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DANSK-FRANSK ADVOKATFIRMA I FRANKRIG   /   DANISH-FRENCH LAW FIRM IN FRANCE

The sale granted under the suspensive condition of obtaining a loan

1. The conclusion of a real estate sale is generally subject to the obtaining of a loan by the purchaser set up as a suspensive condition. By several decisions rendered on the same day (some of which will be published in the Civil Bulletin of the Court of Cassation), the third civil chamber of the Court of Cassation has just provided important clarifications on the realization of this condition, in particular with regard to its articulation with the regulation on real estate credit.

While the condition precedent most often refers to obtaining a loan, other formulas are sometimes used (e.g., “obtaining a loan offer”; “granting a loan”); these differences have no bearing on the clarifications made by the Supreme Court.

Achievement of the condition by obtaining the loan

2. The Court of Cassation has specified that the suspensive condition of obtaining a loan is deemed to be fulfilled as soon as a firm and unconditional offer is made, characterizing the obtaining of a loan in conformity with the contractual stipulations (Cass. 3ème civ. November 7, 2007 n° 06-17.413 (n°1012 FS-PB), Kleinjan c/ Valat ; Cass. 3ème civ. November 7, 2007 n° 06-19.148 (n° 1013 FS-D), Sté Jasmin c/ Sté Plas).
As a result, it ruled that the following does not constitute a loan offer allowing the condition to be fulfilled
– a certificate by which a bank gives an agreement in principle to the purchaser for a loan of a given amount (judgment n° 06-17.413) ;
– the notification of a loan agreement, the implementation of which is subject to the completion of contractual formalities and the taking of guarantees stipulated in the future loan offer (judgment n° 06-19.148).
On the other hand, the condition is fulfilled when the buyer produces a printout of an e-mail from a bank to him, including a proposal for a loan of 105,000 Euros, under the conditions provided for in the promise and a subsequent letter from this same establishment notifying the bank’s agreement to this loan (Cass. 3ème civ. 7
November 7, 2007 n° 06-11.750 (n° 1014 FS-PB), Guérin c/ George).

3. In principle, the fact that the loan offer does not comply with the regulations on real estate credit (C. cons. art. L312-1 et seq.) does not allow the seller to escape the fulfilment of the condition and the formation of the sale. Indeed, the formal requirements set forth in the Consumer Code regarding real estate loan offers are only enacted in order to protect the borrower, who alone can invoke them (Cass. 3ème civ. November 7, 2007 n°06-11.750 (n°1014 FS-PB), Guérin c/ George).

4. However, if the parties to the promise of sale have taken care to specify the circumstances of the realization of the condition by expressly referring to the Consumer Code, the purchaser is required to obtain a loan offer given in writing by the lending institution (Cass. 3ème civ. 7 November 2007 n° 06-17.589 (n° 1015 FS-D), Modica c/ Borge). Consequently, a handwritten letter from the bank attesting that the requested loan was granted but that the offers were in the process of being edited could not be assimilated to the contractually defined loan offer (judgment cited above).

Information of the seller on the realization of the condition

5. The Court of Cassation had previously affirmed that, unless otherwise stipulated, the fact that the beneficiary of a promise of sale subject to the condition precedent of obtaining a loan does not inform the promisor of the refusal of the loan application before the expiration of the period of validity of the promise is not sufficient to characterize a fault in the performance of his contractual obligations imposed on the purchaser of such a nature as to increase the requirements of the text (Cass. 3rd civ. November 7, 2007 n° 06-17.867 (1016 FS-PB), Rinaldi c/ Turbet-Delof).

The violation of the clause obliging the buyer to inform the seller of the obtaining of the credit can thus be sanctioned only on the ground of the contractual civil liability by the allocation of damages but it is then up to the seller to establish that this defect of information caused him a damage. The proof of a prejudice is not necessary when the obligation of information is sanctioned by a penal clause (Cass. 3ème civ. 20-12-2006 n° 05-20.065 : RJDA 5/07 n° 448).

