Off-plan sale in Mauritius
In terms of real estate in Mauritius, the VEFA, or off-plan sale, is the legal contract that governs the acquisition of a property that has not been built or is in the process of being built. Inspired by the French VEFA and conforming exclusively to the provisions of the Mauritian Civil Code, this contract ensures the protection of purchasers, whether Mauritians or foreigners.
VEFA, also known as off-plan purchase or sale, is a contract that authorizes the buyer to purchase a property that has not yet been built or is still under construction, and which the seller, the developer, undertakes to deliver to the buyer once it has been completed. Like all real estate transactions, it must be recorded by a notary.
In order to make a choice, the developer shows the buyer the plans, descriptive documents and graphics associated with the real estate project in question. The buyer is not involved in the construction process. Control is entirely in the hands of the developer. The developer's commitment is to deliver a completed property that conforms to the plans and descriptive outlines, within a specified timeframe. He is responsible for taking all the necessary steps, i.e. building permits, insurance, construction supervision, etc.
The main stages of VEFA:
1 - Contract reservation and payment of security deposit
2 – Notarial deed of sale and payment on due date
3 - Acceptance of work and handover of the property
4 - Extrinsic warranty and construction warranty
VEFA under the Mauritius Civil Code
Art. 1601-3. An off-plan sale is a contract under which the seller immediately transfers to the buyer his rights to the land and ownership of existing buildings. Future works become the property of the purchaser as and when they are completed, and the purchaser is required to pay the price as work progresses. The seller retains the powers of project owner until acceptance of the work.
[Art. 1601-3 inserted by s .2 of Act 37 of 1978.]
Art. 1601-8. In the case of an off-plan sale, the seller may not require or accept any payment, deposit, subscription or acceptance of commercial paper prior to the signing of the contract, or prior to the date on which the debt is due.
[Art. 1601-8 inserted by s. 2 of Act 37 of 1978.]
1 – Contract reservation and payment of security deposit
The Preliminary Reservation Contract (or Contrat de Réservation Préliminaire “CRP”) is a VEFA pre-contract. It describes the property, its price, the delivery schedule, etc. By signing the reservation contract, which complies with the strict, mandatory rules set out in articles 1601 of the Mauritian Civil Code, the buyer undertakes to purchase the property that has won him over. In this sense, the signature of both parties validates the reservation of the property to be built.
We recommend that you use a notary to draw up the VEFA reservation contract, to ensure greater security. The document will include :
- Property structure,
- An information sheet,
- The sale price and possible conditions for its revision,
- Final contract deadline,
- Duration of work,
- Information on the legal terms and conditions under which the buyer may withdraw from the purchase, including recovery of the security deposit, and
- The financing conditions if the buyer wishes to take out a loan.
Security deposit
The developer does not have the right to request payment from the purchaser before the latter has signed the sales contract.
However, when the buyer signs the CRP, he is required to pay a deposit into an escrow account opened with a notary or financial institution in the buyer's name. This is to reserve the property under the VEFA.
This sum is untouchable until the sale contract is signed, unless the sale in future state of completion does not take place.
In the case of VEFA, according to the Mauritian Civil Code, the amount required for the security deposit is as follows:
Art. 1601-42. The amount of the security deposit may not exceed 5% of the provisional sale price if the time required to complete the sale does not exceed 1 year. This percentage is limited to 2% if this period does not exceed 2 years. No deposit may be required if the delay exceeds 2 years.
[Art. 1601-42 inserted by s. 2 of Act of 1978].
Note:
The CRP is optional. The developer has the option of skipping this stage in favor of the final sales contract.
Although the purchaser has signed the reservation contract, the developer has the right not to proceed with the project. In this situation, he is legally bound to refund any deposit paid by the buyer. Alternatively, under certain circumstances, the buyer can withdraw from the project and request the return of the deposit.
2 – Notarial deed of sale and payment on due date
The buyer must receive the draft VEFA deed of sale as well as the accompanying documents, such as the dimensioned plans, the information sheet detailing the nature and quality of the materials used, the equipment in the private and common areas, and the financial completion guarantee (or Garantie Financière d’Achèvement “GFA”) document, at least one month before the date set for signing the final VEFA deed of sale, so that he or she can examine them.
