Property sales and planning regularisation

Source: Gilles Carnoy

It is very common, during a sale, for the parties to realise that the property is in breach of planning regulations. This rarely causes the sale to fall through, but before completion, the buyer will often ask for the breach to be regularised…

To this end, notaries add a clause to the offer or the sale agreement when it is signed. The standard clause requires the seller to take, at their own expense, the necessary steps to obtain regularisation of the matter concerned. An amount agreed between the parties will then be held by the notary. If regularisation does not take place, this amount will be paid to the buyer as compensation.

Matters may subsequently become more complicated because, when applying for regularisation, other works/costs that we had not considered may be imposed as conditions for regularisation… The clause is therefore open to interpretation.

Indeed, the authority issuing the permit must not consider only the subject of the application, but must assess the property as a whole!

It may therefore require works relating to other aspects of the property and will also require compliance with new standards, such as the installation of fire doors, for example.

The question therefore arises: who is responsible for the additional costs imposed in order to obtain regularisation?

There are two possible scenarios:

• It may be considered that the seller has fulfilled their part of the contract because they have taken the necessary steps. Indeed, the permit has been approved, and the buyer is therefore responsible for the additional costs.
• Alternatively, it may be considered that, since the ancillary works are a condition for obtaining the permit, these works and the related costs are the seller’s responsibility because regularisation cannot be obtained unless they are carried out first.

The clause drawn up by notaries provides that the costs of the permit-issuing procedure are to be borne by the seller, but it does not mention the costs and/or works required to satisfy the conditions of the permit.

According to a recent judgment, it was ruled that these costs are indeed the buyer’s responsibility.

The seller is only responsible for taking the steps required to obtain regularisation, not those required to implement the permit granted! The seller’s financial contribution is therefore limited to the costs, duties and fines relating to regularisation and to any administrative or criminal fine for committing the breaches.

Care must therefore be taken to ensure that this clause is not limited to regularisation, but also covers the consequences of regularisation! 

Therefore, exercise caution when buying or selling: you must be extremely precise and understand what each clause entails.  Your notary is there to advise you as effectively as possible, but make sure you know what you are committing to before signing anything so as to avoid any unpleasant surprises!