an already constructed new building you need to sign a notarial sales contract. However it is common to conclude a preliminary contract with the seller beforehand. This preliminary contract („avant-contrat“) is binding. The preliminary contracts form the essence of the purchase procedure. The notarial file which is signed later on resorts to the preliminary contract.

There are three types of preliminary contracts:



1. Undertaking to sell („promesse unilatérale de vente“)



With an undertaking to sell the seller grants the buyer an option on the purchase of his/her real estate at a specific price and for a specific time period. A signature under such a preliminary contract does not obligate you to purchase rather only that you accept the conditions for a purchase deposed in this contract. As a return service for the seller’s obligation the buyer transfers a freely stipulated guarantee sum (normally up to 10 % of the stipulated purchase price) to an escrow account (either to a notary – notary trust account – or to a real estate agency). Should the buyer withdraw from the purchase this guarantee sum is transferred to the seller as immobilisation reimbursement („indemnité d’immobilisation“). So it is a matter of an option with the obligation to reimburse if necessary.

The seller cannot withdraw from this contract.

This form of contract is only used very rarely.

Correspondingly there is also a one-sided undertaking to buy („promesse unilatéral d’achat“) which will not be discussed here as it is very rare.



2. The mutual undertaking („compromis de vente“)



This type of preliminary contract is by far the most commonly used. This contract obligates both parties, the seller and buyer similarly, to carry out the sale / purchase. With it the purchase is all but definitive and can only fail due to reasons which are stated in no uncertain terms in the contract. The sum stipulated in the compromis is to be regarded as a prepayment of the purchase price.

The concerned parties are free to include conditions in the compromis which allow a withdrawal without loss (withdrawal conditions / „conditions suspensives“). Should such a condition come to exist the buyer is refunded his/her guarantee sum.

Besides the freely stipulated withdrawal conditions there are also legal withdrawal conditions as e.g. the condition that the buyer obtains a loan for financing purposes. Should the buyer not obtain a loan, he/she can withdraw from the compromis and is refunded the guarantee sum. Here some additional issues which are often matters of rescinding conditions:



- Does the data about the property given by the seller comply with the official registry?

- Is the seller truly the rightful owner of the property?

- Do purchase options exist?

- Do easements exist?

- Do lease contracts exist?

- Will the property be affected by forthcoming constructional measures in the surroundings?



3. Offer („offre“)



In the case of a purchase offer you bind yourself with your signature. A guarantee payment is forbidden. With a purchase offer the buyer informs the seller what he/she offers for his/her property and how long he/she feels bound to this offer. If the seller completely agrees to this offer with his/her signature the buyer must without a doubt buy!



4. Respite after conclusion of the preliminary contract



By the new law „Loi de Solidarité et de Renouvellement Urbain (loi SRU)“ it is decided for the purpose of consumer protection that the buyer in cases of all compromis de vente or promesse de vente or d’achat regarding the purchase of an old piece of real estate, can withdraw from the preliminary contract after signing within a time limit of 7 days. The 7 day time limit begins on the day after the day of receipt of the preliminary contract (registered letter including receipt confirmation). If the time limit expires the preliminary contract is insofar legally binding.