The Effects of Covid-19 on Property Sales – the Legal Situation

Editor’s note: Since this article was published, the French government has amended some of its rulings. For the latest, see here.

The French government introduced various emergency rulings on 25^th March 2020, due to the Covid-19 pandemic. One particular ruling, the ‘suspension of certain time limits prescribed by the law’, has a significant impact on property sales. This ruling has been initiated in order to neutralise the negative effects of exceeding the existing legal, contractual or administrative time limits during the “legally protected period”.  

Here are some important dates to help understand the ruling:

• Lockdown 17^th March – 15^th April 2020 – (likely to be extended)
• State of emergency – 24^th March 2020 – 24^th May 2020
• Legally protected period (LPP) – 12^th March 2020 – 24^th June 2020

Nullify the effects of exceeding the legal time period when ending during the LPP

Article 2 stipulates that all completion acts will be affected if the legal time period ends during the LPP. The legal time period will remain the same length of time, starting from the end of the LPP (i.e. 24th June 2020) and must complete within 2 months at the latest i.e. 24th August 2020.

Example 1: Purchaser’s 10-day cooling off period.

Rule:  According to article L271-1 of the Construction and Housing Code, any purchaser who is not a property professional, may withdraw during the 10-day cooling off period starting from the day after receiving notification.

Concerning: all sales whereby the 10-day cooling off period is due to finish within the LPP.

Solution: The cooling off period will finish at midnight on the 3^rd July 2020. However, should the purchasers wish to renounce this extension, they are able to do so.

Example 2: Obtaining as mortgage (as a condition of a purchase)

Rule:  According to article L313-41 of the Consumer Code, a 1-month minimum time period is allowed for obtaining the mortgage offer. In reality, 45 or 60 days are often provided.

Concerning: all sales whereby the suspensive condition to obtain a mortgage comes to an end during the LPP.

Solution: 24^th June 2020 + 1 month (or longer if stipulated in the pre-sale contract) = the mortgage offer must be obtained by the 24^th July 2020 in this example.

Example 3: Exercising the 14-day cooling off period after signing a for sale mandate outside of head office.

Rule:  According to article L221-18 of the Consumer Code, vendors benefit from 14 days in which to change their mind without having to provide a reason, for all mandates signed outside head office.

Concerning: all sales mandates whereby the 14-day cooling off period comes to an end during the LPP.

Solution: 24^th June 2020 + 14 days = the 14-day cooling off period will finish at midnight on the 8^th July 2020. However, should the purchasers wish to renounce this extension, they are able to do so.

Nullify the effects of exceeding the contractual time period when this ends during the LPP

Article 4 stipulates that the legal time period for a response will be extended to the end of the state of emergency plus 1 month, i.e. the 24th July 2020 for all acts with contractual time periods ending during the LPP.

Example 1: Time period for completing the sale following acceptance of the purchase offer.

If the offer stipulates that a sale must be completed during the LPP, this date is extended to the 24^th July 2020.

Example 2: Time period for realisation of the contractual suspensive conditions of a pre-sale contract.

The time period for the realisation of all the suspensive conditions is extended to the 24^th July 2020. As a consequence, the vendor cannot be considered to be out of contract and freed from the contract before this date.

Example 3: The purchaser, having signed a pre-sale contract in the form of a promesse unilatérale de vente must ‘exercise their option to purchase’ during the legally protected period. This time period is extended to the 24^th July 2020.

Example 4: The purchaser, having signed a pre-sale contract in the form of a compromis de vente, stipulating a completion date during the LPP.

Neither party can act to force the sale as a consequence of overrunning the stated deadline. According to the ordonnance, completion must take place by the24^th July 2020 at the latest.

Example 5: – Handover of keys during the LPP.

The vendor is obliged to hand over all keys to the property at completion. This obligation has been extended; thus, keys must be handed over to the purchaser by the 24^th July 2020at the latest.

Nullify the effects of exceeding administrative time period when this ends during the LPP.

Articles 7 and 8 of the ruling contemplate:

• Either a postponement of the administrative time period: for those time periods already running on the 12^th March 2020, the calculation will resume from the end of the LPP.
• Or, a total interruption: the restart point for the time periods will be during the LPP and they will end after the LPP.

These two rules apply equally to time periods accorded to public officials to check that the dossier is complete or to request further documentation.

Example 1: The urban right of pre-emption

The beneficiaries of this right have a delay of 2 months (3 months if the property is situated in a sensitive natural zone) to respond. If the DIA (notice of intent to sell a property) was received on the 24^th February 2020, the response must be given by the 24^th July 2020. If the DIA is applied for during the LPP, then the response must be given before the 24^th August 2020. The administration may respond sooner, if able to do so.

Example 2: Planning applications

No tacit approval will be given for any planning application with the time period for a response expiring during the LPP. The start date for the planning application runs from the 24^th June 2020.

Prolong the validity of planning authorisations due to expire during the LPP.

Article 3 prolongs the validity of these planning approvals for 2 months after the end of the LPP. Works must therefore be started before the 24th August 2020 at the latest.

It important to note that a ruling on the 3^rd April confirmed that notaires who are set up with the necessary technology to continue signing acts remotely, are able to do so. It is still possible to sign pre-sale contracts and completions may still go ahead if they are not affected by the matters discussed in this article.

Information provided by Jane Thom of Agence Thom, Normandy. You can view Agence Thom’s properties for sale here.