A mortgage, for a borrower, is first and foremost a long-term commitment involving substantial sums. For the law, it is a contract whose every stage – advertising, pre-contractual information, written offer, reflection period, acceptance, performance, default – is governed by mandatory rules protecting the consumer. This guide sets out the legal regime applicable to mortgage loans concluded since 1 October 2016, when Ordinance No. 2016-351 of 25 March 2016 transposing Directive 2014/17/EU (the Mortgage Credit Directive or MCD) came into force.
The perspective is that of a lawyer advising a colleague, a company director, or a sophisticated borrower. The focus is less on calculating monthly payments than on the litigation pitfalls: irregularity of the offer and forfeiture of interest, inaccurate APRC, disproportionate duty to warn, challenge to loan acceleration, and the interaction with over-indebtedness. These are the concrete levers of banking litigation in the mortgage context.
Forty years of borrower protection
French mortgage credit law cannot be understood without its history. It has been built in successive layers, each responding to a gap or a crisis.
The founding statutes: Scrivener, Neiertz, Lagarde, Lemoine
The Act of 13 July 1979 (Scrivener II) laid the foundations of the protective regime: mandatory written prior offer, non-waivable ten-day reflection period, legal interdependence between the loan agreement and the property transaction, and civil sanctions for formal irregularities.
The Neiertz Act of 31 December 1989 established the over-indebtedness procedure. The Lagarde Act of 1 July 2010 opened borrower insurance to competition. The Hamon Act of 2014 extended the right to switch insurance within the first twelve months. The Bourquin Amendment of 2017 extended it to each annual anniversary. And the Lemoine Act of 28 February 2022 permits switching at any time, without charge or penalty, for all borrower insurance contracts linked to a mortgage.
The Ordinance of 25 March 2016 and the MCD
The most important overhaul was effected by Ordinance No. 2016-351 of 25 March 2016, transposing Directive 2014/17/EU. This directive harmonised at European level the protective rules applicable to residential mortgage credit, imposing three major advances: the mandatory European Standardised Information Sheet (ESIS), a rigorous borrower solvency assessment, and a unified status for mortgage credit intermediaries.
Domestically, the ordinance restructured the Consumer Code. Loans concluded before 1 October 2016 remain governed by the former version – a transitional law issue creating a trap for pleadings: always verify the contract date before citing a provision.
Scope: what the law protects
The protective rules apply to credit financing the acquisition or preservation of rights of ownership over residential property (or mixed-use property), as well as repair, improvement, or maintenance works on residential property exceeding EUR 75,000. The regime protects consumers or non-professionals contracting for purposes unrelated to their activity.
A private individual acquiring a rental property generally retains the status of non-professional; one acquiring property as part of a habitual property dealing business falls within the professional regime. The boundary turns on the regularity of the transaction, not its amount.
Pre-contractual information: ESIS, APRC, duty to warn
The European Standardised Information Sheet (ESIS)
The ESIS, required by Article L. 313-7, must be delivered on paper or another durable medium, in good time and no later than when the loan offer is issued. Its content is strictly standardised by a European model: lender identity, loan characteristics, APRC, total credit cost, simplified amortisation table, insurance particulars, required securities, and the possibility of early repayment. The ESIS is not merely an administrative formality – it constitutes the instrument of proof of the pre-contractual information obligation and serves as the benchmark in litigation.
The annual percentage rate of charge (APRC)
The APRC must integrate all costs whose payment conditions the grant of the loan: interest, arrangement fees, mandatory borrower insurance, guarantee costs, property valuation fees. It must be calculated according to a standardised actuarial method. An inaccurate APRC remains a common ground in banking litigation, though the sanction has been proportionalised since 2020: the court calibrates forfeiture according to the gravity of the irregularity and the actual loss suffered.
The duty to warn
Case law (Cass. ch. mixte, 29 June 2007, No. 05-21.104) imposes on the bank granting credit to an unsophisticated borrower the obligation to assess the compatibility of the contemplated commitment with their financial situation and to warn against a risk of excessive indebtedness. The duty does not apply to sophisticated borrowers. The breach gives rise to damages assessed as a loss of chance – the chance of not having contracted. The burden of proving the borrower was sophisticated lies with the bank.
The loan offer and formation of the contract
Mandatory content of the offer
Article L. 313-25 sets out the mandatory content: identity of the parties, nature of the loan, its purpose, terms (rate and total cost), required guarantees, transfer conditions, amortisation table (for fixed-rate loans), insurance particulars, and total insured cost. Any substantial irregularity may trigger forfeiture of interest or nullity of the contract.
