In London the conversation at social gatherings inevitably turns to house hunting frustrations. There’s always someone drowning their sorrows after just having been outbid by another buyer at the last minute. No surprise that the English adopted the satisfyingly resonant Yiddish expression gezumph to name the devastating experience of having your dream property snatched away by a competitor right before exchange of contracts.
In England and Wales this practice is possible because there’s no binding sales agreement until actual exchange of contracts. Also, agents are required to continue passing on all other offers after the vendor already has accepted an offer. During the period between the verbal acceptance of an offer and the written contract of sale, buyers not only invest emotionally in what they hope to be their future home; they also spend money on surveys, solicitor’s fees, and confirmation of their mortgage offer. This is why the practice of gazumping is so devastating.
Gazumping in France?
France’s conveyancing laws are very different from those of England and Wales and in certain ways buyers are very well protected in France. The initial binding contract of sale (compromis de vente or the unilateral promesse de vente) contains several conditions that allow the buyer to get out of the sale after signing. These conditions can include mortgage financing and the satisfactory outcome of a structural survey.
Once both parties have signed this French preliminary sales contract, the vendor cannot pull out of the sale, unless they pay a 10% penalty and risk being taken to court for specific performance. But the buyer does have ten days to change their mind without any penalty. This means that even if the vendor did not accept a structural survey as a condition in the agreement, it is possible to invest in a survey to be done during cooling-off period with the certainty that the vendor cannot change their mind. The correct answer to the question “Does Gazumping happen in France?” therefore is “No.”
After Price Agreement and Before Signing
The period before the initial contract is however still fraught with potential pitfalls that French buyers should know about. It is a little-known fact that during this early stage, buyers in France are actually more vulnerable than elsewhere.
“It is a little-known fact that during this early stage, buyers in France are actually more vulnerable.”
This is the consequence of the unusual property listing practices in France. Vendors here tend to list their property with several separate agencies and rarely enter into exclusive listing agreements with one agent. Because listings aren’t shared only the agency that finds a buyer receives any compensation. And if the vendor ends up selling the property privately, none of the agencies get any fee at all.
Why does this “commission lottery” affect you as a buyer?
Let’s look at this example: