The property deposit (sequestre) is the sum paid by the buyer upon 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, meaning 25,000 to 100,000 euros for an apartment priced between 500,000 and 1,000,000 euros. This sum 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 expiry of the 10-day cooling-off period. In practice, the notaire generally allows a period of 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, a separate account from their professional accounts, controlled by the Caisse des Depots et Consignations. Banker’s cheques are also accepted. Personal cheques are rarely admitted.
The deposit amount is negotiable. Although Parisian sellers commonly request 10%, nothing prevents negotiating a lower amount. A property hunter experienced in Parisian transactions knows when and how to negotiate this point without weakening the client’s position.
The deposit when the sale completes
When the sale is completed by signing 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 only pay 450,000 euros on the day of signing at the notaire’s office (excluding notaire fees and ancillary costs).
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 remains.
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 does not need to provide a reason. The notaire has 21 calendar days to process the refund.
The second case is the fulfilment of a condition precedent. Loan refusal is the most common: if the buyer proves non-obtention of 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 case concerns the exercise of pre-emption rights by the City of Paris or a tenant. If a third party substitutes for the buyer, the deposit is returned in full.
The deposit in case of dispute
The situation becomes complicated when the buyer withdraws from the sale outside the cases provided by the conditions precedent. If the buyer refuses to sign the deed of sale without legitimate reason after expiry of the cooling-off period and lifting of all conditions precedent, the seller may demand retention of the deposit as a fixed indemnity, known as the penalty clause, generally set at 10% of the price.
In this case, the notaire cannot decide alone. They hold the funds in the escrow account until the parties reach an amicable agreement or a court decision is issued. This situation can last several months, or even several years.
To avoid this risk, the drafting of conditions precedent in the preliminary agreement must be particularly careful. The loan clause, notably, must specify exactly the amount borrowed, the duration, the maximum acceptable rate and the number of banks to be approached. A property hunter ensures that these clauses effectively protect the client while remaining acceptable to the seller.
At Home Select
We support our clients in negotiating the deposit amount and drafting the conditions precedent. Our goal is to secure every stage of the transaction, from the preliminary agreement to the deed of sale, ensuring that deposited funds are protected in all circumstances.
To be supported in your purchase project, contact our team.
Frequently asked questions
Is the deposit mandatory when purchasing property in France?
No. No law requires the payment of a deposit when signing the preliminary sales agreement. In practice, the seller and their notaire almost systematically require it in Paris as proof of the buyer's seriousness. Refusing to pay a deposit often means losing the property to another candidate.
Is the deposit refundable if the buyer withdraws within the 10-day cooling-off period?
Yes, in full and without justification. The 10-day cooling-off period provided by Article L271-1 of the French Construction Code allows the buyer to cancel the sale without reason. The notaire must return the deposit within 21 days of the withdrawal.
What happens to the deposit if the mortgage application is refused?
If the preliminary agreement contains a condition precedent for obtaining a mortgage (which is the case in the vast majority of transactions), a loan refusal triggers cancellation of the sale and full refund of the deposit. The buyer must provide the rejection letters from the banks approached to justify the non-obtention of financing.
