Buying Off-Plan (Sale Before Completion)

The Off-Plan Purchase Process

Buying off-plan involves a relatively specific process. It is a type of contract under which the buyer becomes the owner of a property that has not yet been delivered. Here are the main steps in the process:

Signing the Reservation Agreement

The first step is to sign a reservation agreement with the developer. This document binds both parties: the developer to build the property, and the buyer to purchase it once it is completed. The agreement specifies the property’s details (square footage, floor plans, etc.), the sale price, and the payment terms. A security deposit is also paid, typically between 2% and 5% of the sale price.

Securing Funding

After signing the reservation agreement, the buyer has a certain amount of time to secure a mortgage. The financing terms must be clearly stated in the agreement, and the sale is subject to the condition precedent that the buyer obtain the mortgage.

Signing of the deed of sale at the notary's office

Once construction begins and the buyer has secured financing, the final deed of sale is signed at the notary’s office. This deed formalizes the gradual transfer of ownership to the buyer.

Payment by Request for Funds

Payment for a property purchased off-plan (VEFA) is made based on the progress of construction. The developer issues payment requests at each key stage of construction (completion of the foundation, completion of the roof, etc.). The law sets a cap on these payment calls: 35% upon completion of the foundation, 70% upon completion of the roof, and 95% upon delivery of the property. The remaining 5% is paid upon handover of the keys, after verification that the property meets all requirements.

Delivery of the Goods and Statutory Warranties

Once construction is complete, the buyer receives the keys and can move in. The developer is required to ensure that the property meets all standards and to repair any defects that may arise. Several warranties apply: the warranty of satisfactory completion (valid for one year), the ten-year warranty (10 years), and the two-year warranty for fixtures and equipment.

The Benefits of Buying Off-Plan

A new, customizable home

One of the main advantages of a VEFA purchase is that it allows the buyer to acquire a new home that meets the latest construction and energy efficiency standards . In addition, it is often possible to customize certain aspects of the home (finishes, partitions, fixtures) according to personal tastes and needs.

Solid Guarantees

The legal framework for off-plan sales (VEFA) provides a high level of security for the buyer. Legal warranties—such as the warranty of proper completion, the ten-year warranty, and the two-year warranty—protect the buyer against any defects or poor workmanship. If a problem arises, the developer is required to correct the defects at its own expense.

Tax Benefits

Buying off-plan offers several tax advantages. Notary fees are lower than when purchasing an existing property (approximately 2 to 3% of the sale price, compared to 7 to 8% for existing properties). In addition, in certain municipalities, buyers may be eligible for a two-year property tax exemption. For rental investors, programs such as the Pinel Law allow for tax breaks in exchange for renting out the property for a specified period.

Installment financing

One of the major advantages of a VEFA is that payment is spread out as construction progresses. This allows the buyer to better manage their budget and avoid paying the full price of the property before construction is complete.

The Drawbacks and Risks of Buying Off-Plan

Delivery Time

One of the main drawbacks of a VEFA is the waiting period between signing the reservation contract and the delivery of the property. On average, it takes between 18 and 24 months for a project to be completed. This timeframe can be a constraint, particularly if construction delays occur due to adverse weather conditions or technical difficulties.

Financial Risks

Although rare, there is a risk that the developer could go bankrupt during construction. To mitigate this risk, it is important to choose a reputable developer and require afinancial completion guarantee (FCG), which ensures the delivery of the property even if the developer defaults.

Limited visibility of the property

Buying a property off-plan means visualizing a home that doesn’t yet exist. It can sometimes be difficult to imagine the final result precisely, despite the plans and models provided. Furthermore, there may be discrepancies between perceived quality and reality, even though legal guarantees require the developer to honor its commitments.

Possible additional costs

Certain additional costs may arise after the property is delivered, such as adjustments not initially anticipated or work to correct unsatisfactory finishes. Furthermore, although notary fees are reduced, other expenses—such as those related to customizing the home—can drive up the total cost.

Conclusion

Buying off-plan offers significant advantages, particularly in terms of warranties, tax benefits, and the ability to customize the property. However, this type of purchase also involves a certain amount of risk, mainly related to delivery timelines and limited visibility regarding the property before construction begins. To ensure a successful off-plan purchase, it is essential to choose your developer carefully, learn about the warranties offered, and prepare a budget that accounts for potential unforeseen expenses.

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