During the past years, numerous real estate projects in Mauritius have been sold under the Vente en l’État Futur d’Achèvement (VEFA) also known as the off-plan buying. Governed by the French Civil Code, this type of transaction allows the buyer to acquire a property which has yet to be built or whose construction has not yet been completed, on the basis of plans and descriptive and graphic documents, provided by the promoter.
According to the law, off-plan buying is the contract by which a seller transfers to the buyer his rights to the land at once as well as the ownership of the existing structures. Future works become the property of the buyer as they are carried out ; the buyer is bound to pay the relevant costs as work progresses. The seller undertakes to deliver the residential project to the buyer once completed.
Despite the similarities with the other types of property acquisition, off-plan acquisition is a two stage contract process.
Signature of the preliminary reservation contract
A preliminary reservation contract needs to be signed first and foremost. The buyer reserves the property by depositing funds in an escrow account, which is generally opened in the name of the reservee at the notary. The deposited funds are unavailable, elusive and non-transferable until the sale is completed. The preliminary reservation contract comprises mandatory information such as the address of the property, the location of the unit in the building, the surface of the living area, the number of rooms, the acquisition price (it should mentioned whether or not the price is revisable (and the modalities for reviewing if so is the case), the quality of the construction must be established by technical specifications (also known as a descriptive note) specifying the nature of the material and the equipments as well as the date by which the sale could be concluded… The duration of a preliminary reservation contract usually varies between 1 and 2 years, if the work has not started after this period, the buyer can cancel his/her reservation and recover his/her deposit.
Signature of the deed of sale
The next step is the signature of the deed of sale at the notary and this can only take place if the promoter has obtained all the necessary permits and the performance bond. The deed of sale is sent at least one month before the signature to enable the buyer to carefully review the content. It comprises several clauses including the detailed description of the property, the payment schedule, it also specifies the completion date, among other things…
Unlike other kinds of real estate transactions, the promoter cannot request the buyer to pay the entire amount upfront when signing the preliminary reservation agreement. Indeed, according to the Mauritian law, buying off-plan enables the buyer to make payment in installment, according to the progress of construction works. The payment schedule enables the buyer to become the owner of his/her property progressively.
For illustration purposes, you will find below the payment schedule for O’Patio, a project located at the heart of Cap Tamarin Smart & Happy Village.
|Upon signature of the preliminary reservation contract||25%|
|Upon signature of the deed of sale||5%|
|Upon completion of the foundation (of the block of which the property forms part)||5%|
|Upon completion of the first floor slab (of which the property forms part)||10%|
|Upon completion of the second floor (of which the property forms part)||15%|
|Upon completion of the roof (of which the property forms part)||10%|
|Upon completion of external openings||15%|
|Upon completion of the property||10%|
|Upon delivery of the property||5%|
Payment schedule for O’Patio project
Several guarantees offered
I Performance bond
The promoter is required to obtain a performance bond, which gives the guarantee to the buyer that in the event the promoter fails to meet his obligation, the project will be completed by a financial institution. The buyer is also reassured that his/her property will be built according to the terms of the contract.
I Construction warranties
Upon delivery, the property is under warranty for 10 years under the Mauritian law. Indeed off-plan properties buyers are protected by 2 specific guarantees under the law, which also provide security to subsequent buyers :
Moreover, the promoter also subscribes to a 10-year liability insurance coverage. This insurance guarantees that any structural defects will be rectified, even if the builder fails to do so.
With all the avantages, off-plan acquisition represents a secure investment!