Christophe Dutertre explains how signing an offer of sale can result in an binding contract and gives advice on how to proceed
Usually, a purchaser who wishes to sign a contract to buy a French property will start the process through an estate agent.
Once you have found the right property for you, it is fairly common practice to try to reduce the asking price by making an offer to the vendor, either verbally or in writing.
The uncertainty of the property market during recent years makes it more conceivable that sellers are willing to negotiate a price.
PUTTING IN AN OFFER
The purchasers may send a letter to the vendor with an offer, or they may go via the estate agent who can ask the purchaser to sign an offer to purchase called an ‘offre d’achat’, which they will pass on to the vendor.
In the UK, an offer on a house is not binding but in France, a letter from the vendor accepting your offer will be regarded as a binding contract. It is important that you bear this in mind before signing the offre d’achat.
The offre d’achat is regulated by the general rules of contract law under the French Civil Code and precedents of court cases. It is considered as a unilateral document made by one person (i.e. the purchaser) to inform others of his willingness to perform a contract subject to conditions at a certain price.
The offre d’achat that you may be required to sign is often basic and might not include any conditions or clauses. However do not make the mistake of thinking that it is only a preliminary step prior to the purchase and before the signing of the sales contract (le compromis de vente).
This is where you have to be very careful as once your proposal is accepted by the vendor, this can commit you to purchase. Both parties will be deemed to have agreed the terms and conditions of the transaction.
ROLE OF A NOTAIRE
A vendor would then instruct his notaire to proceed and conduct the searches in order to conclude the transaction if the offre d’achat makes the intentions of both parties sufficiently clear.
The appointed notaire will prepare the transfer of the ownership and draft a title deed (l’acte de vente). This situation can be unfortunate for a purchaser who thought that he was entering into further negotiations with the vendor, but ended up bound for purchasing and required to complete at the notaire’s office several weeks later.
One might wonder what would happen to any conditions that the purchaser intended to include in the contract? It will be too late to request any additional clauses as the vendor will be entitled to refuse to sign a compromis de vente as he has already accepted and agreed the terms of the sale. Only the statutory finance let-out condition for obtaining a mortgage will apply for the benefit of the purchaser.
CONDITIONS AND CLAUSES
The only circumstance in which an offre d’achat from the purchaser will not form a binding contract is when the offer contains conditions. Such a document will be considered as a proposal to conduct negotiations without binding the parties.
The vendor could also refuse the offre d’achat and subsequently send a counter offer to the purchaser, who will then become the recipient of a new offer. A clear acceptance from the purchaser will then bind the parties to the transaction.
When a party receives an offer it creates a situation which varies depending on the wording of the offer. If the offer indicates a validity period for accepting it, the person making the offer is bound during that period and cannot withdraw. If there is no such period, the rules set out by a recent court case state that the recipient has a ‘reasonable period of time’ during which he can accept if he wants to proceed.
What might appear to be a straightforward offer to sign should be looked at with care. This is particularly important for those who wish to add specific conditions to the conveyance, such as a clause confirming that the works done in the property had proper planning consent or that a declaration of works was lodged with the local authorities.
One should be careful and consider any letter or document, including an offer to accept the price, when required to sign for the purchase of a property.
The wording of your offer will have an impact on the legal implications. The words ‘I offer to purchase…’ may commit you to the purchase whereas the words ‘I am keeping the right to agree…’ allow for the negotiations that you started to continue without binding you to the purchase.
Christophe Dutertre is a diplomé notaire at Blake Lapthorn Solicitors
Tel: 02392 530379