Realization of the condition in case of fault of the purchaser

6. The condition is deemed fulfilled when it is the debtor, obliged under this condition, who has prevented its fulfilment (C.civ.art.1178). This is the case when the buyer has applied for a loan that does not comply with the characteristics set out in the promise or the deed of sale (Cass. 3ème civ. 13-10-1999 n° 98-12.025: RJDA 12/99 n° 1306; Cass. 3ème civ. 30-3-2004 n° 02-11.688: RJDA 8-9/04 n° 941).
In a case where a promise to sell real estate had been concluded under the suspensive condition of obtaining a loan within one month from the signature of the promise, the Court of Appeal of Rennes had considered that the buyer had committed a fault leading to the refusal to grant the loan since, having contacted the bank only thirteen days before the expiry of the aforementioned time limit, he had not carried out the necessary diligence to apply for a loan within the time limits compatible with the expiry date of the condition. The Court of Cassation censured this decision on the grounds that the judges had not noted that the delay in the constitution of the loan application by the purchaser was at the origin of the bank’s refusal (Cass. 3ème civ. November 7, 2007 n° 06-14.227 (n° 1017 FS-D), Rougier c/ Musseau). The Court of Cassation had already ruled that article 1178 of the Civil Code does not apply if the non-fulfilment of the suspensive condition relating to the obtaining of a loan was not due to the delay in the presentation of the application but to the reasoned refusal of credit by the requested banks (Cass. 3ème civ. 17-3-2004 n° 02-17.984: RJDA 10/04 n° 1106).

Failure of the condition

7. When a condition is stipulated in the exclusive interest of one of the parties, only that party may rely on the legal consequences of the failure of the condition stipulated in his favor (Cass. 3ème civ. 16-12-2003 n° 02-16.327: RJDA 6/04 n° 662; Cass. 3ème civ. 20-6-2006 n° 05-12.319: RJDA 1/07 n° 25) or waive it (Cass. 3ème civ. 31-3-2005 n° 04-11.752: RJDA 8-9/05 n° 946). If the deed does not specify the beneficiary of the condition, the judges will assess the common intention of the parties (Cass. 3ème civ. 14-11-1976 : Bull. civ.III n° 382 ; Cass. 3ème civ. 16-12-2003 n° 02-16.327 : RJDA 6/04 n° 662).

8. The Court of Cassation has just confirmed a decision of the Court of Appeal of Caen which, in order to judge that it was not possible to determine the exclusive beneficiary of a suspensive condition, had retained the following elements the disputed condition appeared under a heading “protection of the real estate borrower”, the content of which also dealt with his relations with the seller and which followed two other headings bearing respectively the wording “in the interest of the purchaser” and “in the interest of the seller”; the obligations placed on the purchaser as he obtained the loan did not make it possible to hold that these provisions had been stipulated in his exclusive interest; the indication that, after a certain period of time without notification of the loan offer, the condition will be deemed not to have been fulfilled with regard to the seller and the latter will be released from any commitment, each of the parties then resuming their full and complete freedom, necessarily benefited both parties (Cass. 3rd civ. November 7, 2007 n° 06-17.729 (n° 1018 FS-D), Brinitzer c/ Pellerin). As a result, the seller could validly invoke the failure of the said condition.

Reproduction is authorized with mention of the source.

January 22, 2008.

Me Nicolas BRAHIN
Lawyer at the Bar of NICE
Nicolas.brahin@brahin-avocats.com
Diploma of Higher Specialized Studies in Banking and Financial Law
Panthéon-Sorbonne University (DESS 1997)

file to download:
080125 the sale granted under the suspensive condition.MIS

C A B I N E T B R A H I N

DANSK-FRANSK ADVOKATFIRMA I FRANKRIG / DANISH-FRENCH LAW FIRM IN FRANCE

What will change…

for companies

While companies will benefit from a relief of around 11 billion in 2014 thanks to the CICE, their corporate taxes will reach new heights.

• The additional contribution on the IS more than doubled

This was one of the main about-faces of the executive. After announcing the creation of a “contribution on the gross operating surplus (EBE)”, and faced with the foundation of business leaders, the executive has fallen back on an increase from 5 to 10.7% of the rate of the additional contribution on corporate tax. This surtax will only apply to companies with a turnover of more than 250 million. This measure is expected to bring in roughly the 2.5 billion euros of revenue expected from the tax on EBITDA. “Without taking into account the tax on very high salaries, known as the “75% tax”, with the additional contribution on the IS at 10.7%, which is added to the social contribution on profits of 3.3%, and taking into account the contribution of 3% on distributed dividends, our IS rate, which is already the highest in Europe at 36.1% of profits, will be close to 40% for some companies for two years”, notes Patrick Fumenier, partner at Taj. Paradoxically, the executive initially intended to lower it by one point at the same time as the creation of the tax on EBITDA.

