Sale off plan (VEFA)

The sale of a building off plan is the result of the Dahir n° 1-02-309 of the 25 rejeb 1423 (October 3, 2003) carrying the promulgation of the n°44-00 legislation completing the dahir of the 9th ramadan 1331 (August 12, 1913) constituting a code of obligations and contracts. (B.O. from November 7, 2002).

Definition of a sale off plan article 618-1 of the n°44-00 legislation :

It is the sale of a building before it is built with an agreement in which the seller is obliged to construct a building within a specific time frame and the buyer is committed to paying the price in instalments as the construction of the building moves forward.

The legislation concerns property destined for habitation use as well as property for professional, commercial, industrial and artisanal use by people in the public or private sector.

The seller maintains his rights and attributions of master builder or project manager until the end of the construction.

Necessary formalities for the sale off plan of a property (Article 618-3).

Preliminary contract

The necessity of a preliminary contract or the sale off plan will be considered invalid:
an authentic deed, a deed with a precise date and elaborated by a professional who is a member of a legal and regulated profession authorized to draw these deeds. (The list of authorized professionals able to draw these deeds is established annually by the minister of justice. Example : solicitors accredited by the Supreme Court).

The preliminary contract must contain the following elements:
- the identity of the seller and the buyer;
- title deed of ownership of the registered building, object of the construction, or the references of ownership of a non registered building indicating the actual rights as well as property servitudes and all other servitudes ;
- the number and date of the authorization to construct ;
- the building’s description, object of sale ;
- the final price of the property and the conditions of its payment ;
- the deadline of its delivery ;
- the references of the bank guarantee or all other guarantees and insurances if necessary.

The preliminary contract must be signed by the seller and the buyer as well as the professional that drew it. The signatures of the contract drawn by a solicitor are legalized by the head of the secretarial registry of the court of first instance within the jurisdiction where the solicitor practises.

It is necessary to add the following to the preliminary contract:

- exact copies of the following: architecture plans, reinforced concrete plans and the specification booklet;
- the certificate given by the specialized engineer attesting that the foundation of the building in question has been completed.

The law protects the buyer by not allowing the preliminary contract to be signed until the completion of the foundation.

Payment conditions for a sale off plan (Article 618-6).

The buyer is obliged to make partial payments towards the total cost of the property according to the following phases:
- one payment must be made at the completion of the construction of the foundation;
- a second payment must be made once the construction of the structure of the building is completed;
- and a third payment must be made when the construction is fully completed (ready to be used as intended).

However, the law allows the parties the possibility to fix their own conditions of payment but with the following exception: no payment can be made before the signing of the preliminary contract of the sale (article 6186-8).

The sales deed (final contract)

The sales deed may only be established once the totality of the cost of the building or a fraction of the building has been paid to the seller (cost and what is being purchased stipulated in the preliminary contract).

If one of the two parties refuses to conclude the sales deed within 30 days from the date of notification concerning the above article 618-18, the harmed party can file for legal action to conclude the sales deed or to terminate the preliminary contract. The definite judgment ordering the conclusion of the sale is equal to the sales deed in question.

Fulfilment of the sale – The transfer of ownership of the building or the fractions sold to the buyer is validated only after the establishment of the sales deed or after the definite decision by the court for cases in which the building is not registered or in the process of being registered and from the time of inscription of the sales deed or from the decision given by the court on the property registry once the property is registered.

The building sold will not be considered completed, even though the actual work is finished, until an habitation licence or a certificate of conformity has been obtained or at the request of the buyer, the seller presents the buyer with a certificate attesting that the building complies with the specification booklet.

Once the habitation licence or the certificate of conformity is obtained the seller is obliged to inform the buyer, within 30 days of receiving them, by registered mail with proof of reception. The seller must also obtain the title deed for each lot once the constructed building is registered. (Article 618-18)

Security for the buyer (Article 618-9)

The seller must constitute in benefit of the buyer a bank guarantee or another similar guarantee, if that is not possible, an insurance to enable the buyer to recuperate previous payments if the contract has not been respected. This guarantee will end once the sales deed is established and if it concerns a registered building it will end at the date of inscription of the said sale on the property registries.

The law makes one exception (Article 6186-11). All national establishments as well as corporations in which the total capital is held by the State do not need to provide a guarantee to the buyer.

The article provides another guarantee to the buyer: the establishment of a specification booklet :

The seller must provide a specification booklet of construction defining the project, its designation as well as the furnishings and the facilities to be constructed and the deadline for its delivery. The seller and the buyer must sign the specification booklet. A certified copy with the legalized signature of the buyer will be given to the buyer.

For registered buildings the specification booklet, the architectural plan and the co-ownership rule book (if it is a co-owned property) must be submitted to the property conservation agency.
For a non registered building the above mentioned copies must be inscribed on a special registry held by the office of the court of first instance within the jurisdiction where the building is located and then submitted to the office in question.

Penalties for late payments (Article 618-12).

The penalties due by the buyer

If the buyer is late in his payments due, as indicated in article 618-6, the buyer will have to pay an extra fee that can not surpass 1% per month of the amount due nor surpass 10% of the amount due per year.

The penalties due by the seller

If the seller does not respect the deadlines indicated for the construction of the building the seller will have to pay an extra fee that can not surpass 1% per month of the amount due nor surpass 10% of the amount due per year.

However, the late fee will be applicated only one month after the faulty party has received a formal notice from the other party by way allowed in article 37 and following the civil procedure code.

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