In French Law, we deal primarily with two distinct forms of real estate contracts. One is a sales agreement known as “promesse de vente” in which the seller promises to sell the apartment or property to the other party. The other type is a purchase and sales agreement known as “compromis de vente” in which both parties agree to buy and sell the real property in question.
Although the two different contracts seem relatively similar, they are in reality very different in their consequences:
The “compromis de vente”
The “compromis de vente” is more technical than the other contract. Thus, carefully drafting the different clauses is essential! You will need an attorney or notary to do so since most real estate brokers use standard contracts that will not reflect your particular situation.
The buyer and seller are bound by this purchase and sale agreement as long as all the prearranged conditions are fulfilled. The buyer needs to escrow 10% of the selling price in order to secure the sale.
Therefore, the individual is susceptible to losing money if they do not follow up with the sale even though all the conditions are fulfilled. We also call this “clause penale”. On the other hand, the seller cannot refuse to sell to the decided buyer.
The “promesse unilaterale de vente”
The “promesse unilaterale de vente” is an agreement under private seal where only the seller is bound by the promise. There are no requirements such as the 10% penalty and the buyer has a deadline to exercise the purchase option.
Nevertheless, the main difference with the “compromis de vente” is the fact that as long as the purchase option is not exercised, the seller can cancel the sale (assuming the prospective buyer can sue him in order to obtain compensation).
Also, it is very important to register a privately sealed agreement within 10 days of its signature otherwise it is null and void.
In any case, buying real estate is an investment that cannot be handled by an amateur. Frankly, you need the assistance of a French legal professional to avoid any unwanted issues and complications.
A good investment is one that you must master!