Real estate and construction

CLARE LEGAL advises its clients on the legislation and the regulations applicable to their real estate projects, and deals with the litigation of the sale, the management and the construction of real estate properties.

Our services

Assistance in the negotiation of property sale contracts

Pre-litigation and litigation procedure of tort in precontractual negotiations

Advice in "sales before completion" contracts ("VEFA")

Advice in the acquisition and the sale of business assets, leasehold rights, commercial leases, residential leases

Drafting and negotation of deeds of assignment, pre-contracts, notices

Advice and resolution of litigation concerning the joint-ownership

Advice and resolution of litigation concerning the leases (sublease, assignment, renewal)

Implementation of judicial procedures of setting the rent for new leases and of setting the compensation for eviction

Monitoring of judicial expertise

Assistance during the delivery of the properties

Advice and resolution of litigations relating to the construction defects

Advice in real estate taxes

FREQUENTLY ASKED QUESTIONS

Spring is the best season to sell because potential buyers are the most active. The arrival of good weather makes buyers want to visit properties. In French real estate market, the demand of properties is the highest in March and April.

Normally, the time between signing the compromise/promise of sale and signing the final deed of sale before the notary is 3 months.

The average time between signing the sales agreement and that of the final act is 2 to 3 months, depending on whether the buyer already has the necessary financing or not. This deadline, which cannot be reduced, allows the notary to carry out verifications relating to property titles, previous sales deeds, certification of urbanism and the mandatory technical diagnoses.

The “immobilization compensation” (“l’indemnité d’immobililsation”) is a sum paid by the buyer of real estate when signing the promise of sale, and sequestered in the account of the notary in charge of the sale during the fulfillment of the suspensive conditions.

The amount of the immobilization compensation is not fixed by law but in practice, it corresponds to 10% of the salling price.

If the sale is not concluded, unless the non-conclusion of the sale is liable to the seller, the entire amount of the immobilization compensation will be paid to seller by the notary.

The Costs of acquisition, or “notary fees”, include not only the notary’s remuneration (“emoluments”) but also the taxes collected on behalf of the department, the municipality and the State.

There is a simulator on the Anil website (National Agency for Housing Information): https://www.anil.org/

For example, for the acquisition of an apartment for €2,000,000 in Paris, the notary fees amount to €139,145, including:
– Fees including tax for the notary: €19,652
– Duties and taxes: €116,133
– Formalities fees and disbursements: €1,360
– Real estate security contribution: €2,000

These costs are always paid by the buyer, according to article 1593 of the Civil code.

No. According to the case law of the Court of Cassation (ex. 3rd civ, July 11, 2019, n°18-16690), notary fees do not in themselves constitute compensable damage in the event of cancellation of the real estate sale. As such, it will be necessary to demonstrate the notary’s fault to obtain reimbursement of these costs.

Yes. Article 1583 of the Civil Code provides “A sale is perfect between the parties, and ownership is acquired by right to the buyer with regard to the seller, as soon as the thing and the price are agreed, although the thing has not yet been delivered nor the price paid”. If the seller does not accept the offer, the buyer can go to court to obtain a forced sale.

An off-plan sale (VEFA in French) is a sale contract for real estate to be built or under construction.

An off-plan sale (VEFA) is strictly regulated by law.

For example, payment of the sale price is staggered depending on the progress of the construction work, as follows:

– 35% maximum of the sale price upon completion of the foundations
– 70% wupon completion of the roofs
– 95% at completion
– remaining 5% paid upon delivery of the property.

During a VEFA, the seller must take out a financial guarantee of completion (GFA) and a guarantee of reimbursement of payments made in the event of cancellation of the contract in the absence of completion (article L261-10-1 of the Construction Code and housing). The certificate of these guarantees is annexed to the reservation contract.

To reserve the accommodation, the seller may ask the buyer to pay a security deposit when signing the reservation contract.

The amount of this security deposit is limited to:

– 5% of the sale price if the deed of sale is signed within less than 1 year
– 2% if the deed of sale is signed within 1 to 2 years.

No security deposit can be claimed if the deed of sale is signed after 2 years.

The “Financial Completion Guarantee” (GFA), obligatorily subscribed to by the residential real estate developer since 2015, is covered by a banking establishment and ensures that the housing will be completed even in the event of bankruptcy of the developer. It is therefore possible to take action against the bank which is obliged to complete the construction work.

According to the case law of the Court of Cassation (Civil Chamber 1, December 9, 2014, 14-29960), buyers of a VEFA can request the suspension of the execution of the real estate loan contract in the event of the bankruptcy of the real estate developer.

