The most frequently asked
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What is a reservation contract?
The reservation contract is to new build property what the compromis de vente (agreement to purchase / sell) is to existing property: in other words, a bi-partisan pre-contract between the property developer (the vendor) and the purchaser, which establishes the terms of sale of a property purchased off plan (or for future completion - VEFA). Through this preliminary contract, the vendor (the developer) undertakes to reserve the property for the future purchaser. The future purchaser places an option on the property. At MGM, a digital version of this reservation contract is available in the client area.
Good to know. Since August 2015, from receipt of the reservation contract, the purchaser benefits from a cooling-off period of 10 days (as opposed to 7 previously).
What do my reservation documents consist of?
Reserved for the sale of properties off plan (or VEFA), the reservation contract sets out:
- The names, contact details and other details of the two parties: the vendor (property developer) and the purchaser (individual, business, SCI…).
- Details of the future apartment: address, unit numbers, detailed description of the apartment (surface area, number and distribution of the rooms, standards…) and description of its position within the complex.
- The sales conditions. Specifically,
- the provisional sale price, the terms for revising the price, the percentages of the stage payments.
- the amount of the deposit to be paid, the terms for the refund of the deposit should the sale not proceed.
- the provisional date for the signature of the deed of sale, the estimated duration of the construction work and the provisional date for the handover of the property.
- any loans on which the funding of the apartment depends and a suspensive clause providing for the cancelation of the sale without penalty should the loan not be granted.
What happens at the handover?
The handover of a new apartment is the moment when you take possession of it. It is from this date that the guarantee periods covering your property commence.
Handover takes place between the developer and the purchaser and involves a site inspection – the famous owner’s inspection which enables them to check that everything has been carried out as provided for in the reservation contract. If this is not the case, the reservations recorded in the inspection report notify the builder of what needs to be corrected. After this, you have one month in which to report by registered letter any apparent faults which were not noticed during the inspection. The developer then has one year to correct these faults.
What are the guarantees covering my apartment?
During construction, two guarantees exist in tandem and may be offered to you:
- The completion guarantee (or extrinsic guarantee): this is the assurance that the construction will be funded until it is completed even should the developer or builder default
- The refund guarantee, which guarantees that the purchaser will be able to recover all funds already committed should the construction not be completed.
When the project is complete, other guarantees take over and cover your apartment over time as follows:
- 1 year for any fault noticed after the keys are handed over (the perfect completion guarantee).
- 2 years for electrical fittings, plumbing and door and window frames (the operating guarantee).
- 10 years for the foundations, walls and roofs (ten year guarantee).
What is a furnished or managed apartment complex?
Managed apartment complex is the name used for service apartment complexes offering apartments for let such as résidences de tourisme, business accommodation, student accommodation or accommodation for the elderly. Here are three of the specificities by which they differ from standard furnished rental accommodation:
- They are required to provide facilities in addition to the rental accommodation (reception, housekeeping, catering…). In tourism, the quality of these facilities as well as the leisure and recreational amenities and infrastructures offered are subject to standards and are classified from 1 to 5 stars.
- The rental management of the properties is provided by an appointed manager or the operator of the complex, but never by the owner either directly or through a standard estate agent. Owners and manager sign a commercial lease. In the case of new developments, your property is managed by MGM Hôtels & Résidences, a subsidiary of the MGM Group.
- The taxation status of owners of properties in managed apartment complexes is that of Loueur Meublé non Professionnel (LMNP – non-professional furnished landlord). Among other benefits, it allows the VAT on the purchase price to be recovered and offers reduced taxation on the rental income. At MGM, you have the bonus of free use of the furnished apartment for several weeks each year.
What taxes apply to my secondary residence?
As for a principal residence, the owner of a secondary residence is liable for the taxe foncière for each of their secondary residences. This is calculated according to the rental value of the property and the rate is set annually by the local authority where the property is located.
As for the taxe d’habitation, the reform started in 2018, aimed at exonerating principal residences from this tax, does not apply to secondary residences. Renamed taxe d’habitation sur les résidences secondaires (THRS) it remains payable in full and is even increased in some municipalities with over 50,000 inhabitants.
The television licence payable for principal residences does not apply to secondary residences.