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Contents of article "The seven day cooling-off period and your deposit"

- The seven day cooling-off period and your deposit
- Model letter of retraction

The seven day cooling-off period and your deposit

Many intending buyers ask questions like:

 When does my purchase contract become legally binding on me and my vendor?

 When must I pay my deposit?
Rather unhelpfully the French end will usually consider that they have answered these questions by quoting to you sections of Article 72 of Loi SRU 2000-1208 of 13 December 2000 (‘the SRU law’) and/or Articles L271-1 and L271-2 of the Code de la Construction et de l’Habitation (‘the CCH’) of 1 June 2001.

Translated into plain English, French law firstly states that a builder, property speculator or other “professional” buyer is not protected by the SRU law, which also does not cover building plots or commercial property in France.

French law then goes on to say that for all “non-professional” buyers a contract for the purchase of French residential property does not become legally binding (under Article L271-1 of the CCH) until:

 You have received a signed letter from the French end (not via any UK or other intermediary) quoting from the SRU law and/or the CCH. The letter must be sent to you by recorded mail (the French call this ‘LRAR’ or lettre recommandée avec demande d’avis de réception) or by Chronopost (similar to DHL delivery) or by some other method of delivery where the date of receipt is officially recorded (e.g. hand delivery via a notaire, huissier or other French court official).

 You have received a copy (which accompanies the signed letter) of the purchase contract originally drawn (and with any additional pages you may have made) signed/initialled by you and countersigned/initialled by your vendor.

Please be aware that, for proof of delivery purposes, any letter received by you from the French end should be signed for by you (usually on a pink card written in the French language) or by someone else at that address which the English postman returns to the address of the sender in France. Once the French end have received the pink card or some other evidence of receipt, their obligations under French law are deemed satisfied. It is more and more frequently my unfortunate experience to receive “Signed For” or other similar letters from clients or others worldwide which are put through my letter box without me or any of my team ever signing for them! If this also happens to you, please let the French end know what has happened. In such cases they are likely to ask you to confirm to them in writing (by registered letter) that on such and such a date you received the signed letter and the copy of the contract referred to above.

The generally held view in France is that other methods of delivery (e.g. receipt by you of an e-mail [with a scanned copy of the signed letter as an attachment] or by fax, or by hand delivery in France witnessed by someone other than by a notaire or by a huissier) would not suffice as there is no official record or evidence of the date on which the letter was received.

You then have seven days (which start to run from the day following receipt by you of the above documents) in which to decide whether or not to exercise your cancellation right to withdraw from your purchase without penalty. This is commonly known as ‘the seven day cooling-off period’. The French call it the période de délai de rétraction de sept jours. If you do wish to withdraw, the procedures you must follow are set down below. If you do not wish to exercise your rights of withdrawal, you do not need to reply to the letter or do anything else. If you do not observe this seven day time limit you are contracted to buy the property and may be penalised if you unilaterally fail to do so.

In some cases a French estate agent may send you the contract (signed only by the vendor) together with a similar letter referred to above prepared in the form of an acknowledgement of receipt to be signed by you. If you sign the contract and the acknowledgement of receipt, your seven day cooling-off period starts to run on the following day.

Unlike you, your vendor does not have a seven day cooling-off period and, if at this or at any future stage s/he unilaterally decides to withdraw from the sale to you, you are usually entitled to claim damages from your vendor and/or (against my advice) litigate the matter in France.

Under Article L271-2 (aliéna 2) of the CCH you do not have to pay any deposit (preferably to the notaire [who will hold your money in a protected stakeholder account]and not to an estate agent) until the expiry of the seven day cooling-off period unless the contract was prepared either by: (a) a notaire; or (b) by an estate agent who can prove that he was instructed (mandaté) by the vendor to sell the property, and who also holds appropriate insurance cover (garantie financière affectée au remboursement des fonds déposés) which should appear on his headed paper allowing him to handle your deposit (some agents are not allowed to handle large sums of their client’s money).

