Defending the borrower against the bank

A mortgage is a long-term commitment involving large sums of money. When the situation deteriorates - loss of employment, separation, rise in interest rates - the bank may declare that the loan has been cancelled and demand immediate repayment of the outstanding capital. The borrower then finds himself under threat of property seizure.

Such forfeiture is not always lawful. The Cour de cassation censures automatic termination clauses that do not provide for reasonable notice (Cass. civ. 1re, 22 March 2023, no. 21-16.044). It also points out that a simple clause providing for immediate payment does not exempt the lender from sending a prior notice of default (Cass. civ. 1re, 11 January 2023, no. 21-21.590). There are a number of ways to challenge a contract.

Our firm handles

  • Challenging a bank's unlawful decision to terminate a credit agreement
  • Analysis of the compliance of the home loan offer (compulsory information, APR, FISE)
  • Checking the calculation of the annual percentage rate of charge and forfeiting the right to interest in the event of error
  • Liability of the lender for failure to warn the uninformed borrower
  • Defence in the event of property seizure following loan default
  • Negotiation of debt restructuring plans and support before the debt commission

Cooling-off period - Article L. 313-25 of the Consumer Code

The borrower has an unconditional cooling-off period of 10 days from receipt of the mortgage offer. No acceptance may be made before this period has expired. Any pressure exerted during this period or any early acceptance is liable to be penalised. The offer itself must remain valid for at least 30 days.

The key stages of a mortgage

1

Loan offer

2

Reflection10 days

3

Acceptance and release

4

Reimbursement

5

Incident or dispute

Mortgages and buying: securing your purchase

Almost all property purchases depend on obtaining a mortgage. The law protects the buyer by imposing a loan condition precedent for a minimum period of one month (article L. 313-34 of the French Consumer Code). If the loan is not obtained within the agreed period, the purchaser may withdraw from the sale and recover the deposit.

In practice, there are frequent difficulties: the loan is refused late, the period for the suspensive condition is too short, and the seller challenges the buyer's good faith and wants to keep the earnest money. L’intervention of a credit lawyer ensures that every stage of the process is secure and that your rights are protected.

Our areas of expertise

  • Analysing and negotiating the clauses of the mortgage contract before signing
  • Managing the suspensive condition of obtaining financing in preliminary sales agreements
  • Challenging a loan refusal and assisting you in dealing with the bank
  • Litigation relating to’interdependence between the loan and the contract financed (article L. 313-40 of the French Consumer Code)
  • The negotiation of the early repayment and contesting excessive compensation (legal ceiling: 6 months' interest or 3 % of the outstanding capital)

Penalties for the lender - Article L. 341-25 of the Consumer Code

Where the lender fails to comply with the obligations imposed by the Consumer Code - compulsory information in the offer, provision of the European Standardised Information Sheet (ESIS), accurate calculation of the APR - the right to interest is forfeited in whole or in part. The borrower then repays only the capital, without the contractual interest.

Guarantee for a mortgage: your rights and remedies

Acting as guarantor on a mortgage is a major commitment. If the principal borrower defaults on repayment, the bank will take action against the guarantor for the outstanding capital, interest and penalties. The guarantor may find himself liable for far more than he had anticipated.

The law on surety bonds was radically reformed by the Order of 15 September 2021. The firm's role is to check that the surety undertaking complies with the substantive and formal conditions, and to challenge its implementation where it is irregular. Visit the bank's liability may be liable if it has not correctly assessed the proportionality of the commitment.

Our firm handles

  • Analysis of the validity of the surety undertaking (compulsory information, proportionality, annual information)
  • Challenging the implementation of the guarantee in the event of irregularity in the accelerated repayment of the principal loan
  • Liability action against the bank for failure to warn the uninformed guarantor
  • Defending the guarantor in the event of foreclosure or debt collection proceedings