Buying off-plan, best known as VEFA in Mauritius (Vente en État Futur d’Achèvement), is a contract that allows the buyer to acquire a property that has yet to be built or that is under construction and that the seller or promoter undertakes to deliver to the buyer once completed. Like all real estate sales, it is mandatorily received by a notary. To be able to choose, the developer then presents the buyer with the plans, descriptive documents as well as graphics related to the real estate project in question. The buyer is not involved in the construction process, the responsibility for which lies entirely with the developer. The latter undertakes to deliver to the buyer a completed property in accordance with the plans and descriptive notices within a specified period. He must take all the necessary steps to achieve this (building permits, insurance, site supervision…).
The key steps of the VEFA:
Various VEFA programmes are available in Mauritius, governed by the Civil law of Mauritius, according to which:
1601-3. The sale before completion is the contract by which the seller immediately transfers to the buyer his rights to the land as well as the ownership of the existing buildings. Future works become the property of the buyer as they are carried out; the buyer is required to pay the price as the work progresses. The seller retains the authority of the controller of the works until the works are received.
1601-8. In the case of sale before completion, the seller may not demand or accept any payment, deposit, subscription or acceptance of any commercial instrument before the contract is signed or before the date on which the claim is due.
In order to protect their interests throughout the acquisition process, those interested in such a real estate investment must turn to a professional in the sector as well as a notary.
The CRP (Contrat de Réservation Préliminaire) or Contract of Preliminary Reservation: also known as ‘preliminary contract’, ‘reservation contract’, ‘preliminary reservation contract’, the CRP is, in reality, a preliminary VEFA contract which describes the property, its price, the delivery schedule, etc. By signing this reservation contract, which obeys strict and mandatory rules provided by articles 1601 et seq. of the Civil law of Mauritius, the buyer is already committed to the purchase of the property of interest to him.
Attention :
The CRP is optional, so it is possible for the promoter to skip this step in favour of the final sales contract.
Despite the signing of the reservation contract by the buyer, the developer is entitled not to concretize the real estate project in question. In such cases, he is legally obliged to return any security deposit paid by the buyer. The latter may, under certain conditions, renounce the project and request the return of his security deposit.
The developer is not entitled to claim any type of payment from the buyer before the latter signs the CRP.
For greater security, it is preferable to use a notary to prepare the VEFA reservation contract. The document should contain:
When the buyer signs the preliminary reservation contract in order to book his real estate property under VEFA, he is required to pay a security deposit to a special account, opened through the notary or within a financial institution in the name of the buyer. Until the conclusion of the sales contract, this sum remains untouchable, unless the sale before completion does not concretize.
Concerning the amount of the security deposit with regards to a VEFA, in accordance with article 1601-42 of the Civil law of Mauritius:
It amounts to a maximum of 2% of the selling price if the VEFA deed of sale is signed between 1 and 2 years after the reservation contract. In case the time limit for completion of the sale is more than 2 years, the seller may not ask for a security deposit.
It amounts to a maximum of 25% of the selling price if the signing of the final sales contract takes place in the same year as the signing of the reservation contract.
The deed of sale before completion must be drawn up by a notary. According to the Civil law of Mauritius, the document must contain:
The draft VEFA deed of sale together with supporting documents (side plans, technical specifications detailing the nature and quality of the materials used, the components of the private and common parts) and the financial Completion Guarantee document (“GFA” garantie financière d’achèvement) must be communicated to the buyer at least one month before the date scheduled for the signing of the final VEFA in order to allow him to examine them.
The payment of the purchase price of a property under VEFA is staggered, and divided to follow the progress of the work. The seller is authorised to raise funds from the VEFA buyers after an independent professional has verified the progress of the work. As for the timing:
At the end of the work, as controller of the development, the developer:
The developer, and possibly an architect and the builder, must sign the minutes.
The buyer is strongly advised to request a copy of the report of the acceptance of the works. This way, he will be able to know the activation date of the guarantees he can benefit from.
VEFA delivery occurs when the keys are delivered by the real estate developer to the buyer. This step activates the biennial and 10-year guarantees that the builder is responsible for:
If the buyer accepts the work without reservation, he has the year following the receipt to assert the guarantee of perfect completion, for example, if defects were not found during the receipt of the work and the preparation of the report (provided, however, that they are denounced within one month of taking possession). For this, he will be required to provide a registered letter with acknowledgement of receipt.
If the buyer expresses reservations when the works are received, he may ask the developer to remedy the situation and resume the works within a fixed period agreed with him.
Once the work is completed, the seller or developer delivers the property to the buyer within the agreed-upon time frame: this is referred to as a delivery obligation.
The signing of the minutes of acceptance of the works of the VEFA building constitutes the starting point of the guarantees of perfect completion, of the biennial and 10-year guarantees. A report of the acceptance of the works is drawn up, in which are recorded any malfunctions or defects of conformity when the property delivered does not meet the stipulations of the contract and the clauses of equivalence or tolerance for certain equipment.
In the event that the property is not completed, that is, it has essential elements that are missing or unusable in the state (no windows, etc.), the developer or seller must request compliance before they can receive the balance of the price and hand the keys over to the buyer.
If the lack of conformity does not prevent a move into the property (for example, the floor covering which does not fit the description), the buyer can record this balance at the bank or at his notary until the compliance: the delivery of the keys becomes mandatory, it is the customer delivery, the customer becomes the legal owner of the property.
In order to protect the residential property buyer, the developer must provide either a completion guarantee or a repayment guarantee.
The completion guarantee or financial completion guarantee (GFA) is a bank guarantee whereby a financial institution undertakes, in the event of default by the developer, to advance the necessary sums for the completion of the works.
The repayment guarantee, on the other hand, allows that in case of non-completion, the sums already paid by the buyer are reimbursed. This guarantee also comes from a financial institution. The sale would then be cancelled, unlike the financial completion guarantee that allows the building to be completed.
In the context of a VEFA purchase, the buyer has several guarantees:
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