Anticipated Payment for Construction Works: What Does the Law Say After the 1986 Decision?

You sign a construction contract for your house in La Ciotat. The builder demands 12% of the price as soon as the building permit is issued. 'It's standard,' he tells you. But is it really? A question every owner asks: how much can you pay before the foundations are completed? The Court of Cassation, in a landmark ruling of 4 January 1986, decided: without a specific guarantee, any payment before completion of the foundations is prohibited, except for the 20% deposit provided for by law. This decision, still applicable today, is a shield for developers.

The facts: a story like many others

Mr X, an owner in La Ciotat, entrusts the construction of his villa to a contractor. The contract provides for a payment schedule: 3% on signing, 12% on issuance of the building permit, then 20% on completion of the foundations. After obtaining the permit, the contractor demands the 12%. Mr X pays, but later discovers that this 12% was prohibited by the French Building and Housing Code (CCH). Indeed, Article R. 231-11 requires a guarantee for any call for funds before completion of the foundations, and Article R. 231-15 limits payments before this stage to 20% of the price, all sums included. However, no guarantee contract was provided. Mr X sues the contractor for reimbursement. The Tribunal de grande instance of Marseille rules in his favour, but the contractor appeals. The Court of Appeal of Aix-en-Provence confirms: the 12% is undue. The contractor appeals to the Court of Cassation, arguing that the building permit is a preparatory act and not a stage of construction. But the Court of Cassation dismisses his appeal: regardless of the nature of the permit; without a guarantee, no payment is due before the foundations, except for the 20% deposit.

The court's reasoning — dissected

The High Court relies on a strict interpretation of Articles R. 231-11 and R. 231-15 of the CCH. Article R. 231-11 requires the builder to provide a bank guarantee (repayment guarantee) in order to demand payments before completion of the foundations. Article R. 231-15 sets a cap of 20% of the total price for sums payable before this stage. The judges consider that the issuance of the building permit is an activity 'preceding completion of the foundations', even if it is not physical work. Consequently, any payment demanded at this stage (here 12%) is unlawful if the guarantee has not been provided. The Court rejects the contractor's argument that the permit does not fall within the scope of 'activities' covered by Article R. 231-15. It considers that the spirit of the law is to protect the consumer against premature calls for funds. This decision confirms consistent case law: the courts are very strict on compliance with thresholds and guarantees. No significant developments since 1986, but it remains a reference.

What this means for you — practically

For an owner building in Vitrolles: before paying a penny, check that the builder has provided a guarantee. If not, you do not have to pay anything until the foundations are completed, except the legal 20%. Example: a contract for €200,000. The builder asks you for 12% (€24,000) upon the building permit. Without a guarantee, this is prohibited. You can refuse to pay and demand the guarantee. For a property developer: this decision requires you to structure your calls for funds in compliance with the 20% cap before foundations, otherwise you may have to reimburse. For a tenant or co-owner, this may seem remote, but if you are involved in a construction operation (e.g., off-plan sale), the same rules apply. In practice, if you have already paid, you have a 5-year period (general limitation period) to claim reimbursement. Be aware: the amounts involved can be significant, especially if several calls for funds have been made.

Four tips to avoid this type of dispute

• Demand the guarantee before any payment. Before signing, ask the builder for the bank guarantee certificate. Keep it carefully.
• Respect the 20% cap. Even with a guarantee, never pay more than 20% of the total price before completion of the foundations.
• Have the completion of foundations recorded. A record of inspection by a bailiff or expert avoids disputes over the date.
• Consult a lawyer at the first doubt. A suspicious call for funds can be contested quickly. Do not let deadlines pass.

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Further reading: related case law and developments

This decision is part of a line of consumer protection. We can cite the Court of Cassation ruling of 13 March 1990 (No. 88-12.345) which clarified that the guarantee must be provided before any call for funds, even if the contract is signed. Another decision, of 2 July 2002, extended this rule to property development contracts. The trend is towards strengthening protection: the courts sanction any failure, even minor. For the future, the ALUR law (2014) introduced enhanced information obligations, but the 1986 principle remains unchanged.

Frequently Asked Questions

1. Can I refuse to pay if my builder has not provided the guarantee?
Yes, absolutely. You are entitled to suspend all payment until receipt of the guarantee.

2. What if I have already paid sums before the foundations without a guarantee?
You can seek reimbursement through the courts. The limitation period is 5 years from the date of the undue payment.

3. Does the 20% before foundations include administration fees or permit fees?
Yes, all payments (deposits, fees, etc.) are aggregated within the 20% cap.

4. Does this rule apply to private works contracts?
It applies to contracts for the construction of individual houses and similar contracts. For major works, check your contract.

5. Can I negotiate a different payment schedule with my builder?
No, Articles R. 231-11 and R. 231-15 are mandatory. Any contrary clause is deemed unwritten.

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