The duration of a commercial lease cannot be less than 9 years and the lessee can only terminate it at the end of each three-year period. This is why a commercial lease is commonly called a “3-6-9 Lease”.

You must wait until the end of the 9-year commercial lease contract to be able to send a “termination notice with refusal of renewal” to the tenant. For this, notice must be given with a minimum notice of 6 months before the initial term of the commercial lease.

If the 9-year commercial lease has been tacitly renewed, the 6-month notice period must start after the end of the calendar quarter.

It is also possible to terminate the lease at the end of a three-year period (after 3 or 6 years), in order to take back the accessory residential premises and reassign it to residential use (article L145-23-1 of the Commercial Code).

In all cases, the termination must be unequivocally justified, and the lessor must in principle pay the tenant eviction compensation, unless he offers the tenant replacement premises.

Eviction compensation from a commercial lease is financial compensation paid to the commercial lessee which compensates for the damage caused by the refusal to renew the lease.

Normally, this compensation is fixed according to the value of the business operated in the leased premises when non-renewal of the lease results in its total disappearance.

When the eviction of the tenant does not result in the complete disappearance of the business, the amount of compensation will correspond to the value of the lease right, and the costs of moving or transferring the fund.

The amount of this compensation may be proposed in the termination notice. The lessor and the tenant then negotiate the amount amicably, and if necessary, by calling on an expert.

In the event of disagreement between the parties, the amount of the eviction compensation may be determined judicially. In this case, the lessor or tenant takes legal action to request an expert opinion in order to assess the amount of compensation.

After the Court’s decision, the lessor has a “right of repentance”, which allows him to cancel the notice and offer the tenant the renewal of the lease. This right must be exercised within 15 days from the date on which the decision becomes final (article L 145-58 of the Commercial Code).

No. Termination notice must be given by extrajudicial act and specify the reasons for which it is given (article 145-9 of the Commercial Code). Otherwise it is void.

In the event of irregular notification of the termination notice by the lessor, the lessee has two options:
– Either take legal action before the court to obtain the continuation of the lease judged,
– Or request payment of eviction compensation from the lessor.

Generally, the amount of rent for renewed or revised leases is capped at the indices published by INSEE (article L 145-34 of the Commercial Code).

In the event of a significant modification of the elements constituting the rental value or of the lease having lasted, by tacit renewal, for more than 12 years, the amount of the renewal rents must correspond to the rental value (article L145-33 of the Commercial Code) .

According to the case law of the Court of Cassation, this provision is not of public order (Court of Cassation, 3rd civil, March 10, 2004, n°02-14998). The termination notice may contain a clause which excludes its application and provides for another method of setting the renewal rent (for example: setting the renewal rent at the “market” rental value).

You must first check the provisions of the lease, and appoint an expert to assess the renewal rent for your premises, to be able to negotiate with the lessor if the amount of the proposed rent turns out to be excessive.

In the event of disagreement, you can contact the Commercial Rent Judge (the president of the regional court) to set the amount of the renewal rent. The procedure is specific and initiated by a brief followed by a summons.

During the duration of the procedure, the old rent is applied. After the judgment which will set the amount of the renewal rent, this new rent takes effect retroactively from the day of renewal of the lease, or of the request for review by the lessor.

However, the rent increase for a year is limited to 10% of the rent paid during the previous year (article L145-38 of the Commercial Code resulting from the law of June 18, 2014 known as the “Pinel law”), except contrary clause specified in the lease.

The market value of a property is the value at which the property could be sold on the real estate market.
The Charter of Real Estate Valuation Expertise, the reference for real estate valuation experts in France, defines the market value as follows: “the estimated sum of money for which property and real estate rights would be exchanged on the date of the valuation between a willing buyer and a willing seller, in a balanced transaction, after adequate marketing, and where both parties have acted with full knowledge, prudence and without pressure.”

Expertise in real estate valuation allows the buyer to understand the real value of the property they plan to purchase, and therefore the relevance of the selling price displayed on the sales advertisements. Depending on the valuation result, he or she can appreciate the opportunity to make a purchase offer for the appraised property.

Of course. The seller can:
– Either refuse your purchase offer,
– Either accept your offer at the proposed price,
– Either refuse your purchase offer and make a counter-offer, in this case you can negotiate the price with the seller.

There are several valuation methods to determine the market value of real estate. The comparison method, the most common, consists of comparing sales prices resulting from transactions carried out on the real estate market for properties presenting similar characteristics and located in the same geographic area as that of the appraised property.

No, the market value appraisal must refer to the sales prices resulting from transactions carried out on the real estate market for properties presenting similar characteristics and located in the same geographic area as that of the appraised property. If assessment can be supplemented by selling princes, it cannot refer only to the latter.

