Property planning problems
Many folk moving to France rely on the income from their gites for their livelihoods. The problem of course is that gite income is usually seasonal - with the summer lettings usually being critically important. There may be a few off season lettings to walkers and other sturdy souls, but very few gites secure year round bookings. Unless they are in prime activity areas like the Alps and the Pyrenees, where properties are usually in continuous demand for skiing, walking and family holidays. But take care; because some properties apparently suitable for conversion into gites may not be so suitable after all.
In the foothills of the Pyrenees is the town of Oloron, ideal for skiing in the winter and climbing in the summer, and year round for pilgrims to nearby Lourdes. In the town are a number of character properties suitable for improvement with space for large rear extensions. One such property, in a poor state of repair and competitively priced, was of interest to a U.K. builder, keen to modernise the property for gite letting. The property had bundles of character and would be of keen interest to tourists. A price was agreed and contracts were signed.
A few weeks before completion, the notary advised the builder that the property was subject to a road improvement scheme (arrêté d'alignement) proposed by the commune ‘within the next two to three years' to improve access to the nearby school. The scheme involved the demolition of the front of the house. The notary assured the buyer that the dilapidated property would be rebuilt at public expense to a high specification. However, until the work was done, the commune would not be granting any planning permissions for any works to the property - which meant no rear extension or any other improvements the buyer may have had in mind.
For the buyer, this was a disaster. His capital would be tied up in the blighted property, possibly for years, with no rent yield, until the commune had rebuilt the house. He could then apply for planning permission to extend the house, which of course would take a further year or so to complete.
So what could the buyer do? He could not withdraw from the sale under the standard conditional clause in the contract because the commune had certified that the project did not involve any diminution in the value to his property. And the real problem of course was that the commune may take far longer than ‘two or three years' to deal with works. By the look of the property, no maintenance work had been done for some time. So it looked as though the current owner had known about the scheme and neglected the property accordingly.
So how could the buyer have avoided this problem? The French operate a conditional contract system. You sign a contract and can withdraw from the purchase if the conditions are not satisfied. The standard planning conditional clause talks of a right to withdraw if matters are disclosed which involve a ‘diminution in the value of the property', an objective test which of course was passed in this case. If anything the rebuilding of the dilapidated property would have increased the value of the property - but this was of little use to the buyer, who now found himself owning a blighted property. Possibly for years to come.
The trick is to turn the objective test in the contract into a subjective test. In other words, the buyer could have amended the conditional planning clause to state that he could withdraw if the searches disclosed anything which in his opinion would be prejudicial to his proposals for the property. For example:
‘Que le certificat ou note de renseignements d'urbanisme ne révèle aucune servitude particulière ni arrêtée d'alignement pouvant faire obstacle à la mutation du bien vendu à l'avis unique et absolu de l'Acquéreur'
So if you buying a property in France which involves any major changes involving planning law, and you want to leave your options open, consider using this clause.
Philip Winter-Taylor
Advice for property in France
Tel: 01233 666968
Email: wintertaylors@aol.com
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