The property deposit: amount, release and disputes

The property deposit (séquestre) is the sum paid by the buyer on signing the preliminary sales agreement, held in a blocked account at the notaire’s office as a guarantee of their commitment. In Paris, this amount typically represents between 5 and 10% of the sale price, that is, 25,000 to 100,000 euros for an apartment priced between 500,000 and 1,000,000 euros. It is neither a down payment nor an advance: it is a security deposit whose fate depends on the outcome of the transaction.

Payment of the deposit

The deposit is paid in the days following the signing of the preliminary sales agreement, after the 10-day cooling-off period has expired. In practice, the notaire generally allows five to ten business days after the end of the cooling-off period to receive the funds.

Payment is made by bank transfer to the notaire’s escrow account, separate from their professional accounts and controlled by the Caisse des Dépôts et Consignations. Banker’s cheques are also accepted. Personal cheques are rarely admitted.

The deposit amount is negotiable. Although Paris sellers commonly ask for 10%, nothing prevents you negotiating a lower figure. A property hunter experienced in Paris transactions knows when and how to negotiate this point without weakening the client’s position.

The deposit when the sale completes

When the sale completes with the signing of the deed of sale, the deposit is deducted from the total price. If the buyer paid 50,000 euros as a deposit on a property at 500,000 euros, they pay only 450,000 euros on the day of signing at the notaire’s office (excluding notaire fees and ancillary costs).

Any interest earned by the deposit during the holding period, three to four months on average in Paris, goes to the buyer unless otherwise agreed. At current rates this interest is minimal, but the principle holds.

Refund of the deposit

The deposit is fully refunded in three main cases. The first is exercising the right of withdrawal within ten days of notification of the preliminary agreement. This right is unconditional: the buyer need give no reason. The notaire has 21 calendar days to process the refund.

The second is the fulfilment of a condition precedent. Loan refusal is the most common: if the buyer proves they failed to obtain the financing specified in the agreement (amount, rate, duration), the sale is cancelled and the deposit returned without penalty. The buyer must produce at least two bank rejection letters for the condition to be considered fulfilled.

The third concerns the exercise of pre-emption rights by the City of Paris or a tenant. If a third party steps into the buyer’s place, the deposit is returned in full.

The deposit in case of dispute

It becomes complicated when the buyer pulls out of the sale outside the cases provided for by the conditions precedent. If the buyer refuses to sign the deed of sale without legitimate reason after the cooling-off period has expired and all conditions precedent have been lifted, the seller may demand to keep the deposit as a fixed indemnity, known as the penalty clause, generally set at 10% of the price.

Here the notaire cannot decide alone. They hold the funds in the escrow account until the parties reach an amicable agreement or a court ruling is issued. This can last several months, even several years.

To avoid this risk, the conditions precedent in the preliminary agreement must be drafted with particular care. The loan clause, especially, must state exactly the amount borrowed, the duration, the maximum acceptable rate and the number of banks to be approached. A property hunter ensures these clauses genuinely protect the client while remaining acceptable to the seller.

At Home Select

We help our clients negotiate the deposit amount and draft the conditions precedent. Our aim is to secure every stage of the transaction, from the preliminary agreement to the deed of sale, so that the deposited funds are protected in all circumstances.

To be supported in your purchase project, contact our team.