What kind of purchase and sales agreement to choose?

In French Law, we have to deal with two main different real estate contracts. One is a sales agreement known as “promesse de vente” where the seller promises to sell the apartment or the piece of land to the other party. The other one is a purchase and sales agreement known as “compromise de vente” where both parties agree to buy and to sell the real property in question.

Although the two different contracts seem to be very similar, they actually are very different in their effect:

-  The “compromis de vente” is more technical than the other contract. Thus, carefully drafting the different clauses is a must! You will need a Notary or an Attorney to do so since most of the Real Estate Brokers use standard contracts that do not reflect your particular situation.

The seller and the buyer are bound by this purchase and sale agreement as long as all the supsensive conditions are fulfilled. The buyer needs to escrow 10% of the selling price in order to secure the sale.

Therefore, she can lose her money if she does not follow up with the sale although all the conditions are fulfilled. We also call this “clause penale”. On the other hand, the seller cannot refuse to sell.

-  The “promesse unilaterale de vente” is very often an agreement under private seal where only the seller is bound by the promise. There is no requirement such as the 10% penalty and the buyer has a deadline to exercise the purchase option.

 But, and this is the main difference here with the “compromis de vente”, 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 private seal agreement within 10 days of its signature otherwise it is void.

 

In any case, buying real estate is an investment. And this investment cannot be handled by an amateur. You need the assistance of a French legal professional to avoid any issue.

Because a good investment is one that you master!

Sebastien Gaddini, Esq.
Attorney at Law / NY

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