Laws Governing Real Estate Buying and Selling in France
One real estate transaction that requires the involvement of French law is the relationship between a landlord and a tenant. Here the law specifically lists out the buying and selling obligations of each party and serves to create an atmosphere of trust and understanding that creates an amicable business relationship.
The overriding law
In France, the dominant law that regulates the relationship between landlord and tenant is the Mermez Act of 1989. Despite minor amendments this law has largely remained intact and has become the overriding law on tenancy agreements.
The tenant and landlord under French law
- The tenant is highly favored by the law
- The landlord and tenant are permitted to reach agreement on the amount of rent payable but the amount can only be revised once a year and as the occupier and user of the house, the tenant is obliged to take out home insurance.
- Any suggested increase in rent must conform to the INSEE index. The owner is equally obliged to confirm that the rent paid is below those paid in the vicinity by landlords who own rentals with identical furnishings, accessories, fixtures and fittings. If the increase exceeds 10%, it must be spread over 6 years even if the contract is of shorter duration.
- A 2 months deposit may be paid only if payment of the rent in advance is not made.
- For a privately owned unfurnished rental, the duration of occupancy is 3 years minimum but six years if the rental is owned by a company or society. For furnished rental, occupancy is one year, renewable each year provided no notice has been given by either side. Furnished accommodation is more relaxed than unfurnished rental in terms of deposits, charges and obligations.
- Furnished accommodation is taxed as professional income but no VAT is payable. The landlord is required to pay all local taxes.
- The tenant can vacate the rental accommodation anytime he wishes but must issue a 3 month notice before doing so. The notice can be reduced to 1 month for special circumstances e.g. the tenant’s loss of employment or bad health. The landowner is not permitted to issue notice.
- A 2 month notice is the standard procedure given by the tenant who wishes to vacate the rental accommodation.
- The landlord is obliged to issue a notice of at least 6 months before the tenancy contract expires. The notice is sent either by post or by safe hand of a bailiff. If the landlord intends to sell the rented accommodation, a copy of the offer must be sent to the tenant together with the price. The tenant holds first preference to buy the accommodation.
- Under no circumstances can a tenant be evicted from his rental premise except for cases where the house is about to collapse, in which case the Mayor is the only person who can evict the tenant, or where the tenant has not paid rent or has failed or refused to take out a home insurance
- The landlord must wait out the period of the contract when the tenant either freely leaves the rental accommodation or elects to renew the agreement.
Strictly speaking, the tenant cannot be evicted from his/her rented accommodation but there are exceptions to the rule.
- A tenant may be evicted by the Mayor if the house is about to collapse
- The tenant has not paid the agreed rent amount
- No home insurance has been taken out by the tenant
- The tenant has abused his rights of occupancy by misusing the paid rental.
The landlord is not strictly permitted to re-enter the rented accommodation but there are exceptions where he may be permitted to re-occupy the premises.
- If he or a member of his immediate family intends to occupy the rental to live.
- If he intends to sell the rental accommodation.
- If the tenant has failed to pay rent, take out a home insurance or abused his/her rights of occupancy.
Termination of contact
- A contract must be drawn up to include obligatory and forbidding clauses.
- A resolution clause has the ability of terminating the agreement after a 2 month notice if an obligation in the contract has not been fulfilled.