Sale of property to be renovated
Sellers of buildings intended for residential use for both residential and professional use may undertake to perform work within a given time period and receive money from the purchase before work is complete.
How is the contract for the sale of a building for renovation drawn?
The seller must draw up a notarised deed known as a "contract for the sale of a building for renovation" designed to give the purchaser better protection. Under this instrument, the seller immediately transfers to the purchaser the ownership of the land and the building work in progress.
Sale of property to be renovated and works
The works must necessarily be carried out on an existing constructed building. It is defined in the implementation decree of 16 December 2008. These works must not be aimed at extending or completely restructuring, i.e. rebuilding a property; for these works only the regime of sale of buildings to be constructed applies.
Is it possible to sign a preliminary sale agreement?
A preliminary contract or preliminary sale agreement may be signed and must include essential information such as a description of the works and time frames for their completion, the price and the seller's undertaking to provide, when the authentic deed of sale is signed, evidence of the guarantee of completion of works and the compulsory insurances, failing which the agreement is deemed to be null and void. This preliminary contract may be signed subject to conditions precedent. In such case, the law provides that no payments can be made before the conditions are fulfilled. This principle is specific to the sale of property for future completion.
What are the terms of payment of the prices?
The law provides for a staggered system for paying the sale price: the price for the existing building is paid when the authentic instrument of selling is signed. Payment of the price of work must, in turn, be made as follows:
- 50% on completion of the work being half of the total price of the work,
- 95% on completion of all work, the balance on delivery.
Note that since the decree of 27 September 2010, it is possible to provide intermediate payments to the extent that the ceilings above are respected.
Which guarantee of completion of works does the seller have to give?
The law requires the seller to provide a guarantee of completion which consists of a joint and several guarantee provided by a finance company or approved insurance company. This guarantee is exclusive of any other type of guarantee.
The guarantee ends when a specialist in the field jointly appointed by the parties issues a certificate recording that the works have been completed. The seller and the buyer then sign memorandum of acceptance of works.