Payment in instalments under a VEFA contract

The contract

The acquisition of a off-plan property (VEFA) complies with a special legal regime which gradually provides security for the buyer throughout the construction process. At the heart of this system is an essential mechanism: payment of the price in instalments.

Unlike a traditional sale, payment of the sums due is not not freely determined by the parties ; it follows a mandatory schedule, strictly governed by the Building and Housing Code, in order to ensure that payments called for correspond to the actual progress of the work.

The payment structure in the VEFA contract

Le off-plan sale contract is subject to specific regulations. Given its nature, the legislator has introduced in Article 1601-3 of the Civil Code, the principle of payment in instalments.

This principle, reiterated in Article Section 261-3 of the Building and Housing Code, meets strict conditions and do not leave it up to the VEFA contract to determine the payment itself.

The article R.261-14 The same Code thus stipulates that, at most:

• 35 % of the price may be paid upon completion of the foundations; ;

• 70 % of the price when taken out of service; ;

• 95 % upon completion of the building; ;

The 5 % remaining upon full completion, subject to the absence of reserves.

It should be noted that the 5 %s may not not be paid by the purchaser if there are still reservations about the construction. This balance must nevertheless be deposited with the Caisse des Dépôts et Consignations.

The contract for the sale of the building to be constructed must be signed by authentic deed and detail the full price as well as the terms of payment (direct payment or deposit).

In accordance with Article Section 261-12 of the Building and Housing Code, the seller may not demand any payment before the contract is signed or before the debt becomes due.

This rule, which is a matter of public policy, is punishable by criminal penalties under two years' imprisonment and a fine of €9,000, both penalties being applicable accumulate.

Payment in instalments is therefore the norm: the purchaser only pays the price at as the work progresses in order to limit its exposure to the risk of default by the seller or contractor.

How is payment handled in the event of a delay in delivery?

In a contract VEFA, Work may be delayed for various reasons (bad weather, shortage of materials, etc.). For the buyer, this may result in financial loss.

He will then be able to suspend part of the payment in proportion to the delay or claim compensation if the contract provides for it.

If no clause is provided for, the purchaser will have to take legal action to obtain compensation, proving fault, damage and a causal link attributable to the builder.

However, certain delays may be considered legitimate, particularly those resulting from inclement weather.