FRANCE Law and Practice Contributed by: Antoine Mercier, Myriam Mejdoubi and Gabriel Dalarun, DLA Piper France LLP
• an obligation to deliver technical information on the property; the obligations are stricter when the buyer is not a real estate profes - sional. The buyer’s remedies in relation to misrepresen - tations by the seller are limited to a claim for financial compensation or, in some cases, the annulment of the sale. French law imposes the following obligations and warranties on the seller: • an obligation to transfer the property in accordance with the specifications set out in the deed of sale; • a guarantee of eviction: the seller must ensure that the buyer does not suffer any nuisance from the seller or third parties in relation to rights such as easements or leases relating to the property; • a guarantee against hidden defects ( vices cachés ), which may affect the normal use of the property; and • an obligation to deliver technical information on the property. The obligations are stricter when the buyer is not a real estate profes - sional. The buyer’s remedies in relation to misrepresen - tations by the seller are limited to a claim for financial compensation or, in some cases, the annulment of the sale. As a general rule, the buyer has a period of five years from the date of the sale to file a claim, with the exception of, notably: (i) the action for hidden defects ( vices cachés ), which is limited to a period of two years from the discovery of the defect; and (ii) the action for a guarantee of eviction, which can be subject to no prescrip - tion at all.
Warranty and indemnity insurance policies (often tailored to and/or supplemented by title insur - ance policies in order to capture specific identi - fied risks possibly affecting, inter alia, the valid - ity of the property title) are now implemented in the vast majority of complex real estate (share deal) transactions. The insurer’s (and the seller’s) liability with respect to representations and war - ranties are typically limited to two to five years. In the case of implementation of a warranty and indemnity insurance, the seller’s liability is often capped at EUR1 (except, sometimes, for “funda - mental warranties” – ie, relating to the title over the asset and/or over the target entity’s shares). 2.6 Important Areas of Law for Investors An investor should have a clear understanding of the commercial lease regime as set out in the French Commercial Code, which has been sig - nificantly modified following Law No 2014-626 (the “Pinel law”) dated 18 June 2014. Over recent years, US and English compliance rules have had a major impact on French real estate acquisition practice, with increased inte - gration of some of the provisions of the United States Foreign Corrupt Practices Act 1977 and the UK Bribery Act of 2010 concerning anti-cor - ruption, sanctions and anti-money laundering compliance into the obligations carried out by the parties. The equivalent French legal provi - sion would be Law No 2016-1691 of 9 December 2016 on transparency, the fight against corrup - tion and the modernisation of economic life (Loi no 2016-1691 du 9 Décembre 2016 relative à la transparence, à la lutte contre la corruption et à la modernisation de la vie économique, known as “Sapin II”).
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