The interest rate specified in the suspensive clause for obtaining a loan in a real estate sales agreement determines the scope within which the buyer must seek financing. A rate that is too low creates an artificial exit, while a rate that is too high deprives the buyer of protection. The issue boils down to a technical arbitration between safety margin and the credibility of the financing approach.
Rate in the agreement and market rate: the gap that protects the sale
Since the sharp rise in rates that began in 2022, several notaries and brokers recommend not to set the maximum rate in the agreement based on the current market rate. The reason is mechanical: several weeks elapse between the signing of the agreement and the issuance of the loan offer. During this period, rates can fluctuate enough to render a file non-financeable under the initially planned conditions.
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The recommended practice is to provide a margin of several tenths of a point above the rate observed at the time of signing. This margin absorbs fluctuations without jeopardizing the sale.
To delve deeper into concrete recommendations on the rate to include in an agreement, you can visit the Alpha Immobilier website which details current practices.
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| Situation | Rate in the agreement | Main risk |
|---|---|---|
| Rate set on the current market | Identical to the average rate observed | Loan refusal if there is an increase between agreement and offer |
| Rate with reasonable safety margin | A few tenths above the market | Low, protects buyer and seller |
| Deliberately undervalued rate | Significantly below the market | The seller may contest and retain the deposit |
| Very high rate | Well above the market | Suspensive clause rendered meaningless, risk of dispute |
Undervalued rate in the sales agreement: the deposit trap
A buyer who sets an artificially low maximum rate (for example, aiming for a rate far below the market) exposes themselves to a specific situation. If the bank refuses the loan because the requested rate is unrealistic, the seller may refuse to return the deposit.
The legal logic is as follows: the suspensive condition for obtaining a loan protects the good faith buyer. A buyer who requests a clearly unattainable rate does not fulfill this good faith condition. The seller may then consider that the buyer has created an artificial exit for themselves.
Elements checked in case of litigation
- The rate specified in the agreement is compared to the average rate practiced by banks at the time of signing, to assess whether the loan request was realistic
- The number of banks approached by the buyer is examined: having contacted only one bank may be deemed insufficient to demonstrate good faith
- The consistency between the borrowed amount, the loan duration, and the maximum rate specified is analyzed as a whole
This risk concerns both the buyer and the seller. For the seller, a rate that is too low in the agreement means a property immobilized for weeks with a high probability that the sale will fail.
Seller financing and contractual rate: a regulated alternative
In a context of high bank rates, seller financing is making a comeback. The principle: the seller directly finances part of the sale price, and the interest rate applied is freely set in the agreement, including at zero.
This apparent freedom remains regulated. The rate applied cannot exceed the current usury rate, and mandatory mentions related to the credit must appear in the deed. The maximum duration depends on the nature of the loan.
What the agreement must specify for seller financing
- The exact amount financed by the seller, distinct from the portion financed by a traditional bank loan
- The interest rate applied (fixed or variable), even if it is zero, with explicit mention in the deed
- The repayment terms: duration, frequency of payments, conditions for early repayment
- Any guarantees (mortgage, lender’s privilege)
Seller financing generally does not replace the entirety of bank financing. It covers a fraction of the price, often complementary to the main loan. Both rates then coexist in the agreement, complicating the drafting of the suspensive clause.
Suspensive clause for mortgage: drafting and rate parameters
The interest rate is just one of the parameters of the suspensive clause. The drafting must cover a coherent set for the protection to function effectively.
Borrowed amount, loan duration, and maximum rate form an inseparable triptych. A realistic rate associated with a duration that is too short can produce monthly payments incompatible with the buyer’s debt ratio. The clause must reflect a credible financing plan.
The time allowed for the buyer to obtain their loan also deserves special attention. A time frame that is too short does not allow for contacting multiple institutions. A time frame that is too long delays the sale without real benefit.
The mention of the minimum number of banks to approach does not systematically appear in agreements, but some notaries include it to prevent future disputes. Two to three institutions approached is a commonly accepted threshold to demonstrate the buyer’s good faith.
The rate set in the real estate sales agreement remains a negotiation lever between buyer and seller, but it produces concrete legal effects. Calibrating it with a sufficient margin relative to the market, without excess, remains the only approach that secures both parties throughout the purchasing process.