This contract represents title to the property. It sets out the buyer's rights and obligations towards the seller, as well as the precise and definitive description of the property.
The VEFA deed must be drawn up by a notary. According to the Mauritian Civil Code, the file must include:
- A precise, in-depth description of the property for sale,
- The date of completion of construction,
- Acceptance date in months, with penalties for late completion,
- All construction insurance, including financial guarantees of completion (GFA) and/or reimbursement for biennial, decennial.
- Reference to administrative approvals. Example: building permit
- The value of the property, and
- The schedule of payments when due.
Payment terms for VEFA
Payment of the purchase price of a VEFA property is made when due. It depends on the progress of the building work.
25% on contract signature
10% on completion of foundation work
35% on completion of roofing phase (waterproofing)
25% on completion of work
5% on handover of keys
As soon as the VEFA contract is signed, the buyer acquires the land and the buildings in progress, even before the work is completed. Funds are paid by the purchaser in accordance with the calls for funds specified by the developer, following verification of progress by an independent expert.
3 – Acceptance of work and handover of the property
As project owner, the developer admits the VEFA property once the work has been completed:
- He draws up a report with the help of an architect to validate the work.
- Any reservations regarding the quality of the work are noted.
The report must be signed by the developer, an architect and the builder.
Buyers are strongly advised to request a copy of the acceptance report. That way, you'll know when any warranties you may be entitled to are activated.
Handover of the VEFA property
Once construction is complete, the developer informs the purchaser of the delivery date, and draws up a delivery report.
Any imperfections or non-conformities are recorded in the minutes if the property delivered does not comply with the contract conditions, and any equivalence or tolerance clauses for certain equipment.
If the property is not finished, i.e. essential elements have been overlooked or cannot be used, the developer must request that the property be brought into conformity before receiving the balance of the price and handing over the keys to the buyer.
If the purchaser accepts the work unreservedly, he has one year from the date of acceptance to invoke the guarantee of perfect completion. If any defects have not been identified at the time of acceptance of the work and the drafting of the minutes, the purchaser must send a registered letter with acknowledgement of receipt within one month of taking possession of the property.
If the purchaser has any reservations upon acceptance of the work, he can ask the developer to correct them and resume work within a timeframe agreed between the two parties.
The obligation to hand over the property is then evoked once the work has been completed and the developer has handed over the property to the purchaser within the timeframe.
4 – Extrinsic warranty and construction warranty
When the keys are handed over by the property developer to the buyer, this is known as VEFA delivery. At this stage, the builder's two-year and ten-year warranties come into effect:
Art. 1642-1 & Art. 1648 al.2: guarantee of perfect completion
Art. 1646-1 & Art. 1792 of the Civil Code governing biennial warranties: guarantee of proper operation of separable equipment components.
Art. 1646-1 & Art. 1792 of the Civil Code on decennial warranties
Extrinsic warranties
To protect the purchaser of a residential property, the developer is required to provide either an extrinsic guarantee or a repayment guarantee.
The extrinsic or financial completion guarantee (GFA) is a bank guarantee under which a financial institution undertakes to pay in advance the sums required to complete the work in the event of the developer's default.
As for the repayment guarantee, it is possible for sums already paid by the purchaser to be reimbursed in the event of non-completion. This guarantee also comes from a financial institution. The sale would therefore be cancelled, unlike the financial completion guarantee (GFA), which allows the building to be finished.
Warranties related to the construction itself
When buying a VEFA, the buyer benefits from various guarantees:
- Operating mode. This optional 2-year warranty covers in particular all equipment that can be dissociated from the construction, such as shutters, taps, tiles, etc.
- Under the ten-year warranty or the warranty for hidden defects, the buyer has 10 years from acceptance of the property to report and have repaired any imperfections that may affect the solidity of the building, such as the foundations, roof, etc.
- The property developer takes out damage-work insurance to guarantee that the insurer will take immediate responsibility for work covered by the ten-year warranty. Coverage extends for the entire duration of the warranty.
The DECORDIER real estate agency in Grand Baie is at your disposal for any further information and to guide you in your VEFA acquisition project.
DECORDIER immobilier Grand Baie
Phone : +230 268 2828
E-mail : contact@decordier-immobilier.mu
Website : www.decordier-immobilier.mu