The non-waivable ten-day reflection period
Article L. 313-34: the borrower may not accept the offer until the expiry of ten days from receipt. The period is non-waivable: no clause, no manoeuvre, no anticipated consent may shorten it. Any acceptance before the eleventh day is null. The computation follows precise rules: the day of receipt does not count (dies a quo); the tenth day is fully included; acceptance is only valid from the eleventh day onwards.
The suspensive condition for obtaining the loan
Article L. 313-41 requires any written instrument recording a financed property transaction to state whether the price is paid, wholly or partly, with a loan. If so, the suspensive condition must be expressly stated. The period for obtaining the loan may not be less than one month. If the loan is not obtained, the buyer is released without indemnity. The condition is of public policy.
Performance of the contract
Early repayment
The borrower may always repay early (Article L. 313-47). The lender may charge an indemnity, strictly capped: no more than six months’ interest on the capital repaid at the average loan rate, nor more than 3% of the outstanding capital.
Borrower insurance: Lagarde, Hamon, Lemoine
Borrower insurance often represents over 25% of the total cost of a mortgage. Since the Lemoine Act (2022), the borrower may cancel and substitute their insurance at any time, without charge, provided the new contract offers at least equivalent cover. The medical questionnaire has been abolished for loans below EUR 200,000 repaid before the borrower’s sixtieth birthday. These provisions apply to contracts in force.
Renegotiation and amendment
Where market rates fall significantly, the borrower may renegotiate with the existing lender. This takes the form of an amendment to the original credit agreement. Article L. 313-39 requires the amendment to include a modified amortisation table and information on the APRC and total cost over the remaining term. The borrower has a ten-day reflection period before accepting.
Alternatively, the borrower may refinance by contracting a new loan with another institution and repaying the original early. This is legally an autonomous transaction, subject to the full mortgage credit formalism (ESIS, offer, ten-day period).
Borrower default
Loan acceleration
Loan acceleration renders the entire outstanding capital immediately due. For it to be valid, three conditions must typically be met: an express contractual clause, effectively established default, and a prior formal notice respecting a certain formalism. The Cour de cassation now requires the formal notice to mention precisely what the borrower must do to avoid acceleration and the time allowed (Cass. 1re civ., 22 March 2023, No. 21-16.044). A clause permitting acceleration without reasonable notice is unfair and deemed unwritten. See the loan acceleration guide for detailed analysis.
Civil sanctions for irregularity
The primary sanction is forfeiture of interest under Article L. 341-25. It strikes failure to provide the ESIS, APRC irregularity, offer irregularity, or non-compliance with the ten-day period. Since 2020, forfeiture has been proportionalised under European influence.
Over-indebtedness
Where the default forms part of a broader inability to meet debts, the borrower may apply to the over-indebtedness commission. The plan may protect the primary residence by imposing a temporary stay of payments. See the over-indebtedness guide.
Interaction with other areas
- Security interests: a mortgage loan is almost always secured by a mortgage (hypothèque) or a surety. The choice is not neutral – a mortgage commits real property, a surety commits a third party.
- Enforcement proceedings: when acceleration is declared and amicable recovery fails, the lender typically initiates property seizure proceedings (saisie immobilière) against the financed asset.
- Civil procedure: challenges may be brought before the enforcement judge for recovery incidents, before the judicial tribunal for nullity or liability actions, or before the consumer protection judge where over-indebtedness is involved.
| Stage of contract | Lender’s obligation | Sanction for breach | Applicable provision |
|---|---|---|---|
| Pre-contractual information | Delivery of ESIS | Forfeiture of interest | Art. L. 313-7 and L. 341-25 |
| Cost calculation | Accurate and complete APRC | Proportionate forfeiture | Art. L. 314-1 and L. 341-25 |
| Grant to unsophisticated borrower | Duty to warn | Damages (loss of chance) | Case law 2005-2007, Art. 1240 C. civ. |
| Issue of offer | Compliance with L. 313-25 | Forfeiture / nullity | Art. L. 313-25 and L. 341-25 |
| Formation of contract | Ten-day reflection period | Nullity of acceptance | Art. L. 313-34 |
| Early repayment | Capped indemnity | Excessive clause deemed unwritten | Art. L. 313-47 and R. 313-25 |
| Loan acceleration | Prior formal notice | Acceleration unenforceable | Case law Cass. 1re civ., 22 March 2023 |