A promise of sale is signed in July 2019 subject to a loan condition: at most 1,475,000 €, over at most twenty-five years, at a maximum nominal rate of 1.75 %. The beneficiary pays 73,750 € on account of an immobilisation indemnity of 147,500 €. She applies for two loans, of the right amount and term, but at 1.30 %. Refused. The sale does not go ahead; she claims the escrowed sum back, the sellers claim the indemnity and damages. The Paris Court of Appeal sides with her: 1.30 % is not “out of proportion” with 1.75 %. On 25 June 2026 the Cour de cassation (the French supreme court for civil matters) quashed that ruling: an application at a rate below the contract’s is not compliant, and the condition is deemed fulfilled. It also quashed on good faith: asking for an extension without saying that three banks have already refused may be a fault. For the valuer, the case is about the price of tying up a property.
The facts
By notarial deed of 31 July 2019 a couple promise to sell a property to a beneficiary, subject to the condition that she obtains a loan offer by 21 October 2019 at the latest, a deadline later extended to 8 December. The promise sets the loan’s characteristics, at most 1,475,000 €, at most twenty-five years, a maximum nominal rate of 1.75 %, and stipulates that “any application not compliant with the contractual terms, in particular as to the amount borrowed, the rate and the term of the loan, shall entail the fictitious fulfilment of the condition”. The beneficiary pays 73,750 € into the notary’s escrow, on account of the immobilisation indemnity of 147,500 €.
The sale does not complete. The beneficiary sues for the promise to be declared lapsed and for the escrowed sum to be returned; the sellers claim the immobilisation indemnity and damages. The Paris Court of Appeal, on 16 February 2024, declares the promise lapsed, rejects the indemnity claim and orders the sellers to compensate the beneficiary’s financial loss: she proves two refusals on compliant applications, the 1.30 % rate not being out of proportion with the 1.75 % maximum, and the promise set no minimum rate.
The decision
The third civil chamber quashed the judgment in full (Cass. 3e civ., 25 June 2026, no. 24-14.137).
On the condition, under article 1304-3 of the Civil Code, “the condition precedent is deemed fulfilled if the party who had an interest in it prevented its fulfilment”: by holding the applications compliant “while finding that the beneficiary had applied for two loans at a rate below the terms provided by the contract, the Court of Appeal, which did not draw the legal consequences of its own findings, breached the provision”.
On good faith, under article 1104, the Court of Appeal could not reject the damages claim “without examining, as it was asked to, whether by requesting an extension of the deadline for fulfilment of the loan condition without informing the sellers of the loan refusals notified within the initially agreed period, the beneficiary had not failed in her duty to perform the promise in good faith”. Remittal to the Versailles Court of Appeal, the beneficiary bearing costs and 3,000 € under article 700.
What this changes for valuation
The rate is part of a compliant application. A beneficiary who wants the protection of the condition applies for a loan on the promise’s terms: amount, term, and rate, up to the stipulated maximum. Asking for something cheaper is asking for something else, however small the gap seems. And it is not small: on 1,475,000 € over twenty-five years, the monthly instalment goes from about 5,760 € at 1.30 % to about 6,075 € at 1.75 %, more than 90,000 € over the life of the loan. A bank that refuses at 1.30 % has not necessarily refused at 1.75 %, and that is what the promise asked her to test.
What the immobilisation indemnity pays for. It compensates the seller for taking the property off the market during the promise period, here more than four months with the extension, and for bearing the risk that the sale would not happen. Its amount, usually ten per cent of the price, is a lump sum; it is not debated according to the actual loss. When the condition is deemed fulfilled, it is owed in full, and the escrowed sum is an advance on it.
Beyond the lump sum, a loss that can be quantified. The quashing on good faith opens the way to separate damages, for the loss caused by an extension obtained while hiding three refusals. That loss is a property loss and can be measured: the value of the property at the date of the promise and at the date it could be put back on the market, if the market fell in between; the carrying costs over the period, loan interest, property tax, charges, insurance; the rent lost if the property had to be vacated for the sale; the cost of a resale at a lower price. The valuation report establishes those values at their dates with market references, giving the judge a figure to set against the lump sum already received.
For the beneficiary, the reverse. A buyer who forfeits the immobilisation indemnity has paid ten per cent of a property she does not have. When she contests, the issue is the compliance of her applications, not the value of the property; but if she argues that the price was excessive or that the property had a defect discovered during the period, valuation becomes useful again, as a benchmark for what she would have bought.
Drafting the loan characteristics. The clause deeming the condition fulfilled in case of a non-compliant application applied in full. Practitioners take from it that the maximum rate must be realistic at the date of the promise, neither too low, which would make the condition too easy to defeat, nor too high, which would force the buyer to accept a ruinous loan; a valuer consulted upstream can place the price, and the financing that goes with it, in the market of the moment.
What the valuer takes from it
- A loan application at a rate below the maximum rate of the promise is not compliant; the condition precedent is then deemed fulfilled and the immobilisation indemnity is owed.
- Requesting an extension without disclosing refusals already received may breach good faith and open separate damages beyond the lump sum.
- The immobilisation loss is quantified by the value of the property at the dates of the promise and of remarketing, the carrying costs and the loss on resale.
- The immobilisation indemnity is a lump sum; damages have to be proved.
- The stipulated maximum rate must be realistic at the date of the promise.
Further reading
The Market value page describes the assignment, its timescale and its fee. The guide I paid too much, can I challenge the price and the glossary entries valeur vénale and date de valeur complement this article. On the same theme: Risk statement: flood plan approved between promise and deed and Seller’s fraud: the buyer may claim the excess price without annulment. The decision is available on Légifrance.
What next
A promise of sale that fell through, a property tied up for months, and a loss to establish?
I quantify what tying up the property cost the seller, value at the date of the promise, value on resale, carrying costs, to support a claim for the indemnity or for damages.
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