Buying real estate: what are the obligations to respect? What the law says ?

By fashionlifeshopping 04/01/2023 1208 Views

What are conditions precedent? What happens if we don't respect them? Our expert, Maître Ganaëlle Soussens, answers us in this first part of a series devoted to real estate.

Buying real estate: choice of property and offer

When buying real estate, you have to consider the choice of property (new or old, with or without work), the location , price per m², etc. But in addition to that, certain conditions must be respected vis-à-vis the law. This is particularly the case with the offer. When he has made his choice, the buyer sends the seller, on plain paper, by post or by email, a purchase offer in which he indicates the price at which he is ready to buy the property, the deadline for the promise sales, financing terms, etc. The seller can refuse or accept the offer. But, even if this is accepted, the legal situation is fragile: it is difficult, if not impossible, to "force" the sale at this stage. On the other hand, the situation is very different once the promise of sale has been signed.

Buying real estate: what does the law say about the promise to sell?

Signing the promise to sell freezes the rights of the seller and the buyer: the two parties irrevocably commit themselves and, if one of the parties does not respect his commitment, he will have to pay heavy penalties to the other party, generally 10% of the sale price. With one nuance: the promise of sale may include “conditions precedent” which allow the buyer, in general, to abandon the operation without owing compensation to the seller. The best known is the condition precedent for obtaining a loan. It allows the buyer to reserve the property for several months, the time for him to build his loan file and obtain the financing he needs to buy. And if unfortunately the buyer does not obtain his loan, he can give up without owing any compensation to the seller.

Buying real estate: what are the obligations to respect? What does the law say?

Buyers must however be very careful both in the wording of the clause and in its application. For example, if the suspensive condition provides for a deadline for submitting loan applications, the buyer must respect it and submit several applications, therefore at least two. If, for example, the clause provides that he questions several banks, the buyer must actually submit his request for financing to several establishments, entrusting his file to a broker is not enough. Concretely, if he does not obtain the loan, the buyer must inform the seller - and not his notary or the real estate agency. The seller will check that these refusals follow financing requests that scrupulously comply with the terms of the condition precedent. If this is not the case, the seller could refuse to return the amount paid to the buyer, or even claim the full amount of the immobilisation compensation, i.e. 10% of the sale price in general.

Buying real estate: signing at the notary

It is when the deed of sale is signed at the notary that the property changes hands. The funds are sent to the notary by the bank, before the signing appointment. The buyer must therefore plan a retroplanning, the final stage of which is the signature. Before that, the bank lending him the funds must have sent them to the notary, which assumes that he has accepted the loan offer. But since he can only accept the offer after a period of reflection, the buyer-borrower must have received it early enough. Thus, at each stage, the buyer must be proactive and ensure compliance with the deadlines set in the promise of sale. It is often a stressful period for buyers, which is why it is prudent to prepare well and to get help, from a notary for example.

By Ganaëlle Soussens, lawyer, expert in real estate law: ganaellesoussensavocat.com