Today is:
Service France
Buying a Property with a Change of Planning Permission
Please note that the information herein is of a general nature and you should not act or refrain from acting on it without professional advice on the specific facts of your case. NO liability is accepted in respect of this article. This article does not constitute financial advice.
The normal procedure, when buying say a property which has agricultural or part agricultural use, which is to be converted to entirely residential use, is to ensure that there is a clause inserted in the contract or compromis de vente, providing that you are not obliged to complete the transaction if you do not obtain planning permission for change of use to residential. If such a clause is not inserted in the compromis, then you run the risk of being obliged to purchase the property without the benefit of planning permission, which will probably make the property worthless to you. It is good practice to have a clause in the compromis, under which the vendor agrees to you applying for planning permission.
It is always sensible to have such a compromis checked over carefully and also to think through carefully what you are planning to do and also deal with any unexpected situations which may arise. For instance, it is sensible to define the planning permission you are applying for and also the extent of the works which you are proposing to carry out. In some cases it may be necessary to have a provision that if you are unable to obtain the planning permission for the full extent of the works you wish to carry out, you are still able to proceed if you get planning permission for a more limited conversion. It is also useful to make sure that there is nothing in the compromis which would allow your vendor to withdraw from the contract or seek to renegotiate after you obtain planning permission and the value of the property has increased. This should not be the case if the clause is expressed as a suspensive condition, but it is a good idea to read through the rest of the contract to make sure that there are no other clauses upon which the vendor could rely in order to renegotiate a higher price before completion.
Normally, once the planning permission has been obtained, the transaction will proceed to completion and the acte authentique will be signed at the notaire’s. This is normally the end of the procedure, and the building works can then start. However, in a recent Cour de Cassation case (French equivalent of the House of Lords), decided on 23 May 2007 (Juris-data number 2007-038938), a couple who had gone through the above procedure tried to rescind or cancel the sale after completing the transaction at the notaires and paying over all the money.
In this case, the couple signed a contract on 9 November 1998 to purchase a parcel of land upon which they proposed to build a house, situated close to a river. There was the usual suspensive condition that they were only required to complete if they obtained planning permission, which they obtained on 16 December 1998 by way of a municipal order. They completed the transaction on 29 December 1998 using a separate notaire to the seller’s notaire. As a result of rising water levels shortly afterwards on 18 and 19 January 1999, the Mayor on 4 February 1999 withdrew the planning permission which had been granted on 16 December 1998, and revoked the building permit. He stated it was not possible to build on the land. The difficulty here was that the couple had already completed the transaction and paid over their money.
The couple sued the seller, seeking an order that the sale was null and void because there was an error relating to the substance of the land they were buying – they thought they were buying land they could build on which was wrong - and they also sued the notaires for professional negligence in allowing them to purchase the property. The French Supreme Court rejected their claim on both grounds.
The Supreme Court said that you had to decide whether or not there was an error over the substance of the land at the time the contract was concluded, which was when the planning permission was obtained, on 16 December 1998. The fact that the planning permission may have been granted as a result of an administrative error within the French municipality did not matter. The fact was there was planning permission at the time they completed.
The Supreme Court also decided that notaires have a professional duty to make the transaction clearly understood by both parties. In this case, the couple complained that they had not been properly advised by the notaires, and that this lack of advice had caused them damage. The court did not agree with this. It said that the couple knew that the land was situated close to water in an area which was liable to flooding. The notaires had taken the precaution of requiring the couple to sign a document relating to the planning for the property which they attached to the acte authentique, which had a reference to flooding in the vicinity. The notaires had also added in the acte authentique a paragraph stating that the buyer had seen a copy of the planning documentation and accepted that it was his personal responsibility to deal with matters arising there from. This was sufficient to protect the notaires from any claim even though they had not written to the buyers or spelt the position out to them.
The upshot of this case is that the risk of a planning permission being obtained through error or even as a result of some illegal act lies with the buyer if the planning permission is subsequently annulled. This seems quite an extreme decision, especially as there is no suggestion in this case that the buyers were in any way aware of any possible irregularity in the planning procedures. It also shows that the obligation on the notaires is very limited and there is no obligation on them to look into the planning permission or advise in any way on it. It is possible for notaires to engage the services of a planning specialist called an ‘urbaniste’ which, if this had been done in this case, may have helped the buyers avoid the pit they ended up falling into.
David Anderson
30th October 2007