Sale in future state of completion (VEFA) and delivery delay: strict interpretation of legitimate causes of delay. The delivery delay of an apartment due to the failure of a construction company does not necessarily constitute a legitimate cause of delay admissible.
Table of content
Obligation for the Developer to Respect the Delivery Deadline
VEFA is the contract by which the seller (or developer) immediately transfers to the buyer their rights to the land as well as the ownership of existing constructions. The future works become the property of the buyer as they are completed (Article 1601-3 of the Civil Code).
The developer selling a property in a future state of completion has the main obligation to commit to respecting a delivery deadline, at the expiration of which they will hand over the keys to the buyers. Delivery delays are thus subject to sanctions.
This obligation is derived notably from Article 1601-1 of the Civil Code, reproduced below:
The sale of buildings to be constructed is the one by which the seller commits to erecting a building within a period determined by the contract.
When the VEFA contract also covers the construction of a residential building, and the buyer commits to making payments before the completion of the construction, the mention of the delivery deadline must also be explicitly included in the VEFA contract under penalty of nullity (Article L. 261-11 of the Construction and Housing Code).
Any delivery delay by the seller can lead to various sanctions, including:
- The cancellation of the VEFA;
- The awarding of damages (compensation for rents paid by the buyers under their residential lease between the contractual delivery date and the actual delivery date, compensation for the loss of a tax advantage, compensation for expected rents from renting out the property to be built, compensation for moral damage, etc.).
Possible Postponement of the Delivery Date in Case of Legitimate Cause of Delay
To gain more flexibility and avoid delivery delays, developers almost systematically include clauses in the VEFA contract establishing legitimate causes for delay.
These clauses aim to allow an extension of the delivery deadline if the element defined in the clause occurs during the construction process.
This type of clause generally also establishes a mechanism for doubling the number of allowed delay days compared to the actual delay recorded during the works to enable a reorganization of the site.
The Cour de cassation validates the legality of these clauses, provided that the delay is not attributable to the seller and that the seller justifies it objectively:
The clause of a contract for the sale in the future state of completion concluded between a professional and a non-professional or consumer, which stipulates that in the event of a legitimate cause for suspending the delivery deadline of the sold property, justified by the seller to the buyer by a letter from the project manager, the delivery of the sold property will be delayed by a time equal to double that actually recorded due to its impact on the general organization of the site, neither aims nor effects to create, to the detriment of the non-professional or consumer, a significant imbalance between the rights and obligations of the parties to the contract and, therefore, is not abusive
However, the drafting of delay clauses must be clear and unambiguous; otherwise, the developer risks having them disregarded by the Courts.
The Cour de Cassation reiterated this principle in a recent ruling on May 2, 2024 (Civ. 3rd, May 2, 2024, No. 22-20.477).
Inapplicability of Legitimate Delivery Delay Causes in Case of Vagueness of the VEFA Contract (Civ. 3rd, May 2, 2024, No. 22-20.477)
Context
The facts of the case were as follows: a developer sold a property in a future state of completion, which was to be delivered no later than March 31, 2016.
This deadline was not met, and the buyers sued the developer before the competent Court for damages for the delivery delay.
The developer opposed this claim based on a contract clause providing for the suspension of the delivery deadline in case of force majeure or legitimate cause of delay.
One such legitimate cause of delay was: “delay due to the failure of a company (the justification for the failure can be provided by the seller to the buyer by producing a copy of the registered letter with acknowledgment of receipt sent by the project manager to the failing contractor).”
The seller argued that the failure to meet the delivery deadline was due to delays by certain companies in carrying out the work and that, despite various warning letters from the project manager and the application of delay penalties to these companies, the contractual deadlines could not be met.
The delivery delay was therefore, according to the seller, due to the objective failure of the construction companies.
Cour de cassation ruling
This was not the position of the Court of Appeal and the Cour de Cassation.
In its ruling of May 2, 2024, the Cour de Cassation held that, in the absence of sufficient precision in the contract’s stipulations, the mere delay of a company does not constitute a failure characterizing a legitimate cause of delay:
Réponse de la Cour (4) The court of appeal held, through a sovereign interpretation, exclusive of distortion, made necessary by the ambiguity of the sale act clauses relating to the legitimate causes for suspending delivery deadlines, that the delay due to the company's failure had to be understood as a genuine failure of the company, with mere delay, however prolonged, not being assimilable to a failure unless it had necessitated the seller, after warning the company to complete the works, to terminate the contract. (5)Having found that this was not the case for either ECBR or ICS and that the final general account validating the application of possible delay penalties against them was not produced, it inferred that the delay attributed to these two companies by Le Renaissance Promotion did not constitute a legitimate cause for suspending the delivery deadline under the contract concluded with the buyers and therefore upheld their claim for compensation for the delivery delay in the amount awarded.
The Court thus rejected the seller’s argument and upheld the buyers’ claim for compensation for their damage due to the delivery delay within the VEFA framework.
A Decision Specific to the Circumstances of the Case
It should be noted that this ruling by the Cour de Cassation constitutes a case-specific ruling based on the concrete circumstances of this dispute, particularly the lack of precision in the clauses of the sale act in the future state of completion.
It remains that clauses providing for legitimate delay causes in case of a contractor’s failure are common in VEFA contracts.
Sellers and Buyers: Be Vigilant About the Precision of Your VEFA Contract Stipulations
Roméo Mognon
Avocat