The legal framework of an integrated real estate development scheme allows foreigners to buy a residence on any property. But in all the cases of purchase of a good in PDS, (formerly IRS and RES), it is the Sale before Completion (VEFA) or sale on plan which prevails.
To silence the reluctance concerning the principle of acquiring an estate before completion, it must be known that it is governed by the French Civil Code and validated by a contract: the contract of Sale before Completion, whose determining obligation for the seller is to build and for the buyer, to pay as the work progresses.
The terms of Article 1601-3 of the French Civil Code are explicit in this regard: “the Sale before Completion is the contract by which the seller immediately transfers to the purchaser his rights on the land, as well as the ownership of existing constructions. The future works become the property of the purchaser as and when they are executed; the purchaser is obliged to pay the price as the work progresses and the seller retains the powers of the owner until the reception of work”.
In addition, to meet the requirements of the VEFA, the promoters had the idea to protect themselves with a Financial Guarantee of Completion (GFA) with the banks. This scheme gives the future owner the guarantee of the good delivery of his property, according to the conditions defined in his contract. If it happens that the promoter fails to fulfill his obligations, the banks would then guarantee the delivery of the entire real estate development.
Three main stages, including two validated by a contract, intervening at the beginning and at the end of the itinerary, accompany the act of acquisition.
The first contract, the Preliminary Reservation Contract (CRP) signed between the future buyer and the developer, allows the reservation of a property. At its signature, a deposit representing the amount of the deposit is paid into a specific account, usually current, at a notary.
The second step is to obtain the Letter of Approval from the authoritative body on the subject, the Economic Development Board. Because the purchasers must first provide the documents required by the authorities to the promoters, so that they can, on behalf of the client, submit a purchase request. On all the requests studied, the Economic Development Board publishes a letter of approval which accompanies those which are validated, thus allowing the finalization of the sale.
Finally, the binding sales contract is established upon receipt of the letter of approval from the EDB. The client and the seller then sign the binding sales contract at the notary and it is at this stage that the buyer officially becomes the owner of his property.