Buying off-plan property in France: process, costs & legal guide
- The problem: buying off-plan (VEFA) means paying for an Alpine chalet or apartment that does not exist yet, so there is no finished asset to inspect — a buyer has to rely on legal safeguards rather than a site visit.
- The stakes: get the reservation contract, the payment schedule or the completion guarantee wrong, and a buyer can end up funding a stalled construction site, paying a deposit above the legal cap, or losing track of what VAT actually covers.
- The solutions: understand the caps the law places on deposits and payment calls, confirm the developer’s completion guarantee is a genuine third-party one, and have the reservation contract reviewed by a notaire before any money moves.
Off-plan purchases, known in France as VEFA (vente en l’état futur d’achèvement), account for a meaningful share of new construction in Alpine resorts, where much of the recent apartment stock in real estate developments around Val Thorens, Alpe d’Huez and Tignes has been sold this way. For an international buyer, VEFA is a genuinely different transaction from buying an existing chalet: the property is a future right rather than a physical asset, and French law compensates for that with a fairly detailed set of protections. This guide goes through how the process actually works, what the law caps at each stage, and where the genuine risks sit.
For the wider purchase process — due diligence on an existing property, the general cost breakdown, mountain-specific planning checks — see our guide to buying property in France.
What VEFA actually means
Under a VEFA contract, the seller (usually a developer) transfers ownership of the land and any existing structures immediately, while ownership of the building itself transfers progressively as construction advances. This is different from buying an “ancien” property, where the buyer takes a finished asset at completion. Governed by the Construction and Housing Code, VEFA is the near-universal legal vehicle for new residential developments in France, and it plays a particular role in the Alps: mountain construction is constrained by a short building season (broadly May to October at altitude, once snow clears the site) and by planning rules specific to mountain communes, so the staged, legally defined framework of a VEFA contract gives both developer and buyer a workable structure around a genuinely tighter timeline than a lowland project would face.
The main advantages: access to current building and thermal standards (RE2020), a lower acquisition tax bill than on an existing property, and the ability to request layout changes (travaux modificatifs acquéreur) before the relevant stage of construction is reached. The main risks: construction delays, and, far less commonly, developer insolvency — which is precisely what the guarantees described below exist to address.
The reservation contract: what the deposit can and cannot be
Before the notarial deed, most VEFA purchases start with a reservation contract (contrat de réservation), a preliminary agreement that fixes the provisional price, describes the lot, and sets out delivery timing. It generally is not compulsory in law, but not signing one is unusual in practice, since it is what secures the reservation while finance and paperwork are arranged.
The deposit paid at this stage is capped by law, and the cap depends on how far away completion is:
| Expected time to completion | Maximum deposit |
|---|---|
| Less than 1 year | 5% of the provisional price |
| 1 to 2 years | 2% of the provisional price |
| More than 2 years | No deposit can be required |
This is a point worth checking carefully on longer Alpine programmes, where a two-to-three-year build timeline is common: a developer asking for 5% up front on a project not due for three years is asking for more than the law allows. The deposit itself must sit in a dedicated, protected account rather than the developer’s general funds, and the usual 10-day cooling-off period applies once the signed contract is received, during which the buyer can withdraw without giving a reason or losing the deposit. If financing falls through under a proper loan condition, or the final sale price departs materially from what the reservation contract described, the deposit is generally returned as well.
The payment schedule: legal ceilings, not fixed amounts
Once the notarial deed is signed and construction is under way, payments are called in stages tied to progress on site, and the law sets maximum cumulative percentages rather than fixed instalments:
| Construction milestone | Maximum cumulative amount called |
|---|---|
| Foundations completed | 35% of the price |
| Building watertight (hors d’eau: structure and roof complete) | 70% of the price |
| Completion of the works | 95% of the price |
| Delivery (keys handed over) | Remaining 5% |
A developer is free to split these into more instalments — a foundation slab, a ground-floor slab, an upper floor, for example — but the running total can never exceed the ceiling for the stage reached. The final 5% is only released at delivery, and can be withheld, in whole or in part, against defects noted in the handover report (procès-verbal de livraison) if the buyer has a legitimate reason to refuse full delivery. Each call generally includes VAT at the applicable rate, which matters for cash-flow planning when funds are being transferred from abroad; our page on mortgages and loan security covers how staged bank financing is typically structured around this same schedule.
