Equity indicates that the buyer is under no obligation to proceed with the sale if he obtains a loan for an amount less than promised.
In general, in buying real estate, the main difficulty in terms of financing is getting an agreement from your bank. But it can happen, as this case shows, that the bank does indeed grant a loan, but in an amount smaller than required. Then what happens to the sale promise? This is a case recently decided by the Court of Cassation (Civil Chamber 3, December 14, 2022, No. 21-24.539) and this was commented by Attorney Mi Gregory Rowland on the Legavox Legal Blog.
In this case, a couple of buyers through a real estate agency came to a sale promise to buy an apartment. The document contained a precondition for obtaining a loan of a maximum amount of €414,000, to be repaid over 25 years at 2% per annum excluding insurance. However, these buy-out candidates only received an offer of €407,000 from their bank. Under the circumstances, they feel betrayed on their promise but the seller doesn’t hear the matter that way, refuses to re-compensate the freeze and the case goes to court.
There is no agency commission
The 14th of December last, the course of a cassation a confirmation of the decision rendue en appel estimant that the promise was made, that the age of immobilière did not come after his commission, and that it was re-established the indemnity of immobilisation of candidats upon purchase. The argument is simple because the buyers have applied for a loan according to the specifics specified in the promise of sale and the bank has not followed it to the letter. Even if it is a matter of a maximum amount, this indicator ”
It was not such as to force buyers to accept any offer for a lower amount
As summed up by me, Gregory Rolland.
But the lawyer explains:
“It would have been different if the buyers had asked for a loan for a term and at a price lower than the terms stipulated in the contract. In this case, the buyers would have lost the benefit of the antecedent of the condition (Cass. civ. 3, October 17, 2019, No. 17-21.859) .
Generally speaking, he summarizes, if a loan is required for less than the properties specified in the promise of sale: the seller cannot oppose the sale, as buyers can pay the full price of the sale (including notary fees). On the other hand, if the buyer asks for a loan in an amount greater than what was promised, he weakens, or even makes it impossible to cancel the conditional precedent, because he has a great chance of facing a bank refusal.