by Karl-Heinz Schabmuller MBA, Paris

Since the mid-1990s a host of real estate consumer and environmental protection laws has come into effect in France. These laws require people selling properties as well as landlords to carry out various surveys before putting their properties on the sales or rental markets. Buyers and tenants must be informed of the results before the sales contract or lease is signed.

One of the first laws adopted was the "Loi Carrez" passed in the mid-1990s which requires sellers to indicate the exact size of the property when the sales contract is signed. If it is subsequently revealed that the actual size is more than 5% smaller than that stated in the contract, the buyer is entitled to claim a price reduction of the same proportion within a year of the purchase being completed. The law also stipulates exactly how properties are to be measured.

This law was hotly contested and critics argued that the costs involved did not justify the benefits. Ten years on, however, it is widely regarded as a success, since it provides clarity and the number of lawsuits has significantly decreased.
Since then, additional requirements have been imposed on sellers and, in some cases, landlords of rental properties, including producing mandatory certificates for the following:

1) The presence of asbestos (under the decree of 7th February 1996).
2) The presence of any lead (under the Law of 29th July 1998). This also applies to residential property rentals.
3) Any termite infestation (under the Law of 8th June 1999).

The so-called "Loi Bachelot du 30 juillet 2003" came into effect on 1st June 2006 which requires sellers and landlords of properties to deliver a certificate of "natural and technological hazards" ("les risques naturels et technologiques"). This ruling applies to all real estate, both residential and commercial properties, any land owned and all construction projects, as well as furnished and seasonal rentals.

The law distinguishes between two risk categories: 1) natural disasters ("catastrophes naturelles") and 2) natural and technological hazards ("risques naturels et technologiques”).

If the property has been affected by a natural disaster in the past, the seller is legally required to inform the buyer. Landlords have the same obligation to their tenants.

General information about "natural and technological risks" can be obtained at the city hall or the prefecture of each department (county). Sellers have been required to provide a certificate “DPE” for the “energy performance” of the property ("diagnostique de performance énergétique” or "DPE") since 1st November 2006. Landlords have had the same obligation since 1st July 2007.

This provision is found in the Law of 9th December 2004 ("Loi no. 2004-1343 du 9 décembre 2004") and affects essentially all closed or "covered" properties. The "DPE" must include information about heating, sanitation, energy consumption, ventilation and lighting of the property and has a primarily informative function.

The latest in the series came into effect on 1st November 2007 and requires sellers of residential properties to provide a certificate “EIIG” listing all "internal gas" installations ("état de l'installation intérieure de gaz" or "EIIG"). This is aimed at identifying accident hazards and at checking gas installations conform to legal standards.

According to the French broker association "SNPI", legislation requiring two further mandatory certificates is currently pending:

1) Checks on electrical installations, expected to become law in the second quarter of 2008.
2) Checks on sanitation and wastewater installations, which should come into effect in 2013.

As of 1st November 2007, all mandatory documents are to be delivered by the seller in a special file known as a "dossier diagnostic technique" or "DDT".

It is not surprising if these complex laws can, at first glance, appear somewhat off-putting. However, since 1st November 2007 only officially licensed surveyors have been allowed to provide the mandatory certificates. As a general rule, they offer a professional service to customers and most offer “package checks” that include all the mandatory surveys. This simplifies the entire procedure and means that both sellers and landlords do not have get concerned with the details. In evaluating the current legislation, the pros clearly outweigh the cons. It may appear inconvenient to carry out all these checks before a property can be sold. However they provide a great deal of security to the future owner and will undoubtedly avoid numerous lawsuits.

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by Karl-Heinz Schabmüller MBA, Paris
www.khs.fr