How Allowing Early Move‑In Cost French Sellers Their Home

For insurers, the ruling shows the basis on which claims are denied: an insurer can refuse to pay if the insured status was not triggered by a recognised tenancy or by the policyholder's coverage. For banks, the decision warns lenders that interim occupancy arrangements can complicate mortgage security if the building is destroyed and the legal owner still has the outstanding loan.

How to protect yourself: a checklist for buyers and sellers

Below we set out practical steps to reduce risk when parties consider early handover of possession.

For sellers

• Keep existing property insurance in force until the acte de vente is signed and the notaire confirms transfer of ownership.
• Require the buyer to sign an interim occupation contract drawn up or reviewed by a notaire.
• Specify in writing who is responsible for building insurance, contents insurance, and for third‑party liability during the interim period.
• Require a refundable deposit or bank guarantee to cover accidental total loss or major damage.
• Keep records: photographs, inventories and copies of all communications.

For buyers

• Obtain explicit written agreement on insurance obligations and proof of cover from your insurer before moving in.
• Ask your notaire to convert any private interim agreement into an acte authentique or to prepare an occupation contract that creates tenant obligations.
• Do not rely on oral assurances that you will be protected by a seller's insurance after it has been cancelled.

For insurers and banks

• Require clear contractual evidence of occupancy status before processing claims related to interim possession.
• Insist on copies of any acte sous seing privé and verify whether the instrument creates an insurable tenancy under the policy terms.

Drafting tips for interim occupancy agreements

If parties are determined to allow early possession, here are contract clauses we recommend including and negotiating with a notaire:

• Explicit statement of occupancy status (tenant, licensee, simple occupant) and whether the occupant pays rent.
• Clear assignment of responsibility for building insurance and contents insurance during the interim period.
• Requirement for the occupant to provide a certificate of insurance naming the seller as an additional insured or beneficiary where appropriate.
• Inventory of fixtures and a formal handover protocol dated and signed by both parties.
• Indemnity clause securing the seller (or buyer) against loss caused by the occupant's acts or omissions.
• A bank or escrow guarantee to secure repair or rebuilding costs.

These are legal technicalities. We recommend asking the notaire to work with both parties to insert these terms in an acte authentique when feasible.

Broader lessons for the French property market

This ruling is a reminder that customary practice is not a substitute for clear legal arrangements. Across the French property market, many parties assume that private agreements will cover interim practicalities. The court has shown that private arrangements do not always create the legal obligations assumed by the parties, and that the notaire's work is not just formalism but a source of legal clarity.

For agents and advisers, the decision means they should push clients toward notarial drafting for any arrangement that affects possession, insurance or mortgage security. For foreign buyers and expats, the case emphasizes that local informal customs do not replace formal legal protection.

Risk assessment: who actually bore the loss and why

The outcome placed the cost of total destruction on the seller. That was the court's result for two linked reasons:

• The seller had cancelled the building insurance after the acte sous seing privé, so no valid policy covered the loss.
• The court accepted that a free‑of‑charge occupation did not impose typical tenant insurance obligations on the buyers, and the buyers' insurers were within their rights to deny the claim.

From a real estate risk perspective, this is an unusually severe but clear result. Sellers who assume informal arrangements will protect them are at risk. We see three practical risks highlighted by the case:

• Legal risk: a private agreement may not create the legal status needed to transfer insurance obligations.
• Insurance risk: cancelling your policy before the transfer is final can leave you exposed to total loss.
• Financial risk: rebuilding costs and mortgage obligations may remain as your liabilities even if you are not physically in the property.

Our recommendations for practitioners and policyholders

We are direct about this: if you are selling and you plan to give possession before the acte de vente, do not rely on a simple private agreement. Have your notaire draft an acte authentique, or at minimum an interim arrangement that clearly records the insurance and liability allocation and is acceptable to insurers.

If you are a buyer and you intend to occupy early, insist on:

• Proof that the seller will maintain building insurance until the notaire confirms transfer of ownership.
• A written obligation in the contract that requires you to hold specified insurance and to name the seller as an additional insured where necessary.

If you are an insurer, check the precise legal status created by any acte sous seing privé before accepting a risk or paying a claim.

Frequently Asked Questions

Q: What is the difference between an acte sous seing privé and an acte authentique?

A: An acte sous seing privé is a private contract signed by the parties without a notaire. It is binding but has weaker evidential force. An acte authentique is prepared and authenticated by a notaire and has stronger legal standing and proof value in disputes.

Q: Can a seller require the buyer to take out insurance if the buyer moves in early?

A: Yes, a seller can and should require the buyer to take out specified insurance during interim occupancy. However this must be spelled out in a clear agreement—ideally an acte authentique—to have firm legal effect and to satisfy insurers.

Q: Why did the sellers lose despite having a private agreement allowing occupation?

A: The court held that because the buyers were occupying the property rent‑free, the usual tenant duties to insure did not apply. The sellers had cancelled their insurance and the buyers' insurers refused the claim because the private agreement did not create an insurable tenancy; the court found for the sellers' opponents.

Q: What immediate steps should a seller take if a buyer asks to move in early?

A: Keep your building insurance active, insist on written terms that allocate insurance and liability, involve your notaire to draft or validate the interim agreement, and consider a deposit or bank guarantee to secure potential rebuild costs.

Final assessment

The Cour de cassation ruling makes clear that early occupation agreements that are informal or merely private can shift catastrophic risk onto the seller. We advise sellers to maintain insurance until the acte de vente is executed, to involve a notaire in any interim agreement, and to require explicit insurance obligations from early occupants. For buyers and insurers the rule is the same: check the legal status that any private agreement creates before you rely on it for cover. The concrete fact to end on is this: in the reported case the private interim agreement was signed on 29 November 2019, the house burned on 9 December 2019, and the highest court left the financial loss with the seller.