• The 75% tax paid by companies

After a first version censured by the Constitutional Council in 2012, it is the return of the famous “75% tax” on incomes above one million euros. It is not the households concerned who will pay it, but the employers during two years (on the 2013 and 2014 incomes). The “exceptional contribution of solidarity on high incomes” of 50%, to which it is necessary to add the existing social levies to reach the symbolic 75%, will be based on all the gross remunerations received by the employees and managers on the bracket higher than one million. It will be capped at 5% of turnover and will concern 470 companies and 1,000 executives, according to Bercy. It will bring 260 million to the State the first year and 160 million the second.

What will change…

for households

No tax break for taxpayers. A review of the main measures that will affect them next year.

• Increase of the VAT

Voted at the end of 2012 but contested from all sides, the VAT increase will apply on January 1, 2014. The standard rate will rise from 19.6% to 20%, the intermediate rate (catering, accommodation, transport … from 7 to 10%. The reduced rate (food) will be maintained at 5.5%, instead of dropping to 5%. Total? About 6 billion more revenue for the state.

• Tightening of the ISF ceiling

The socialist deputies have added life insurance contracts (interest, dividends, capital gains) to the wealth tax base. The tax cap of 75% of the income remains unchanged, which means that an additional wealth tax is paid on the income from life insurance.

• Indexation of the income tax scale

After two years of freezing the income tax scale, the Ayrault government has decided again to increase the value of the bracket limits in line with inflation in 2013. This is accompanied by an exceptional 5% increase in the decote, which raises it from 480 euros to 508 euros. Cost of these two measures: 900 million “to support the purchasing power of households”.

• The ceiling of the family quotient lowered

To fill the hole in the family branch of the Social Security system, the government has lowered for the second consecutive year the ceiling of the family quotient, from 2000 to 1500 euros. This will affect 13% of families. Additional revenue: a little over a billion euros.

• End of tax exemption on supplements

The portion of the group health insurance paid by the employer was until now tax exempt. It will no longer be exempt from tax as of income received in 2013. This technical measure will bring in nearly one billion euros for the State.

• Capital gain on transfer of securities

The aim is to encourage “long-term investment and risk-taking by generalizing the progressive scale of taxation” of capital gains for individuals. A 50% deduction is therefore introduced after two years of ownership of a security, which could reach 65% after eight years. A second reinforced system, in response to the “pigeons” movement, introduced a 50% allowance after only one year of holding securities of new SMEs, which rises to 65% after four years and 85% after eight years.

• VAT at 5.5% for energy improvement work

The deputies have decided to apply the reduced VAT rate of 5.5% to energy renovation work in homes older than two years. This rate will also apply to induced work (made necessary by these renovations, such as moving radiators or removing old flooring). In addition, other renovation work will not have their VAT rate raised to 10% if they have been the subject of a signed estimate and advance payments of a minimum of 30% by December 31, and if they are completed by March 1, 2014.

• Tuition tax credit saved

The socialist deputies have succeeded in removing the tax reduction for school fees in secondary and higher education. Families will therefore be able to continue to deduct 61 euros from their taxes for a middle school student, 153 euros for a high school student and 183 euros for a university student. This measure was to finance the family reform to the tune of 440 million.

Me Nicolas BRAHIN

Lawyer at the Bar of NICE

Nicolas.brahin@brahin-avocats.com

Diploma of Higher Specialized Studies in Banking and Financial Law

University Panthéon-Sorbonne (DESS 1997)

Dated January 23, 2014

file to download:
Text change 2014 companies and households

The real estate capital gain realized on the occasion of a real estate sale is taxable on income (IR) and social security contributions.

However, many exemptions exist.

How is a real estate capital gain calculated?

The capital gain is taxable when it comes from a transfer for consideration: sale of real estate or the rights attached, exchange, contribution to a company, etc.

It is calculated in two steps:

• the calculation of the gross capital gain (1), and
• the application of allowances (2).
• The calculation of the gross capital gain

The gross capital gain is the difference between the sale price and the acquisition price.

The sale price is the price mentioned in the deed of sale plus the charges and indemnities paid by the buyer (for example, an eviction indemnity) and reduced on receipt of the costs borne by the buyer. seller (for example, the cost of real estate diagnostics or mortgage discharge costs).

As for the acquisition price, it corresponds to the purchase price or the value that appears in the declaration of inheritance or in the deed of gift.

