At issue in the case before the court was the amount of the local property tax (taxe foncière) payable on a residential house and an increase discovered two years after completion.
The facts date back to the end of 2017 when a couple purchased a house for €180,000.
At completion, the notary calculated the pro-rata share of property tax payable by the purchaser on the basis of the amount assessed for 2016, namely €1,699.
The transaction appeared routine. The deed of sale contained no specific clause regarding a possible future increase or a maximum amount of property tax.
Two years later, the purchaser discovered that the property tax for 2019 amounted to €2,628, a difference of €929 from 2016.
Considering that property tax constitutes a charge inherent to the property and directly affects the overall financial burden of the acquisition, the purchasers argued that the sellers should have disclosed the actual or foreseeable amount of this tax prior to the conclusion of the contract.
In court the buyers argued that information is “determinative” whenever it has a direct and necessary link with the content of the contract and that the property tax, as a charge attached to the property, necessarily meets this criterion.
The French Supreme Court, the Cour de Cassation, rejected this interpretation. The court held that the pre-contractual duty to inform applies only to information that has a direct and necessary link with the content of the contract or the qualities of the parties and whose importance is determinative for the other party’s consent.
The Court expressly stated that the duty to inform does not extend to all information having such a link.
In dismissing the appeal, the Supreme Court endorsed the lower court’s factual findings, in particular that:
The purchaser had not requested the property tax assessment notices for previous years before signing the final deed;
The deed of sale contained no reference to a maximum property tax amount;
No evidence demonstrated that this issue had entered the contractual sphere or constituted a decisive condition of the purchase.
Despite the ruling, the information obligations on sellers of property are strong, and there is an abundance of case law, in particular, on hidden/latent defects (vices cachés), with several cases having been previously covered in these pages.
However, as we make clear in our guide below, buyers need to be pro-active in their own pre-purchase enquiries and ensure that the sale and purchase contract accurately reflects all agreed terms, and adequately protects their legal and financial interests before they commit to the transaction.
If you seek advice concerning anything in this article contact our Property/Tax Clinic and one of our advisors will get back to you.
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