Partner article: What are the risks of buying a flat off-plan in France?
Buyers only need to pay a 5% deposit on reservation
Off-plan apartments are typically built to a high-standard modern equipment
Shutterstock
Reader Question: I have seen a building project which interests me for an off-plan flat purchase. Are there risks involved in buying in this way?
Purchasing property off-plan, or VEFA (Vente en l'Etat Futur d'Achèvement), can be attractive to buyers who wish to spread the cost of the purchase over a longer period, as only a 5% deposit is due on reservation. The balance is payable in stages, as and when construction progresses.
Also, notaire fees payable on legal completion are much lower and range from 2-3% as opposed to the usual 7-8%.
Off-plan apartments are typically built to a high-standard modern equipment and the latest technology, and buyers can customise the fittings and layout to match their preferences, albeit at an additional cost.
The developer must also adhere to strict energy-efficiency standards, resulting in lower energy costs.
However, while the developer has a general duty to deliver the property as described, the deed often allows a departure from the technical specification in certain circumstances.
There is also a permitted 5% tolerance from the plans as to the apartment’s surface area and the commercial brochure has no contractual or legal value. It is, therefore, important for any agreement between the buyer and developer to be clearly stated in the deed.
The buyer is advised to attend the handover meeting in person, where a list of all snags will be made; the developer will have one month to rectify these.
Read more: Partner article: What are the rules on noise from heat pumps in France?
The buyer will also have the 10-year structural warranty for major structural defects, and the benefit of other warranties for defects or defective equipment, although the timescales for reporting these are much lower.
One downside, the timescales for completion can often slip, and the buyer has little choice but to accept delays caused by an unforeseen event (force majeure) or any other justified reason, such as bad weather, strikes, unplanned additional works or delays in the supply chain.
This may result in the buyer being unable to honour his/her commitments, for instance, under a rental agreement if the apartment is not ready by the starting date.
Finally, one major risk is that the developer becomes bankrupt during construction. Check the developer has obtained the necessary financial backing (GFA – Garantie Financière d'Achèvement) from a bank or financial institution to ensure the development will still be completed in such a situation.
Fabienne Atkin is a partner with Ashtons Legal
