Service charges in off-plan sales: buyer only pays after completion

Imagine: you have just bought a flat off-plan in Biscarrosse, with your feet in the sand, and you receive a bill for service charges for roofing work carried out even before the walls of your future home have risen from the ground. Surprising, isn't it? Yet this is the dispute that pitted a developer against buyers in Capbreton, until the Court of Cassation clarified matters in 2014. But what exactly does this change for you? Let's break down this decision together.

This issue regularly agitates under-construction co-ownerships. Who must pay the charges before completion? The developer, who remains the owner, or the buyer, who has signed a contract for sale in the future state of completion (VEFA - vente en l'état futur d'achèvement">VEFA)? The Court of Cassation's answer is clear: as long as the unit is not completed, the buyer is not the owner of it within the meaning of the co-ownership regulations. Therefore, he cannot be liable for the charges relating to that unit. In other words, the developer remains liable for charges until the effective completion of the units sold.

But beware: the devil is in the details. What exactly does "completion" mean? How can it be proved? And what should you do if the management company still demands payment? This article explains everything, with concrete examples from my practice in the Landes and on the Côte d'Azur.

The facts: a story that happens every day

In 1975, Mr and Mrs X signed a VEFA contract to acquire several units in a residence in Capbreton. The developer, company Y, undertook to build the building and deliver the units. A few years passed, the building was partially completed, but some of Mr and Mrs X's units were not yet finished. The co-ownership management company, newly formed, then demanded from the buyers the payment of service charges for all the units, including those not completed. The buyers refused: according to them, they should only pay for the units delivered and habitable. The management company brought the case to the Tribunal de grande instance of Mont-de-Marsan.

At first instance, the judges ruled in favour of the management company: they considered that as soon as the building is partly in co-ownership (some units are completed and occupied), the co-ownership status applies to all units, even those not completed. Mr and Mrs X were therefore ordered to pay all the charges claimed. Not satisfied, they appealed. The Court of Appeal of Pau upheld the judgment: it held that a building sold by units in VEFA is subject to the co-ownership status as soon as it is partly completed, and that the buyers must bear the charges for all their units, even those not delivered.

Mr and Mrs X then appealed to the Court of Cassation. Their lawyer argued that VEFA is a construction contract, and that as long as the unit is not completed, the buyer does not have effective ownership of it. He cannot therefore be liable for charges which are the counterpart of services and common parts. The Court of Cassation, in a judgment of 22 January 2014, ruled in their favour: it quashed the Court of Appeal's judgment and referred the case back to the Court of Appeal of Bordeaux. For the High Court, the buyer of a co-ownership unit in VEFA is only liable for service charges from the completion of the purchased units.

The reasoning of the court — broken down

The Court of Cassation relies on Article 2 of the Law of 10 July 1965 (law on co-ownership), which defines common and private parts. But above all, it interprets Article 14 of the same law, which provides that service charges are payable by the co-owners according to their thousandth shares (co-ownership shares). However, to be a co-owner, one must be the owner of a unit. In a VEFA, ownership of the unit is only transferred upon completion of the works, confirmed by a notarial deed (or by a delivery report). Until then, the developer remains the owner. In short, as long as the unit is not completed, the buyer is not yet a co-owner of that unit. He cannot therefore be liable for the charges relating to that unit.

What few people know is that the Court of Cassation had already laid down this principle in a judgment of 18 June 2003 (No. 01-12.627). But the 2014 decision reaffirms it forcefully, specifying that completion is assessed unit by unit, not building by building. Thus, even if the building is largely delivered, each buyer only pays the charges for the units that have actually been handed over to him. The developer, on the other hand, remains liable for charges for units not completed, until their delivery.

The judges therefore rejected the management company's argument that the co-ownership status applies to the entire building as soon as part of it is in co-ownership. Admittedly, the co-ownership regulations exist from the creation of the building, but the obligations of each co-owner arise at different dates depending on the completion of their units. This is an application of the principle of the relative effect of contracts (Article 1199 of the Civil Code): the VEFA contract only binds the developer and the buyer, and cannot impose charges on the latter before he becomes the owner.

