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The process of due diligence in Real Estate transactions in France


The essential features of a due diligence process in real estate transactions, are in correlation with the key concerns that may occur during real estate purchases in France. In fact, before acquiring a real estate company or real estate assets in France, it is inquired to validate the legality of the paperwork, of the price assessment, and to make sure that no third party has rights over the good, and that no restrictions impacting the value of the structure, may it be private or public, are hidden or likely to surface anytime soon. But how does it work? This practical guide presents the Data Room related to Real Estate transactions in France, and how its folders are organized.

After signing the letter of intent, it is possible for the seller to grant exclusively the right for a limited period, to the buyer, access the data room. Frequently electronically set up by the Notaire as “Espace notarial”, it is annexed to the information pack primordial to make the buyer’s consent clear and in full knowledge of cause.

What information is included in the data room’s folders as organized by the Notaire?

Data room services authorize auditors to request additional documents or ask questions, for at least a certain period. Here are the main folders included in the data rooms and exactly what they consist of.

1. The “Organization” folder includes mainly a surveyor’s detailed plan of property, a table showing how much floor space is available depending on how it’s used, specifications for the building’s setup and construction, contracts governing the building’s administration, maintenance, and operation.

2. The “Easement” folder includes a memorandum detailing any easement may it be profiting or not the building.

3. The “Deeds” folder contains the purchase deed of the transaction prepared by the notary, along with any prior title deeds changing the chain of ownership going back at least thirty years.

4. The “Mortgage statement” folder contains all the recent mortgage statements (for less than two months), it helps make sure the title deeds have been correctly published at the lang restry service.

5. The “Joint ownership” folder contains a memorandum and articles of organization of the owners’ management business, a description of property and co-ownership rules, and how the division is organized in volumes.

6. The “Tax” folder contains proof of submissions for land tax and documentations of their payment.

7. The “Contaminations” folder includes a description of reports of termite and wood-boriung bug infestations in the region, an investigation of any structures for which the building permit was obtained prior to July 1, 1997, and a certificate of lead exposure hazards, in case of a building with residential space was built before January 1, 1948.

8. The “Environment” folder contains a list of dangers associated to natural disasters, earthquakes, and technology-related risks, data relating to soil pollution, and past ICPE operations.

9.The “Urbanism” folder includes details on public easements, relevant town planning, and a certificate of the applicable regulations.

10. The “litigation” folder contains a list of ongoing legal battles involving the building or its leases.

11. The “Rental situation” folder includes a summary of the rental status, bank guarantees, termination notices, etc.

12. The “Works” folder includes a schedule of maintenance tasks completed in previous years and that are planned for the following ones.

13; The “Insurance” folder includes insurance policies for construction and operations.


About the Author :

Business lawyers, bilingual, specialized in acquisition law; Benoit Lafourcade is co-founder of Delcade lawyers & solicitors and founder of FRELA; registered as agents in personal and professional real estate transactions. Member of AAMTI (main association of French lawyers and agents).

FRELA : French Real Estate Lawyer Agency, specializing in acquisition law to secure real estate and business transactions in France.

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