If (within the seven day cooling-off period) you decide to exercise your cancellation right and withdraw from your purchase you do not have to give any reason(s) why. Under CCH Article L271-1 you must serve written notice (in the form of the letter I have prepared below) signed by each of you sent to the French end (i.e. the person who originally wrote to you enclosing a copy of the signed contract) by recorded mail or by some other method of delivery where receipt is officially recorded (e.g. hand delivery via a huissier or other French court official). Some French contracts contain “election of domicile” clauses stipulating that, even if a copy of the signed contract was sent to you by the estate agent, service of your written notice to withdraw must be at the notaire’s office. The letter must be posted (but does not have to be received by the French end) within the seven day cooling-off period. Under Article 642 of the Nouveau Code de procédure civile, if the seventh day of the cooling-off period ends on a Saturday, Sunday, a French bank holiday or a French public holiday, the seventh day is carried forward until the next working day.

The generally held view in France is that other methods of delivery (e.g. despatch by you of an e-mail [with a scanned copy of the signed letter as an attachment] or by fax, or by hand delivery in France witnessed by someone other than by a huissier) would not suffice as there is no official record or evidence of the date on which the letter was received by the French end.

If you have paid a deposit CCH Article L271-2 aliéna 2 requires that sum to be returned to you (without interest) within 21 days from the day following the date on which you exercised your cancellation right.

In some cases the French end may not send you a copy of the purchase contract bearing the signatures of all the parties, and the signed letter advising you of your seven day cooling-off rights. If this happens you can still withdraw from the contract and recover any deposit paid. If the notaire sends you (by recorded delivery etc) a draft copy of the unsigned French conveyance deed (acte de vente) with written notice of your seven day rights of withdrawal, you are obliged to complete your purchase if you do not withdraw from your purchase within seven days of receipt of that notice, in accordance with the formalities described earlier above.

Model letter of retraction

The model form of letter advising the French end (estate agent and/or notaire) of your decision to withdraw reads as follows:


Their address
Ref: (quote the property reference details)
Date

Messieurs,

RETRACTATION

Conformément aux dispositions de l’article L.271-1 alinéas 1 et 2 du Code de la Construction et de l”Habitation instituant une faculté de rétractation à notre profit, qui sont ci-après littérallement rapportées :

“Pour toutes acte sous seing privé ayant pour objet la construction ou l’acquisition d’un immeuble à usage d’habitation, la souscriptions de parts donnant vocation à l’attribution en jouissance ou en propriété d’immeubles d’habitation ou la vente d’immeubles à construire ou de location-accession à la propriété immobilière, l’acquéreur non-professionnel peut se rétracter dans un délai de sept jours à compter du lendemain de la première présentation de la lettre lui notifiant l’acte.

Cet acte est notifié à l’acquéreur par lettre recommandée avec demande d’avis de réception ou part tout autre moyen présentant des garanties équivalentes pour la détermination de la date de réception ou de remise. La faculté de rétractation est exercée dans les mêmes formes.”

Nous vous confirmons par écrit notre décision de nous rétracter de cette affaire.

Veuillez, Messieurs, agréer l’expression de nos salutations les plus distinguées.

Your signatures

Your home address (es) in the UK


This letter should be sent to the French end by fax (for speed of receipt but as previously explained not as formal proof of receipt by the French end within the seven day cooling-off period) and by registered post.

Many French estate agents and their UK intermediaries suggest at the outset of a transaction that you immediately sign a French purchase contract, and then decide within the seven day cooling-off period whether or not to proceed with your purchase. As I hope these notes have explained, this course of action is not recommended. It is far better for you to have decided - upon mature reflexion and with ample time - whether or not you wish to proceed with your French purchase before you sign any contract. In many cases the information provided to you by the selling agent at the outset is incomplete (e.g. you do not have a copy of your vendor’s title deed and/or a plan cadastral) and the contract prepared for your signature may not contain all the conditions suspensives you should insist upon to fully protect your position. These and sometimes other matters should be properly dealt with before you enter into a legally binding commitment to buy French property.

Stephen Smith is a bilingual French national who specialises in French estate and tax planning matters. For a French property ‘health check’ and peace of mind, contact him at:
Stephen Smith (France) Ltd, 161 Cemetery Road, Ipswich IP4 2HL. Telephone 01473 437186 ; Fax 01473 436573; E-mail: stephen@stephensmithfranceltd.com Website: www.stephensmithfranceltd.com