Completion financial guarantee (GFA)
A mandatory guarantee taken out by a VEFA developer ensuring buyers that the construction programme will be completed even if the developer fails. It is issued by a bank or insurance company and is required for the building permit. Its existence reassures banks financing off-plan buyers.
Key points
- Mandatory before any first drawdown; its absence blocks the building permit.
- Issued by a bank or approved insurance company.
- If the developer fails, the guarantor funds or arranges project completion.
- Buyers' banks systematically check its existence before releasing funds.
Frequently asked questions
How does the GFA operate if the developer disappears mid-construction?
The guarantor (bank or insurer) has two options: either fund a replacement builder to complete the programme under the original conditions, or directly organise a new delegated project management arrangement. In both cases the final price for the buyer cannot exceed the original contract price.
Why does the GFA reassure banks financing VEFA buyers?
Without a GFA, a developer failure would leave the buyer with a bank debt and an unfinished property whose mortgage collateral value would be very low. The GFA ensures the bank that the financed asset will be delivered complete, securing the value of its collateral.
Does the GFA also cover defects after delivery?
No: the GFA covers only the risk of non-completion before delivery. Defects or faults discovered after acceptance are covered by other statutory warranties: one-year defect remedy guarantee, two-year equipment warranty, and ten-year structural insurance.
In practice
A buyer signs a VEFA contract for a flat in a 40-unit programme. Before releasing a single euro, their bank demands sight of the GFA certificate issued by the credit institution guaranteeing the developer.
Official sources
- VEFA reservation contract (completion guarantee) · Service-Public.gouv.fr
- Delivery of a VEFA dwelling · Service-Public.gouv.fr
- Sale agreement and loan condition precedent · Service-Public.gouv.fr