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The purchaser’s
seven day cooling off period
Under
French law, the purchaser of real estate property for use as a dwelling
who is not a professional in the estate agency field benefits from a seven
day cooling off (or withdrawal) period (called a ‘délai de rétractation’).
There is also provision for a ‘reflection’ period which is when
a draft deed of completion is sent to a purchaser and he or she then has
seven days to decide whether to proceed.
The
cooling off period essentially works in the following manner: a copy of
the first contract is provided to the purchaser.
He or she has seven days following the day after receipt of the
same in which to withdraw from the purchase.
If he or she withdraws during the period then there is not need to
justify the decision. If a
deposit is paid either to an estate agent or to a notaire instructed to
assist in the sale (note that no deposit is otherwise payable until
after expiry of the cooling off period), the deposit holder must
return the deposit to the purchaser that withdraws within twenty one days
of the date of the valid withdrawal.
If
the purchaser is present when the contract is notified to him or her (i.e.
in the agent’s or notaire’s office), a receipt confirming notification
will be signed by the purchaser. Alternatively,
if it is sent to the purchaser by letter then it must be sent by recorded
letter with a request for advice of receipt.
The latter will prove when the contract has been received.
A
vendor does not benefit from the provisions of this law.
Over
the past two years that this law has been in force, we have experienced a
number of problems with the same. The
terms of the law are subject to varying interpretations and due to the
lack of case law there are at present no concrete answers to the
difficulties raised. There
follows an analysis of some of the principal problems, some of which can
lead to the purchaser’s best interests being jeopardised.
1)
In our view, when the contract is
notified to a purchaser by post, the application of the law that is most
correct is as follows: the contract is notified to the purchaser once both
parties have signed it (even should it effectively need to be sent
twice to the purchaser). However,
this is often not complied with and the contract sent to the purchaser for
signature and at the same time for the cooling off period.
This method of approach does not sit logically with the intention
and letter of the law which is to provide someone who has contractually
engaged him or herself with a way of pulling out if, upon reflection, he
or she does not wish to continue with the transaction.
The reason that the law is often not applied in the most correct
way (by both estate agents and notaires) concerns in part the pressure of
time to finalise the first contract (with the postal service being what it
is, this can often take upwards of a month) and the administrative burden
that results. Any purchaser
must thus always be extremely careful to ensure that it is understood how
the cooling off period will be operated.
2)
Proof that the purchaser has received the
contract when sent by post outside of
France
is also an issue.
Often, the post office document proving receipt of the contract is
not returned to the sender. Therefore,
there is nothing formal (and independent of the parties) to prove receipt.
Often, the purchaser is required to sign a separate form proving
receipt inserted with the letter. In
this situation, it is possible for the purchaser to abuse the position by
inserting a different date to that upon which the letter was actually
received. Sometimes the
separate document is not returned to the sender of the notification.
This reduces the security offered to all parties due to the
uncertainty that results and can lead to ‘fudging’ of the rules i.e. a
form filled out with an approximate date of receipt given for the purpose
of proving that the law has been complied with.
Sometimes agents and notaires, as a result of these problems, will
not send out notifications but will insist upon delivery in person of the
contract once signed. This can
sometimes lead to extra pressure on a purchaser.
3)
The law does not cover the position when
a purchaser is not available to sign for the contract.
This links into the problems when it is not the French postal
service that has control over the signing and return of documentation
proving receipt. The law is
silent on this point but logically speaking the cooling off period can
only run from the time when the post is actually collected from the post
office (a purchaser can only effectively be notified of the contract when
he or she receives it). This
allows for abuse by a purchaser who is aware of what is waiting at the
post office but stalls for time before collecting.
4)
Another concern relates to the
‘reflection period’. Occasionally,
notaires will send a copy of the draft deed to a purchaser for a
reflection period when they have already benefited from a cooling off
period at the first contract stage. The
reason for this is sometimes that a condition of the first contract has
failed (e.g. lead has been revealed by the lead report when it was a
condition precedent that there should be none).
This is of concern for two reasons.
Firstly, the law itself appears to exclude the possibility of a
reflection period when there has already been a cooling off period at
first contract stage (thus what is the validity of any withdrawal
exercised during the reflection period?).
Secondly, a purchaser is often unaware of why the contract has been
sent again and does not necessarily realise what the intention behind the
sending is. A condition
precedent and the reflection period should not be confused in this way.
If the reason for having a reflection period is one which
effectively would alter the contractual basis upon which the purchaser
initially benefited from a cooling off period but is not connected to a
condition precedent (e.g. it is discovered that termites are in the
property but that there is no condition governing this eventuality) it is
in our view unsatisfactory to deal with the issue in this manner and
arguable that a new agreement should be drawn up with the purchaser being
properly informed and clearly fully consenting to the new situation.
In
our experience, very few purchasers withdraw during the actual cooling off
period. Should they wish to
withdraw once they have perused the contractual terms or they simply
change their minds, they often do not sign the first contract rather than
contractually committing themselves, even should this mean hanging on to
the contract for considerable periods of time until they have made a
decision. Part of the reason
behind this may concern insecurity about the cooling off period and its
application.
24/07/2003
- Issue of the week
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