France purchase contract shenanigans ?

[Zkaliman]

Hello

Hey I American looking to buy a boat in france. I’ve a French broker, I’m after a boat in france . he said that sales broker said that sales contract says that after signing the MOU agreement, the only way contract can be cancelled is if there is a technical problem ? - in usa I can cancel at anytime, like for example after the survey, or after that during sea trial and engine survey. I get 100% of my deposit back . What I lose out on is fees I paid for my boat survey and fees I paid to engine surveyor. I can simply say I Don’t like way boat handled or didn’t like engine survey or whatever. my broker as well as selling broker are French. - can I push back on that or is that the way it is ?
Cheers gracias jorge . Any other hidden fees or costs I should ask abou like VAT or sales taxes or French taxes ? considering boat is in france and flagged French. Used to be flagged Poland by original American owner. I know I can change flag after and there is a fee - I know and ok with that. Any other fees I should ask my broker about and who pays for those ? Merci !!!

 

[ashtead]

I suspect you need a French lawyer to review the draft contract as I guess it won’t be what we see in UK so whether you can extract yourself based on what might be a subjective test (as opposed to say a mechanical defect based on surveyor evidence) rather depends on the terms you are signing . Is the selling broker reputable though ? He will be holding the deposit after all.

 

[westernman]

The MOU is called a "compromis de vente". It is a legally binding contract and withdrawing from it for reasons which are not specified in the contract is difficult (you can be forced by a court to execute the contract), and you would have to pay damages. The damages could be unlimited, but in practice 10% or the amount of the deposit (whichever is greater) is a common compromise.

You can add to the "compromis de vente" conditions which will allow you to get out of the contract. These are called "conditions suspensive".
Pay particular attention to these and make sure you have added all the conditions/circumstances which would want you to not execute the contract. The seller can of course accept or refuse your "conditions suspensive". If he refuses, there is no sale unless you back off that condition.

If the seller decides not to sell to you for any reason after signing the "compromis de vente", he is liable to you to pay you damages. 10% or the amount of the deposit or greater if you can bring proof that your "lost" expenditure (e.g. flights, hotels etc) is more than the 10% of the price would be.

You can decide to remove a condition or not apply it at any time.

This is the French way.

 

[Tranona]

No different from what is possible in the UK . A contract is specific to the deal, although it is common to use a "model" such as the one described, but they are often restrictive and it is up to the 2 parties to agree any changes to the model.

 

[westernman]

I will also add that no lawyers are usually used or involved.
This is also true for buying a house. I have spent 7 figure sums on buying a property and no lawyers were involved for either the sellers or us the buyers.

 

[westernman]

A "condition suspensive" could be that a survey show up no important things which need to be fixed. Important could be defined as not exceeding a certain amount to fix.

A very common "condition suspensive" is that the buyer gets an acceptable offer for a loan (this is almost always used for property, the condition is usually for a certain amount of loan - e.g. 80% of the purchase price, or even 110% of the purchase price, for a maximum interest rate - e.g. 4.5%)
The condition can be invoked if you get three refusals from banks for the loan.

In our case, one condition was that we could get internet via fibre with a speed of 100Mbits/s or better both up and down.

You can make a condition a satisfactory sea trial (e.g. reaches expected top speed, no overheating, no ingress of water, ...).

But you cannot make a condition on whether you like the boat or not (IMHO).

 

[ashtead]

Sounds like it’s a conditional contract so the risk of dispute arising is that the conditions lack clarity but as said if it’s an objective test capable of independent verification it would seem a reasonable approach . The downside might be for the seller the difficulty of committing to a related purchase until the sale had completed and so depending on market he might be reluctant to agree to many conditions as in my experience surveyors reports come up with a raft of things but as said if value capped I guess the dispute might be around the rectification costs?

 

[DAW]

Check whether the broker is referring to the "MYBA Memorandum of Agreement" used by many of the brokers based in the Med and drafted in English, or some other agreement specific to France.

The pro-forma MYBA agreement includes the concept of a "Sea Trial" and a "Condition Survey", with the Sea Trial performed first and a Condition Survey only completed if the boat is accepted. The buyer can reject the boat after the Sea Trial for any reason without providing an explanation. However, rejection after the Condition Survey can be more challenging as the right to reject is based only on defects which affect the operational integrity or seaworthiness of the vessel as determined by a qualified marine surveyor, and the seller has certain rights to rectify defects and still force a sale.

It's totally normal to modify, delete or replace the terms of the MYBA to reflect practical realities (e.g. the fact that the condition survey is often done before the sea trial) and to provide greater protection for the buyer. Most brokers initially try to resist this, but if they want (i.e. need) you to buy the boat they should agree.

 

[Zkaliman]

Check whether the broker is referring to the "MYBA Memorandum of Agreement" used by many of the brokers based in the Med and drafted in English, or some other agreement specific to France.

The pro-forma MYBA agreement includes the concept of a "Sea Trial" and a "Condition Survey", with the Sea Trial performed first and a Condition Survey only completed if the boat is accepted. The buyer can reject the boat after the Sea Trial for any reason without providing an explanation. However, rejection after the Condition Survey can be more challenging as the right to reject is based only on defects which affect the operational integrity or seaworthiness of the vessel as determined by a qualified marine surveyor, and the seller has certain rights to rectify defects and still force a sale.

It's totally normal to modify, delete or replace the terms of the MYBA to reflect practical realities (e.g. the fact that the condition survey is often done before the sea trial) and to provide greater protection for the buyer. Most brokers initially try to resist this, but if they want (i.e. need) you to buy the boat they should agree.

Thanx man !