Keeping calm with cooling off periods12th August 2015
The markets for properties in Paris, London and Lisbon move fast, especially for new-builds. Buyers have to proceed quickly if they want to secure their chosen property. Yet in each market a buyer has, at some point in the process, the ability to take a last chance look at the acquisition and if necessary withdraw from the process.
With the recent announcement that France has changed it’s ‘cooling off’ period to 10 days for all buyers regardless of their location, we take a look at how different countries across Europe approach this subject.
Known as the ‘cooling off’ period by English-speaking members of the French property industry, the “délai de rétractation” is a window for the buyer – and the buyer only – to withdraw from the purchase of a residential property or building plot. Previously this window was 7 days for those residing in France and 14 days for those abroad. The new window is 10 days for everyone.
For international buyers, the cooling off period starts once you have received the counter-signed copy of the ‘contract de reservation’ or ‘compromis de vente’, which is almost always sent via a means of registered post so that the time and date of receipt are recorded. If the buyer wants to withdraw from the purchase, they do not have to provide a reason, and simply need to send a letter (via registered post to record the time & date) within 10 days.
After this point the buyer could still back out of the purchase, but could forfeit their deposit, normally around 5% of the purchase price. However, as before, deposits still remain fully refundable at any point of the purchase process pending the buyer being granted the French mortgage they applied for.
There is no cooling off period akin to that of France, but instead there is a period of reflection that occurs once the offer is accepted and before the Exchange of Contracts. During this period a buyer often receives the property survey results and depending on the outcome they may wish to negotiate on the price or withdraw entirely. If the buyer wants to back off at this point they normally inform their solicitor and the estate agent.
Once the Exchange of Contracts is complete, the buyer is often required to place a holding deposit to demonstrate their intent. If the buyer was to withdraw after this point (and before ‘completion’ whereby he would be the owner anyway), he could be sued for costs incurred by the vendor and will lose his original deposit.
Portugal operates in a similar way to the UK. There is no cooling off period, but rather a 4-week period between the acceptance of the offer and the signing of the contracts. During this period the buyer can withdraw without cost by filling out a relevant registration form.
Once the contract is signed, a deposit is made, normally in the region of 25%. A withdrawal after this point would see the buyer loosing their deposit. If the purchase stays on track, the process normally takes up to 6 months to complete, depending on the type of property.