Over the years, buying-off plan has become an increasing trend for investors in Mauritius. Both individual and institutional investors go for off-plan property acquisition as it allows them to buy a property before or during the construction stage. By following this process, investors become owners of the property as soon as they sign the deed of sale. In this article, learn more about how does the trend work and how it is seen as a safe investment option in Mauritius.
What is the VEFA and how does it work?
The VEFA, also known as the sale before completion, is the latest trend with regards to the property acquisition in Mauritius. This contract is regulated by the Mauritian Civil Code in adherence to the French Civil Code in order to ensure the safety of the overall process. With the VEFA plan, investors can buy properties as from the project’s planification based on the architects’ drawings. Buyers become owners from the moment they sign the VEFA contract and get the building ownership as soon as the construction is completed. The contract allows buyers to make payments by instalments according to the construction progress. Among its many benefits, the VEFA allows future owners to take part in the design plan of their dream home.
What does it imply legally?
As the Mauritian civil law is based on the French civil law, VEFA contracts are thus governed by the French Civil code and needs to be validated by a contract. In the process of land acquisition, the developer in charge of the project must ensure that the construction financing is guaranteed in the event of possible bankruptcy. A GFA must be provided by the promoter (Garantie de Fin d’Achèvement) stating whether he guarantees the completion of the project or if a third-party bank will provide the financial guarantee.
The Sales contract procedures
When buying off-plan, two distinct procedures have to be followed:
The Reservation Contract
As a buyer, you will be asked to sign a preliminary reservation agreement stipulating that he is legally agreeing to buy the property and is abiding to the clauses which come with it. After the signature of the agreement, the buyer shall provide a deposit in adherence to the estimated selling price of the property. The deposit will be placed in a special account appointed by the notary in charge of the sale.
The Sale Contract
The sale contract represents the title deed which puts forward the rights and obligations of the buyer towards the seller. This contract should be received by the buyer one month prior to his signature which allows him to check the conformity of the conditions before the final signature.
Here is the schedule of payments for a property sold under a VEFA contract, following the Article 1601-3 of the French Civil Code:
25% upon signature of the deed sale
10% upon completion of the foundations
35% upon completion of the roof
25% upon completion of the building works
5% upon delivery of the project
Interested to know more about Mauritius’ investment possibilities. Learn more about the Property Development Scheme.