16 July 2026.
Where a French sale agreement is conditional upon the buyer obtaining a mortgage, the financing applications must carefully follow the characteristics stated in the contract. The buyer must also act transparently when requesting an extension after receiving loan refusals.
A judgment delivered by the Third Civil Chamber of the French Supreme Court on 25 June 2026 illustrates the potential consequences of differences between the sale agreement, the applications sent to banks and the information provided to the seller.
A sale subject to mortgage finance
In this case, a unilateral promise to sell required the buyer to obtain finance by a specified date. A sum had been paid to the notary towards the contractual reservation payment.
When no loan was obtained, the buyer argued that the promise had lapsed and requested repayment of the funds held in escrow. The sellers maintained that the financing applications did not comply with the contract and claimed both the reservation payment and damages.
The mortgage application must match the sale agreement
The promise specified, among other matters, the loan amount, duration and nominal interest rate. The buyer’s applications stated a rate of 1.30%, while the agreement referred to a maximum rate of 1.75%.
The Court of Appeal considered the applications compliant because the requested rate was below the contractual ceiling. The French Supreme Court overturned that reasoning: having found that the loans had been requested at a rate below the contractual conditions, the lower court could not describe the applications as compliant without drawing the corresponding legal consequences.
The decision calls for particular care when drafting and performing the finance condition. The agreement should clearly distinguish the terms that must be reproduced in the buyer’s application from those that merely limit the loan offer the buyer is required to accept.
What are the risks of a non-compliant application?
Under Article 1304-3 of the French Civil Code, a condition may be deemed fulfilled where the party benefiting from it prevented its fulfilment. A financing application that departs from the agreed parameters may therefore deprive the buyer of the protection normally provided by the mortgage condition.
Depending on the circumstances and the wording of the agreement, the buyer may lose the right to recover the reservation payment or deposit.
An extension must be requested in good faith
The judgment also concerns the information given to the sellers. The buyer requested an extension without telling them about loan refusals already received during the original period.
The French Supreme Court held that the lower court should have examined whether this omission breached the duty to perform contracts in good faith. It did not finally decide that a breach existed, but required the issue to be considered.
Practical precautions
Before applying for finance, the buyer should verify:
- the loan amount specified in the agreement;
- the stated term and interest rate;
- the number of applications required, where applicable;
- the deadlines for applying and obtaining an offer;
- the evidence that must be retained.
If an extension becomes necessary, existing refusals and the true progress of the applications should be disclosed transparently. Any extension should be documented and agreed before the original deadline expires.
Official source
French Supreme Court, Third Civil Chamber, 25 June 2026, No. 24-14.137.
The notarial office does not contractually guarantee the accuracy or currency of this information. For advice on how it applies to your circumstances, please consult a notary at our office.