The completion guarantee: why “extrinsic” is the word that matters
This is the protection most non-French buyers have not encountered before, and it is the one that actually answers the question “what happens if the developer runs into financial difficulty part-way through?”
Since 1 January 2015, French law has required developers to provide a financial completion guarantee (garantie financière d’achèvement, GFA) issued by a party genuinely outside the operation — a bank or an insurer — which commits to funding completion of the building if the developer becomes insolvent. This is known as an extrinsic guarantee. Before 2015, developers could sometimes rely on an intrinsic guarantee instead, based on their own financial resources and pre-sale levels rather than a third party’s commitment; this route still exists in law for a narrow set of legacy cases, but it offers materially less protection, since it depends on the same developer’s solvency that the guarantee is meant to protect against.
| Extrinsic GFA (the current standard) | Intrinsic GFA (largely historical) | |
|---|---|---|
| Who backs it | A bank or insurer, external to the developer | The developer’s own resources and pre-sales |
| What happens on developer insolvency | The bank or insurer funds completion directly | Depends on the developer’s own remaining capacity |
| Where it applies today | The default for virtually all new VEFA programmes | Only permitted in narrow, largely legacy circumstances |
A notaire checking a VEFA file will confirm that a valid, genuinely extrinsic guarantee is in place before the deed is signed — without it, the deed cannot properly be signed at all. For a buyer reviewing a reservation pack independently, it is worth asking specifically which type of guarantee is being offered, rather than assuming a “completion guarantee” mentioned in a sales brochure is automatically the extrinsic kind.
VAT, registration duty, and where the money actually goes
New-build purchases carry 20% VAT, generally included in the advertised price, alongside a reduced registration duty of around 0.715% — considerably lower than the transfer taxes payable on an existing property. We go through the full comparison, along with how these figures interact with the wider French tax system, in our guide to taxation in France.
A reduced 5.5% VAT rate exists for specific social-housing and urban-renewal schemes, but this mechanism is narrowly targeted and rarely relevant to the prestige and lifestyle segment of the Alpine market. What is genuinely relevant to that segment is the possibility, under certain managed-residence and leaseback structures, of reclaiming the 20% VAT paid on the purchase price where the property is let commercially under specific service conditions. This is a distinct and fairly technical mechanism with its own long-term commitments attached, and we cover the ongoing tax treatment of that kind of rental activity in our guide to French property rental income and taxation.
What happens after delivery: the guarantee pyramid
Delivery (livraison) is a distinct legal moment from the notarial deed: it is the physical handover of the keys, formalised by a signed report noting any defects the developer is required to fix. From that point, several guarantees run in parallel, each covering a different kind of problem over a different period:
| Guarantee | Duration | Covers |
|---|---|---|
| Perfect completion guarantee (garantie de parfait achèvement) | 1 year from delivery | Any defect reported, whether identified at handover or during the first year |
| Two-year guarantee (garantie biennale) | 2 years from delivery | Equipment that can be detached from the structure — shutters, taps, built-in appliances |
| Ten-year structural guarantee (garantie décennale / dommages-ouvrage) | 10 years from delivery | Defects serious enough to affect the building’s soundness or its intended use |
Financing an off-plan purchase
French banks release VEFA financing in stages that mirror the payment schedule described above, typically charging interest only on the sums actually drawn down (interim interest) rather than on the full loan amount from day one — though some lenders will agree to defer interest entirely until delivery. Non-resident buyers are often asked for a larger equity contribution than a French resident would be, commonly in the region of 20% to 30% of the price, though this varies by lender and by profile. Where a purchase is being made jointly, or through a company or an SCI, the financing structure and the completion guarantee both need to be checked against that ownership structure specifically, not assumed to carry over automatically from a standard individual purchase.
