Annulment of Construction Contract and Loan Agreement

Extract

[...] By a ruling of 19 November 2106, the construction contract was annulled. The creditor initiated a procedure for the seizure of the immovable property against the spouses ICKIC, resulting in the sale by auction at the bar of the court of the aforementioned house on 13 December 2017. Then a judgment of 1he July 2018 awarded the entire sale price in the context of an order procedure to the sole and unique creditor registered of the spouses ICKIC, the financial institution BFer. [...]

[...] In consequence, the financial institution BFer is ensured by deduction from the sale price of the auction to be repaid the total amount (in the absence of other registered creditors) of the sums lent, in addition to the conventional interest, insurance premiums, and potential damages and interest based on the notion of loss of chance to receive future interest. Finally, the contractual liability of the bank does not seem to have been called into question in the procedure. The balance, if any, after repayment of the financial institution will be returned to the spouses ICKIC. [...]

[...] This inherent obligation to repay remains as long as it has not been fulfilled and remains guaranteed by the securities taken into consideration for the loan, regardless of the nature of the guarantee. This jurisprudence has been clarified by the High Court on the occasion of several types of guarantees: For a suretyship (Cass. Civ. 1ère July 1997, Bull. civ. I n°224 In the presence of a lender's privilege of last resort (Cass. Civ. 3ème October 2017, n°16-15754 And on the occasion of a conventional mortgage (Cass. [...]

[...] (Article L 231-1 and following of the Construction Code). When it is annulled, the contract is retroactively annulled from the day of signature. Consequently, the parties must therefore be returned to the state in which they were at the date of conclusion. The consequences of the annulment of the construction contract Direct consequence: the annulment of the loan contract The annulment of the construction contract automatically renders the loan contract financing the overall construction operation null and void (Cass. Civ. [...]

[...] 3first November 2018, Bull. civ. III, n°167), Cass. Civ. 1first September 2019, n°18-17.598 F-D). This case law of the Supreme Court was enshrined by the legislator in its ordinance of 10 February 2016 reforming the law of obligations, by introducing Article 1352-9 of the Civil Code, which stipulates that \"securities constituted for the payment of the obligation are automatically transferred to the obligation to return without, however, the guarantor being deprived of the benefit of the term\"." MINOR (IN SPECIES) In this case, the contract for the construction of a single-family home was annulled by a court decision dated 19 November 2016, effectively rendering the mortgage contract subscribed by the spouses ICKIC with the financial institution Bfer null and void. [...]