Mortgage condition clause in France: term, refusal, deposit

What the law says: articles L313-40 to L313-45

Mandatory statement (art. L313-40). Any written contract recording the purchase of a home, including an accepted promesse unilatérale (option to buy) and the preliminary contract for a Vefa (off-plan sale), must state whether the price will be paid with or without one or more loans.

Automatic condition (art. L313-41). If the contract states that a loan will be used, it is concluded subject to the condition precedent of obtaining the loan or loans. Its period of validity cannot be less than one month from signature or, for an acte sous seing privé (private contract) that must be registered on pain of nullity, from that registration.

Purchase without a loan (art. L313-42). If the contract states that payment will be made without a loan, the buyer must write in their own hand a statement acknowledging that they have been informed that, if they nevertheless take out a loan, they cannot rely on these protections. If this statement is missing, or if the contract says nothing about financing, and a loan is applied for, the contract is deemed to be concluded subject to the condition precedent.

Exclusion (art. L313-45). These rules do not apply to sales by adjudication (auction).

Drafting the clause: the terms to set

The law imposes a minimum of one month; the rest is negotiated in the preliminary contract. Service-public.gouv.fr (F188) lists the details the condition must specify:

For the buyer, realistic terms (rate and term close to the market, amount consistent with their financing plan) protect their ability to invoke the clause. For the seller, a short period and a defined number of applications limit how long the property is tied up. For the other conditions of the preliminary contract, see compromis ou promesse de vente (preliminary sale contract); for the security the bank will require, garantie du prêt immobilier (mortgage security).

The timeline: from compromis to loan offer

1. Signing of the preliminary contract, then the buyer’s 10-day cooling-off period (code de la construction et de l’habitation (Construction and Housing Code), art. L271-1).
2. Submission of loan applications within the period set by the clause.
3. Issue of the loan offer: the lender must keep its terms open for at least 30 days from receipt, and the borrower may accept it only 10 days after receiving it (Consumer Code, art. L313-34).
4. Informing the seller and the notary: if the loan is approved, the buyer tells them and the sale proceeds to signature (F188).

The 10-day period in article L313-34 fits within the period of the condition precedent: a period of 45 to 60 days leaves time to obtain the offer and then accept it.

Loan refused: what happens

If the loan is refused, the buyer informs the seller and the notary within the agreed deadlines, with the supporting documents provided for. If the steps were taken within the deadlines, the sale does not go ahead and the buyer recovers the sums paid at signature without penalty (F188).

The law is more precise: any sum paid in advance by the buyer “is immediately and fully refundable without deduction or compensation of any kind” (art. L313-41). The dépôt de garantie (deposit) under a compromis (usually 10% of the price) or the indemnité d’immobilisation (option fee) under a unilateral promesse (in practice 5% to 10%), held in the notary’s escrow account (F2965), must therefore be returned in full.

Beware of fault on the buyer’s part. “The condition precedent is deemed fulfilled if the party who had an interest in it prevented its fulfilment” (code civil (Civil Code), art. 1304-3). A buyer who submits no application, or an application that does not match the clause, therefore risks having the condition deemed fulfilled, and so losing their deposit.

The law sets no deadline in days beyond this “immediate” refund, but it penalises delay: if the money is not returned, it bears “interest at the legal rate increased by half from the fifteenth day following the request for reimbursement” (Consumer Code, art. L341-35). So make your refund request in writing, to fix the starting date.

Extending or waiving

An extension of the period is agreed by an amendment between seller and buyer; the official page consulted does not set out how. A buyer who has the funds can also waive the condition, but the contract must then carry the handwritten statement under article L313-42: if they later take out a loan, they can no longer rely on the legal protection.

Which professional to consult

The courtier en crédit (mortgage broker) helps set a realistic amount, term and maximum rate before signing, then obtain the offer within the deadline. The notaire (notary) drafts the clause, holds the deposit in their escrow account and returns it if the condition fails. An agent immobilier (estate agent) drafting a compromis must transcribe the agreed terms accurately.