It is increased:

• acquisition costs (notary fees, registration fees, etc.) of a lump sum of 7.5% of the purchase price or actual costs on receipts; and
• work for a lump sum of 15% of the purchase price for a property held for more than five years or at actual costs on receipts.

Example: for a purchase price of €200,000, fixed valuations allow the price to be increased by €15,000 for acquisition costs and €30,000 for works.

• The application of allowances

To this capital gain apply deductions for duration of detention.

For example, for a property held for 15 years, the seller benefits from a reduction of:

• 60% for IR,
• 5% for social contributions.

For a capital gain of €40,000, only €16,000 will be subject to income tax and €33,400 to social security contributions.

Note

For properties located in certain “tense” areas between supply and demand, an additional 70% reduction is applicable if the transfer allows the construction of collective residential buildings and 85% if it is mainly social and/or intermediate housing.

In practice, this exceptional allowance applies to transfers carried out until December 31, 2022 (provided that the preliminary contract has acquired a certain date between January 1, 2018 and December 31, 2020).

The tax rate of the capital gain: after deduction, the capital gain is taxed on income tax at the rate of 19% and on social security contributions at the rate of 17.2%.

An additional tax is due for capital gains over €50,000, after the allowance.

It is 2% to 6% depending on the amount of the capital gain.

What are the exemptions?

There are many exemptions concerning real estate capital gains, each subject to specific conditions.

Thus, sales of main residences, those whose price is less than €15,000 or sales for the benefit of bodies responsible for social housing.

The capital gain is also exempt when the seller does not own his main residence and uses the money from the sale price to acquire one or when a non-resident sells a dwelling located in France.

In addition, retirees and people who live in social, medico-social establishments, care for the elderly or disabled adults can benefit from an exemption subject to income conditions.

Cabinet Nicolas BRAHIN

Advokatfirma i NICE, Lawyers in NICE

contact@brahin-avocats.com

1, Rue Louis Gassin – 06300 NICE (FRANCE)

Phone : +33 493 830 876 / Fax : +33 493 181 437

www.brahin-avocats.com

To open a bank account in the United Kingdom, certain documents must be provided to the bank concerned, while others may be requested.

• Documents to be provided:
• A valid identity document: identity card, passport, driving license… ;
• Proof of address: EDF bill, telephone bill, rental contract, etc.; and
• Proof of income: pay slips, bank statements, tax form…
• Documents that may be required (especially for non-UK citizens):
• An employment contract or letter from the employer.
• A letter from the university.

It should be noted that the British bank can check the credit history of new customers.

Lawfirm Cabinet BRAHIN

Nicolas BRAHINI Avocat

Master’s Degree in Banking and Financial Law

nicolas.brahin@brahin-avocats.com

1, Rue Louis Gassin 06300 NICE (FRANCE)

Tel : +33 493 830 876 / Fax : +33 493 181 437

www.brahin-avocats.com

To open a bank account in the United Kingdom, certain documents must be provided to the bank concerned while others may be requested.

• Documents to be provided:
• A valid identity document: identity card, passport, driving licence, etc.;
• Proof of address: electricity bill, telephone bill, rental contract, etc.; and
• Proof of income: payslips, bank statements, tax form, etc.
• Documents that may be requested (especially for non-UK citizens):
• A work contract or a letter from the employer.
• A letter from the university.

It should be noted that the British bank can check the credit history of new customers.

Lawfirm Cabinet BRAHIN

Nicolas BRAHINI Lawyer

Master’s Degree in Banking and Financial Law

nicolas.brahin@brahin-avocats.com

1, Rue Louis Gassin 06300 NICE (FRANCE)

Phone : +33 493 830 876 / Fax : +33 493 181 437

www.brahin-avocats.com

Any person or company wishing to start a business in Mauritius must register with the Registrar of Business who will provide them with a Business Registration Number. Information such as the type of business, the address of the business or the foreseeable date of commencement of activity will be requested. It is possible to set up a business without using the services of a notary. A registration fee of Rs 2,000 is payable. The Business Registration Act of 2002 provides that companies must also register with the Commercial Registry to obtain a business registration card.

To do so, companies must fill out an application form1 . This form can be downloaded from www.boimauritius.com.

Summary:

I/ THE CREATION OF A COMPANY

II/ CORPORATE INCOME TAX (IS)

III/ INCOME TAX (IR).

file to download:
100112 – Setting up a company in Mauritius