Generally speaking, it is not relevant to use the offer prices as they are to evaluate the value per m² of the property subject to the appraisal, without taking into account the amount of agency commissions and other costs included in the selling prices displayed in real estate advertisements.

In France, real estate sales prices are accessible on the DVF file (Request for land values) on the site https://app.dvf.etalab.gouv.fr/. Real estate valuation professionals also use B.I.E.N. databases (Notarial Economic Information Base) which centralizes the main elements of the transfers made.

The floor space / habitable surface is the surface area of an accommodation, after deduction of the surfaces occupied by walls, partitions, steps and stairwells, shafts, door and window embrasures (article R156-1 of the Construction and habitation Code).

The Carrez surface includes the surfaces which are not occupied on a daily basis, such as unfinished attics, attics, reserves, sheds and verandas which are excluded in the calculation of the habitable surface of an accommodation. It is the Carrez surface which is used by the expert to calculate the market value of an apartment.

Excluded from the Carrez surface (as well as from the habitable surface, the surface occupied by loggias, balconies, terraces as well as annexes, cellars, garages and gardens.

A hidden defect is a defect which was hidden in a property at the time of the purchase, and which makes the property improper for the use for which it is destinated, or which reduces this use so much that the buyer would not have purchased it, or would have purchased at a lower price, if he or she had known it (article 1641 of the Civil Code).

You have two years, from the discovery of the defect, to take the legal action against the seller for hidden defects. And this, within the limit of 20 years after the purchase of the property.

According to article 1644 of the Civil Code, you have the choice between returning the property to the seller in return for a full reimbursement of the sale price, and keeping the property in return for a reduction of the sale price. The action to obtain reimbursement of the sale price is called the “redhibitory action”, and that to obtain a reduction in the price “the estimatory action”.

You can also request compensation for damages from the seller (article 1645 of the Civil Code).

Yes. The occupancy compensation will be calculated from the day of the summons, unless the seller proves that you had knowledge of the hidden defect earlier.

Yes. You must initiate proceedings against the seller by requesting a reduction in the sale price (article 1644 of the Civil Code). Foe this action, called “estimatory action”, a legal expertise is mandatory (Court of Cassation, 3rd civil, April 18, 2019, n°18-14668).

If the diagnosis of the parasitic state of the property has been established less than six months before the sale, you will benefit from the non-guarantee clause. The sale will not be canceled, but the diagnostician, who committed the fault, will be ordered to pay the cost of the necessary work, and to compensate the buyer (Court of Cassation, 3rd civil, March 7, 2019, no. 17-31080). On the contrary, if the diagnosis was established more than six months before the sale, this clause will not be applicable.

According to the jurisprudence of the Court of Cassation, the seller’s representative is not considered to be a third party to the sales contract (Court of Cassation, 3rd civil, April 29, 1998, n °96-17540, July 5, 2018, n°17-20121). This is why you are held liable, even if you were not informed by your architect of the hidden defect affecting the building.
After the cancellation of the sale, you can take legal action against the architect for damages.

If the malfunction of this electrical installation harms the safety of people and renders the property unfit for its intended purpose, you can take action against the contractor who carried out the electronic installation work within 10 years from receipt. work by the previous owner (article 1792-4-1 of the Civil Code).

Any clause of a contract which aims either to exclude or limit the liability provided for in articles 1792, 1792-1 and 1792-2, or to exclude the guarantees provided for in articles 1792-3 and 1792 -6 or to limit its scope, or to exclude or limit the solidarity provided for in article 1792-4, is deemed unwritten (article 1792-5 of the Civil Code).

The Court of Cassation confirms the public order nature of these provisions (Court of Cassation, 3rd civil chamber, March 19, 2020, n°18-22983).

The clause in the deed of sale, indicating that this installation is in good working order and that the purchaser will make it his personal affair is considered unwritten by the court, and the contractor who carried out the disputed electronic installation work assumes responsibility notwithstanding this clause.

He must have taken out ten-year guarantee insurance (article L241-1 of the Insurance Code).

In principle, the sale of the main residence is exempt from any capital gains tax, regardless of the holding period (article 150 U of the General Tax Code).

For sellers residing abroad, tax on capital gains from the former main residence is exempt on the double condition that the transfer is made no later than December 31 of the year following that of the transfer by the transferor of his tax domicile outside France, and that the building has not been made available to a third party, free of charge or for a fee, between this transfer and the sale (article 244 bis A from the law of December 28, 2018).

For example, if you left your main residence in Paris in January 2018, you are exempt from capital gains tax if you sell your apartment before December 31, 2019 and if your apartment has never been rented in the meantime. If the sale occurs after January 1, 2020, you will then be liable for capital gains tax.