32 | Investor Guide to Europe 2014
aCQuISITIon PRoCESS:
KEY STaGES
Foreign investors wishing to carry out real estate transactions do not
need any prior authorisation. Acquisitions may be carried out either
through an asset deal or a share deal.
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negotiations
•
As a preliminary step, a non-disclosure agreement is proposed by
the seller/agents in order to allow access to the property, informa-
tion and documentation
•
The would-be purchaser issues a letter of intent whichmay 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
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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.
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Deed of sale
•
I
s the deed according to which the ownership of a property is trans-
ferred from the seller to the buyer. For an asset deal, it is necessa-
rily 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 pur-
chaser and (ii) for hidden defects, are the twomandatory warran-
ties 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 firmduration
- The service charges.
However, commercial leases must comply with somemandatory rules.
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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.
•
Unless otherwise provided, the lesseemay, however, terminate the
lease on expiry of each three-year period.
•
There is no automatic termination of a commercial lease: it may
only be terminated by notice of termination delivered by the lan-
dlord 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 termina-
tion at any time with a 6-month prior notice.
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Transfer of business
•
Principle of freedomof assignment of the lease by the tenant
within the context of the right to transfer its business
•
Validity of restrictive clauses :
- transfer of the lease without the business may be prohibited.
- clauses limiting the transfer to various conditions such as
prior information of the transfer by the landlord, prior pay-
ment of any unpaid balance, drafting of the transfer agree-
ment as a notarised deed to which the landlord is a signatory,
etc., are deemed valid.
- in the case of assignment of the lease, it may be provided
that the tenant remains jointly and severally liable with the
assignee for the tenant’s obligations under the lease, in parti-
cular, the payment of rent and charges.
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The environmental appendix
•
Since 14 July 2013: any new lease or renewal relating to office or
commercial premises of a surface area greater than 2,000 sqm
has to provide a «green appendix».
•
It contains information on current consumption, a description of