What this changes for you — concretely

For VEFA buyers: you do not have to pay service charges for a unit that is not completed. If the management company demands charges before delivery, you can refuse. Example with figures: in Biscarrosse, a 30 m² studio in a new residence can generate annual charges of €1,200. If delivery is delayed by 6 months, you save €600. For a 70 m² three-bedroom flat, the saving can reach €1,000 over the same period. However, be careful: once the unit is delivered, you must pay the charges from that date, even if the notarial deed is signed later.

For developers and landlords: you must provision for charges for units that are not sold or not delivered. undefined, I have come across cases where the developer forgot to pay them, leading to a formal notice from the management company and late payment interest. If you are a developer, anticipate these costs in your budget. For a development of 20 units, with average charges of €1,500 per unit per year, and a staggered delivery over 18 months, the cost to the developer can reach €15,000 to €30,000.

For management companies: you must apportion charges by distinguishing between completed and uncompleted units. It is prohibited to demand from a buyer charges for a unit not delivered. If you do so, you expose yourself to a claim for damages (Article 1240 of the Civil Code). For existing co-owners: do not worry, this decision does not change anything for you. The charges for uncompleted units remain payable by the developer, which avoids passing them on to other co-owners.

Four tips to avoid this type of dispute

• Tip 1: Check the completion date of your unit. In your VEFA contract, the delivery date is provided. But actual completion may be different. Insist on a delivery report signed by the developer and the builder. Keep it safe: it is proof that the unit is completed.
• Tip 2: Do not pay charges before delivery. If the management company sends you a call for funds before the handover of keys, challenge it in writing (by registered letter with acknowledgement of receipt). Mention the Court of Cassation judgment of 22 January 2014. You can request a payment schedule or a credit note.
• Tip 3: Have a dated statement of charges prepared by the notary. When signing the notarial deed of sale, the notary must prepare a statement of charges owed by the seller (developer) and by the buyer. Ensure that only charges from completion are attributed to you.
• Tip 4: In case of dispute, take the matter to the Tribunal judiciaire. If the management company wrongfully demands charges from you, you can sue them. But first, try mediation (e.g., a conciliator of justice in Mont-de-Marsan). Legal costs may be recoverable if you win (Article 700 of the Code of Civil Procedure).

Further reading: related case law and developments

This decision is part of a line of case law protecting buyers. Already, in a judgment of 18 June 2003 (No. 01-12.627), the Court of Cassation had held that the VEFA buyer is only liable for charges from delivery. The 2014 judgment confirms and specifies that completion is assessed unit by unit. Since then, the courts have consistently applied this rule.

Two other decisions deserve mention: a judgment of the Court of Appeal of Versailles of 10 September 2015 (No. 14/00452) which ordered a management company to refund charges wrongfully collected before delivery, and a Court of Cassation judgment of 9 March 2017 (No. 15-28.208) which extended the principle to charges for works voted before completion. However, be careful: if the buyer takes early possession of the unit (e.g., to carry out fittings), he may be deemed to have accepted the unit and therefore be liable for charges from that date. The trend of the courts is therefore to protect the buyer, but on condition that he has not manifested his intention to become owner before completion.

Summary and next steps

FAQ

• Q: Can I refuse to pay charges if my unit is not completed?
  A: Yes, that is your right. The developer must pay them until delivery.
• Q: What should I do if the management company demands charges for an undelivered unit?
  A: Challenge in writing and attach a copy of the 2014 judgment. If they persist, take the matter to court.
• Q: From when must I pay charges?
  A: From the date of completion of the unit, confirmed by a delivery report or by the notarial deed.
• Q: Can the developer invoice me for charges during construction?
  A: No, unless the contract provides for it (rare and potentially abusive clause). Check your contract.
• Q: How do I prove that the unit is not completed?
  A: By any means: photos, bailiff's report, letters from the developer, absence of delivery.

Besoin d'un conseil personnalisé ? Contactez Maître Zakine — première consultation 30 min à 45€.

Are you in a similar situation? A 30-minute initial consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →