38 / 132
Pre-emption right
• Is the statutory option provided to certain public authorities
to substitute an acquirer in a real estate transfer for purposes
of general public interest.
• Is held by the public entities and prevails over any rights of
pre-emption which may be held by private persons.
• Extension of the scope of pre-emption rights.
• Sales of shares in sociétés civiles immobilières (SCI) holding
a single real estate asset, may also be subject to pre-emption
rights where the shareholder intends to sell all or the majority
of the shares in the company or where the sale will result in
the buyer becoming the majority shareholder. This will be the
case where the asset of the SCI comprises a property (land or
buildings on land) the transfer of which would itself be subject
to pre-emption rights.
ACQUISITION PROCESS:
KEY STAGES
• Foreign investors wishing to carry out real estate transactions
do not need any prior authorisation.
Negotiations
• As a preliminary step, a non-disclosure agreement is
proposed by the seller/agents in order to allow access to the
property, information and documentation.
• The would-be purchaser issues a letter of intent which may be
indicative or binding.
• Discussions are usually pursued within the frame of a
preliminary agreement providing for an exclusivity period
during which the due diligence exercise is carried-out and at
the expiry of which the would-be purchaser is expected to
confirm its initial offer.
Preliminary contracts
• Preliminary contracts provides for the terms and conditions
of the sale whereas the final transfer remains subject to the
fulfilment of certain conditions.
Call option or unilateral undertaking to sell (promesse unilatérale
de vente)
• Is a contract under which the seller or promisor (promettant)
irrevocably undertakes to sell the property for a specified
price, whereas the buyer or beneficiary (bénéficiaire), has the
option of purchasing (or not purchasing) such property during
the given time period.
• Consideration for this undertaking consists in a deposit
which will be lost by the purchaser should it not opt for the
acquisition.
Bilateral undertaking to sell (promesse synallagmatique de vente
or compromis de vente)
• Is the reciprocal undertaking to sell and to purchase where
both parties are committed to transfer the property.
• The transfer remains subject only to the fulfilment of
condition precedents.
Deed of sale
• Is the deed according to which the ownership of a property
is transferred from the seller to the buyer; it is necessarily
notarised and is the fulfilment agreement of the preliminary
contract.
• There is no re-negotiation of the terms and conditions of the
sale which have been agreed at the stage of the preliminary
contracts.
• The sale shall be registered at the Land Registry by the notary.
• Warranties (i) for claims over the property aiming to evict the
purchaser and (ii) for hidden defects, are the two mandatory
warranties which by law are incumbent upon the seller of a
real property.
Off-plan sales (ventes en état futur d’achèvement)
• Used for selling buildings that have not yet been constructed.
• The seller is committed to erect the property in accordance
with agreed specifications, price and deadline; the seller
provides the purchaser with completion and defects
guarantees.
• The purchaser pays the price gradually along the construction
steps until completion.
• At the date of the deed of sale, the transfer of ownership
applies to the land and existing construction.
• The seller remains liable for construction defects under the
one-year, two-year and ten-year legal constructors’ warranties.
COMMERCIAL LEASES
• Leases of buildings used for commercial purposes are covered
by specific provisions codified in the French Commercial
Commerce. Certain provisions of the commercial leases may
be freely agreed by the parties, such as:
–– the initial rent (which can be fixed or variable);
–– the firm duration;
–– the service charges.
• However, commercial leases must comply with some
mandatory rules.
Duration: initial term of the lease
• May not be less than 9 years: the parties may agree on a
longer term (a lease longer than 12 years is subject to a
registration fee of 0.715%).
• Perpetual leases are prohibited.
• The lessee may, however, terminate the lease on expiry of
each three-year period. The parties may agree that the lessee
waives this option to terminate but only for leases:
–– concluded for a term of over 9 years;
–– for premises constructed for a single purpose (hotel,
cinema, etc.);
–– for premises only containing office space;
–– for warehouses.
• There is no automatic termination of a commercial lease: it
may only be terminated by notice of termination delivered
by the landlord or a request for renewal by the tenant. Failing
that, the lease will be extended beyond its contractual term
for an unspecified term: each of the parties having the right
to request the termination at any time with a 6-month prior
notice.
Pre-emption rights of tenants of commercial premises
• Save in certain cases provided for by law, tenants have a
preferential right over the sale of the commercial premises
they occupy.
38 Investors Guide to Europe 2015