Lettre d'intention d'achat or Offre d'Achat

[Helgamobil]

I have done some research, but cannot find a definitive answer to this - is a letter of intent, signed by a purchaser - binding in law? In other words, is it a sneaky pre-compromis de vente by another name even though no deposit is handed over. We have every intention of buying a particular house, but many a slip.....

In some cases I am told it simply prevents the seller from selling to anyone else at a higher price for an agreed period, but other advice is that this is totally binding leading seamlessly into the Contract.

Has anyone signed one of these and what is their view?

[P-D de Rouffignac]

An offer letter is generally used to confirm a written (as opposed to verbal) offer on a property, at - or more usually below - the asking price. If an agent is involved, he/she would normally have discussed with the buyer the level of offer (reduction) that the vendor might accept, and will convey your witten offer to the vendor and hopefully secure their counter signature, confirming their acceptance.

As with the 'compromis de vente' which is the next stage, either side may include conditions (such as securing funds or, say, the vendor agreeing to finish certain works). I would also advise putting a time limit on any offer of, say, 24 or 48 hours, after which your offer lapses and you are free to continue looking at other properties. This is because a vendor may delay counter-signing if there is for example the possibility of a higher or full-price offer in the pipeline. This may happen where more than one agency is involved and/or there are several people interested in the property.

As to the legality of a written offer, it contains all the ingredients cited in the law books - an offer, an acceptance, a consideration (the purchase price) - and could probably be enforced if someone decided to go down that route. But, is it all worth it............

That said, never ever make mutiple offers on several properties at once, hoping one will be accepted! You might find yourself committed to buying several properties. Protect yourself by using the time-limit noted above. And vendors - don't try and collect multiple offers, hoping for a kind of auction of your property: you may find all your would-be buyers get impatient, cancel and move on.

The 'compromis de vente' is a more formal document, and with the payment of a deposit (not obligatory, though) by the purchaser, there is an element of protection for the vendor if the buyer changes his/her mind after signature.

Hope this helps.

[Helgamobil]

Thank you for your full response. Does a binding contract in France need only offer and acceptance (no consideration, money, will change hands until the deposit is paid when the compromis is signed at a later date)?

We have made the Lettre d'intention d'achat subject to securing funds and agreeing the terms of the compromis and asked the Agent to make it clear to us, in writing, exactly what his letter of intent is intended to commit us, and the vendor, to do.

I wonder what sort of form others have signed?

[andyh4]

Even the compromis does not demand the payment of a deposit - although it is usual that a deposit is paid.

So no money need change hands at this stage to make the document effective.

[P-D de Rouffignac]

A brief reply:

1. I have never come across a specific form, most offer letters were hand-written and signed, then countersigned by the vendor.

2. Perhaps best to liken them to a preliminary offer of finance from your bank, sometimes refered to as a 'letter of comfort', I doubt you could sue the bank successfully if in the eventuality they turned you down.

3. When describing the legal elements of a 'contract' (offer, acceptance, consideration) I was trying to clarify the difference between a contract and, say, a promise. If I say 'I will give you my gold watch when you are 21' there is no legal contract (because there is no consideration).

4. From what you say, I think you have covered all the angles - subject to obtaining finance, subject to clauses in the 'compromis de vente' etc. Don't forget your 7 days 'cooling off' period as well (extended if you meanwhile are sorting out your finances).

Regards - P-D de R.

[Will]

Don't forget either that a seller is legally bound to accept an offer (or I suppose we should say the first unconditional offer) at the asking price, thus avoiding the sort of gazumping situations that happened in the English market when times were better.

I believe that in French law a verbal contract is no less legally binding than a written one - it's just somewhat harder to prove.

[Helgamobil]

Very reassuring, thanks guys, I think we are OK.....We have done a fairly "belt & braces" job on the original Letter of Intent, so cross your fingers chaps!