Risks worth naming plainly
- Construction delays. Contracts specify a delivery quarter, but genuine force majeure events — and in the Alps, this can include unusually severe weather affecting a short build season — can extend it lawfully. A delay is a normal contractual risk, not automatically a breach.
- Developer default. With a valid extrinsic GFA in place, this is the scenario the guarantee exists to neutralise: the bank or insurer steps in to fund completion, rather than the buyer absorbing the loss.
- Non-conformity at delivery. Uncommon in practice, but this is exactly what the handover report and the perfect completion guarantee are designed to catch and correct.
- A reservation contract that does not reflect the law’s caps. A deposit above 5%/2%/0% for the relevant timeframe, or vague delivery-date language, are the kind of details that are easy to miss reading a sales brochure and straightforward for a notaire to catch in the contract itself.
Common pitfalls: a quick reference
| Situation | What often goes wrong | Why it matters |
|---|---|---|
| Paying a deposit without checking the legal cap | A deposit set above the 5%/2%/0% scale for the completion timeframe | The excess is not legally due, and is a sign the reservation contract needs closer review |
| Assuming any “completion guarantee” is equivalent | Some legacy programmes still rely on a weaker intrinsic guarantee | Only an extrinsic GFA guarantees funding from a genuinely external party |
| Treating VAT and registration duty as an afterthought | Buyers budget the advertised price without checking what it already includes | Usually already priced in on new-build, unlike the separate transfer taxes due on an existing property |
| Assuming a VAT reclaim applies automatically to a rental plan | Reclaiming VAT under a leaseback structure depends on specific service conditions and a long-term commitment | Getting this wrong can mean repaying VAT that was reclaimed, sometimes years later |
| Financing with a foreign lender not familiar with the VEFA payment schedule | Staged calls for funds can be unfamiliar to a lender used to a single completion payment | Can create timing mismatches between what the developer calls for and what the bank is ready to release |
Frequently asked questions
Is a reservation contract legally required before signing the VEFA deed?
Not strictly, but it is standard practice, and it is the document that secures a reservation, fixes the provisional price, and starts the protections described above running.
Can the price change between the reservation contract and the final deed?
The price in the reservation contract is provisional, and any revision clause is itself constrained by law; a material departure from what was agreed generally allows the buyer to walk away and recover the deposit.
What happens to my payments if the developer becomes insolvent?
With a valid extrinsic GFA in place, the bank or insurer providing that guarantee funds completion of the building; buyers are not expected to absorb this risk directly.
Do I need to be in France to sign a VEFA deed?
No — international buyers frequently complete remotely through a properly drafted power of attorney, following the same identification and verification steps as an in-person signature.
Is off-plan cheaper than buying an existing Alpine property?
The headline acquisition costs are generally lower (VAT included in the price plus a reduced registration duty, against higher transfer taxes on an existing property), but the comparison depends on the specific price per square metre being asked for each option, which off-plan pricing does not automatically undercut.
Sources
- Code de la construction et de l’habitation — Article L.261-10-1 (extrinsic completion guarantee)
- Code de la construction et de l’habitation — Article R.261-14 (payment schedule ceilings)
- Code de la construction et de l’habitation — Article R.261-28 (reservation deposit caps)
- Code de la construction et de l’habitation — Article L.271-1 (10-day cooling-off period)
- Service-public.fr — Contrat de réservation d’un logement en VEFA
In summary
VEFA gives a buyer a legally structured path to a property that does not exist yet, built around caps on what can be asked for and when, and a completion guarantee designed specifically to remove the developer-insolvency risk that would otherwise make the whole idea uncomfortable. None of these protections are automatic in the sense of requiring no attention — a deposit above the legal cap, or a completion guarantee that turns out to be the weaker intrinsic kind, are the sort of details a reservation pack will not necessarily flag on its own. Having the contract reviewed by a notaire before signing, rather than after a concern arises, is where this generally gets resolved most easily.
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