A RECENT article published in Le Figaro described how a simple administrative discrepancy during a property purchase procedure could result in the sale of allegedly the most expensive villa in the world falling through, writes Guillaume Barlet.
Mikhaïl Prokhorov, a Russian billionaire, agreed to purchase the luxurious property named Leopolda in Cap Ferret for the modest price of €390 million.
The compromis was signed and the administrative procedures started. However, it appeared that when an administrative authority, the local SAFER, received the declaration of sale, the price included was different to the one included in the compromis.
Mr Prokhorov’s lawyer then claimed that this discrepancy made the compromis null and void probably also suggesting that the SAFER could exercise its pre-emption right at this lower figure using this discrepancy as a method of renegotiating the purchase price.
SAFERs (Sociétés d’Aménagement Foncier et d’Etablissement Rural) are entities under the authority of the Ministry of Agriculture and Finance.
A SAFER's primary objective is to prevent speculation over rural lands and more generally protect the agricultural exploitation of these lands.
One of the options for this entity to do so is to purchase a land for sale as SAFERs can hold a 'pre-emption right' over the land. It is the right of first refusal to purchase the property before it is sold to another person.
Although, in the case mentioned by Le Figaro, it seems that the local SAFER had no intention to enforce its pre-emption right and the legality of the compromis may not have been endangered, this trivial story highlights how the blurred boundaries of the SAFER's roles and powers can trigger important issues.
One of these issues is the peculiar links that can exist between notaries and SAFERs.
Usually, a SAFER must be notified of the sale of lands in a rural area by a declaration (Déclaration d’Intention d’Aliéner or DIA). A two-month period is observed from the date of the notification before the parties can consider the pre-emption right not to have been enforced (if the SAFER has not replied).
It is sometimes possible for the buyer to pay a fee to a notary (usually around €100) to 'accelerate' the SAFER's procedure. However, because this possibility does not appear in any enforced legal text, it is difficult to find grounds to justify such practice.
Beside the numerous reasons that contradict the legality of accelerating the procedure, it is important to understand that even if a fee is paid, there is no guarantee that the procedure will actually be dealt with in a shorter time frame. Some notary will clearly make this point, others will not.
SAFERs have a duty to enforce a public utility mission and the independence of such a mission can be in question where payment can influence the modalities of the procedure. All procedures should be handled equally, which would clearly not be the case where payments would privilege some at the expense of others.
In addition, it seems very unusual (not to say illegal according to French law) that payment does not guarantee that the service will be delivered. A payment to the notary only allows one to hope that the procedure may be accelerated.
This practice may seem even more outrageous if you consider that payment is only intended to accelerate the procedure. As a result, there is no guarantee that the SAFER will not pre-empt the lands in question and fees are not refundable in this case.
Despite the compulsory nature of the procedure, it is always easier to deal with such issues with someone representing your interest while transferring the ownership of a property. This is another example of the complexity of the French legal system and seeking independent legal advice could be beneficial to help you prevent potential pitfalls.