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Property price increases and guzumping in Paris

Mr X viewed a Paris flat and made a formal written offer in July which was accepted through the estate agent. At the request of the seller, the offer stipulated that the sale was perfected by acceptance i.e. was not subject to contract. It was agreed between all parties that on this basis there would be no compromis (contract) and that the parties would just go straight to the acte de vente (completion). Everyone thought this was much simpler and avoided spending time on a formal contract. The terms of the acte de vente were all agreed.

Completion does not take place

Mr X put his notaire in funds. The seller and buyers’ notaires turned up to the scheduled completion meeting at which the seller announced that he had made a “mistake” and could not sell the flat to Mr X. He offered Mr X a similar flat in the same building. Mr X was not prepared to change. The seller walked out of the completion meeting. It seems that the seller had in the meantime been contacted by another buyer who particularly wanted the flat and was prepared to pay over the odds for it. The problems surrounding offer and acceptance in property sales are a source of significant litigation under French law. It has become worse with the recent sharp increase in prices in Central Paris.

Law

To be valid the offer must be precise and firm (article 1114 French Civil Code). To be an acceptance, the intention of the recipient of the offer must be the same as the intention of the offeror. There is acceptance of the offer if the recipient expresses his full agreement with the proposal made to him (article 1118 French Civil Code). If the acceptance is different from the terms of the offer then it will not be a valid acceptance but a counter-offer.

An offer letter drawn up by the estate agent which is signed by all parties and is clear as to the property, the parties and the price will operate as a binding contract under French law. Mr X can force the seller to complete. There is no need for a formal contract to make the arrangements binding.

What Mr X should do

Mr X should decide whether he wishes to treat the agreement as rescinded and walk away and buy elsewhere or press on with the purchase.

If he wants to press on he should immediately ask his notaire to call a “huissier” (a sort of bailiff) to attend the notaire’s office. The notaire should make a formal declaration to the huissier that he was in funds to complete and that the seller attended the completion meeting and attempted to switch the flats. He should also produce the estate agents signed offer letter. France is much more formalistic as to proof of the facts and these written sworn “constats” as to the facts by a huissier are very difficult to overturn later in court.

Mr X should immediately instruct an avocat to serve notice on the seller that he is in breach of contract and give him a short time to attend a further completion meeting. The letter should spell out all the facts. If he fails to do so proceedings should be issued in the court where the property is situated with a request for an expedited hearing date.

The judge will usually order that the sale is completed and that the seller must pay an “astreinte” or penalty of a fixed amount for each day of delay. The judge fixes the astreinte and amounts of €500 per day are normal. The judge can order that if there is no completion by a certain date the judgement becomes the sale document. Alternatively the seller may have to go back to court for a sale order.

The judgment should be sent to the publicité foncière (Land Registry) so that the seller cannot sell to a third party. If, as in this case, there is a likelihood the seller will sell to a third party an urgent application should be made to the court for an injunction. It is sensible to serve the court orders on the seller’s notaire as well.

Mr X should also speak to the estate agent who will normally be keen to see the sale complete and receive his commission. The agent may also be involved in the claim for his commission.

On costs Mr X needs to be aware that the costs awarded in French courts are usually much lower than in England. He may only be awarded €2.000 and end up funding the balance of his costs himself.

David Anderson has extensive experience in French litigation proceedings involving French property. He works with specialist French avocats across France and is regularly in the French courts.

September 2018
David Anderson
Solicitor-Advocate and Chartered Tax Adviser