Some estate agents in France offer a resale guarantee on the purchase of a French property, but just how useful are such guarantees?

Amongst the panoply of property insurances that you can obtain in France is a policy to protect you against a loss on the sale of your property.

These policies are called ‘garantie revente’.

With the downturn in the market in recent years they have increased in popularity. Such policies are unheard of in the UK, where the price of homes seems to rise inexorably.

The policies can be purchased alongside a mortgage contract, but they are equally available to cash buyers. They are also available to both principal home buyers and those purchasing a second home.

In an attempt to reassure prospective buyers a number of estate agent chains in France offer these policies, on which the buyer will pay the insurance premium. You can also buy them direct from certain banks and insurers.

Some policies can be had for as little as €100 a year, although the best are likely to be over €500 year.

Given the relatively small outlay it sounds a tempting proposition.

However, there are a number of serious limitations and conditions around these policies that means they are only likely to be of interest to a minority of international buyers.

Operative Period

Most contracts require that there is a minimum waiting period before it becomes effective and the contracts are also normally limited to a maximum duration.

The operative date is normally not less than six months from the commencement of the contract, with any claims normally limited to a maximum of five years from the date of purchase. Some contracts are shorter, perhaps no more than two years from the date of purchase.

Once the operative date is passed most contracts also require that the property is placed on the market for a minimum period, often not less than eighteen months.

Maximum Payout

The principle on which these policies operate is that they will compensate you for any loss incurred between the purchase price and the selling price.

All well and good, except that almost without exception the level of the compensation is limited to a maximum of the purchase price, and is also in turn capped at a maximum sum.

In most cases the maximum compensation is 20% of the purchase price, up to around €30,000, in a few cases to €50,000.

Obligatory Sale

Most contracts can only be triggered if you are obliged to sell; it is not possible to use them for voluntary sales.

More precisely, there are only particular circumstances when the contract can be used, such as the enforced sale due to illness, loss of employment, loss of earnings, divorce, invalidity or death of one of the insured parties.

Age Conditions

One of the key limitations that is likely to be of concern to many international buyers are the conditions relating to age.

Many policies are not available to those 60+ and some events that might trigger the contract are age limited, notably in relation to a maximum age of 70 for death, and also in the case of the loss of employment for those 60+.

Conclusion

With such limitations it is difficult to see how most international buyers of French property might be interested in such policies, although they may be of more use to younger buyers and investors.

In most cases you would be better off ensuring you purchased at the right price in the first instance.