Buying Off-Plan In Mauritius
Understanding the VEFA
Investors in the real estate sector in Mauritius are increasingly going for off-plan property acquisitions. This type of acquisition means purchasing a property based on the architects’ drawings as the construction is at its planning stage.
“Buying off-plan” is commonly known as a VEFA (Vente en l’état future d’achèvement).
How does VEFA work?
Main features of VEFA:
- Buyer owns the land upon execution of the deed sale.
- Buyer gets the building ownership when the construction works are completed.
- Make payments by instalments according to the construction works progress.
- Contribute to the design plan of their dream home.
Legal implications of VEFA
As a former French colony, the legal framework governing real estate in Mauritius is the French Civil Code. It requires that VEFA be binding by a contract. Under the VEFA, the promoter must provide for a GFA (Garantie financière d’achèvement).
The GFA is a financial guarantee which acts as a safeguard for the buyer if the promoter cannot respect his commitments. The GFA can be provided by either the promoter himself or a third party such as a bank.
The Sales contract
The VEFA is achieved through 2 distinct procedures each validated by a contract:
The reservation contract
Ø The buyer needs to sign a ‘preliminary reservation agreement’
Ø Once the contract is signed, the buyer must follow with a deposit
Ø The payment is placed in a special account, usually opened by the appointed notary
Ø This contract represents the title deed.
Ø It settles the rights and obligations of the seller until building works are over.
Ø The buyer can check if the project complies to commitments since he receives the contract one month prior to the signature.
According the provisions of Article 1601-3 of the French Civil Code, payments of a property sold under VEFA are thus scheduled :
- 25% when signing the purchase agreement
- 10% once foundations are completed
- 35% upon completion of the roofing
- 25% when building works are done
- 5% once keys are handed over
Article by Know House