4. Guarantees on 'Off-Plan' French Property
- Checking out the Developer
- Financial Guarantees
- Building Guarantees
4.3. Building Guarantees
Under the terms of a VEFA contract, the developer is under an obligation to remedy any defects in the property that arise within the first year following handover of the property.
In addition to this one year contractual guarantee, the developer is also required to give a ten year statutory building guarantee on the property.
The first year of this ten year guarantee runs co-terminously with the one year guaranteee under the VEFA.
In strict legal terms, if the developer is not also the builder, the ten year building guarantee is between the developer and the builder, to the benefit of the purchaser.
The responsibility is referred to as la responsabilité décennale and operates on a reducing basis, with minor work guaranteed for a year and more major building work guaranteed for the full period.
In order to improve the enforceability of this rule, and reduce litigation between client and developer, the law requires separate client insurance is also taken out.
The client insurance is called assurance dommages-ouvrage.
The policy provides a similar ten year guarantee against defects in the workmanship in the event of default by the developer.
4.3.1. Developers Building Guarantee
The ten year building guarantee from the developer/builder operates through an insurance policy they are required by law to take out.
This insurance policy is called the assurance décennale.
There are severe penalties for a developer/builder who does not carry this insurance cover.
Our own strong recommendation would be that you should always ask to see the insurance certificate of the developer before you sign the contract.
You should check that it is an up-to-date certificate, failing which the insurance company may be unwilling to pay out in the event of a claim. Normally, the Notaire should verify that it is satisfactory.
The ten year guarantee operates on a tiered basis as follows:
I. During first year from completion the developer is obligated to guarantee complete performance of the work - La garantie de parfait achèvement.
II. During second year to guarantee that fittings are in good working order, e.g. electrics, sanitary goods, heating, windows, shutters, and doors – la garantie de bon fonctionnement.
III. During the ten years from completion to guarantee all those works concerned with the stability and integrity of the building including those elements which ensure the building is wind and watertight, e.g. foundations, floors, walls, staircase, ceilings, door and window frames, major electrical and plumbing defects, roof, framework – l’assurance décennale.
Where a defect arises the client is not obliged to prove the fault and the developer/builder is presumed to be responsible.
The developer/builder can, however, escape liability on grounds of force majeur (event not foreseeable, irresistible and external).
Most importantly, beyond the first two years, the ten year guarantee does not cover defects in building products or equipment installed in the property. It only covers the workmanship of the contractor.
Accordingly, if, for instance, your boiler ceases to function after five years, you cannot go back on the builder, unless the cause of the failure was their installation work. If the builder was not at fault, you would need to examine the manufacturers' guarantee.
There is also a guarantee that the property complies with current noise insulation standards – la garantie de l’isolation phonique. This guarantee operates separately from the assurance décennale for the first year following handover, to the benefit of the first occupant of the property.
Moreover, in a recent judgement, the French Court of Appeal took the view that, even should a property comply with current noise insulation standards, if there remains a noise problem that can be objectively identified, then it is still possible to draw upon the ten year guarantee to seek redress. It will, as always, depend on the circumstances.
Quite apart from the ten year guarantee on defects, there is also a right to bring a legal action against the developer for up to 30 years, if the property does not conform with the specification as set out in the sale contract.
So the 30 year rule does not cover 'defects' per se, but a lack of correspondence between the specification and the end product. There is a lot of litigation on this whole issue and the distinction can only finally be determined by a court of law.
Some developers seek to get buyers to waive their right to bring such an action, so be careful of the terms of the VEFA contract on this point.
4.3.2. Householder Defects Insurance
The purpose of the assurance dommages-ouvrage is to ensure, as far as possible, that you are satisfactorily protected in the event that the developer, or their insurance company, does not accept liability under the ten year building guarantee.
In these circumstances it might take you years to obtain redress, even if you are ever able to do so.
The policy seeks to remove all of this uncertainty by placing an obligation on your insurer to meet the costs of remedying the defect, and leaving it to them to fight the battle as to who is responsible.
This insurance is normally arranged by the developer but paid for by the client.
The policy will provide ten year cover on the same basis as that of the builders’ insurance.
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