Government Order of 25 March 2016

French Government Order 2016-351 of 25 March 2016 on consumer credit contracts in relation to property used for housing accommodation, transposes EU directive 2014/17/EU to set up a harmonised legal framework at European level for the distribution of house loans and mortgages.

The order defines obligations that apply to credit establishments and credit intermediaries particularly concerning:

• General information to consumers.
• Provision of a standardised information sheet.
• Credit-worthiness assessments.
• A duty to warn consumers.
• The advisory service.
• Valuation of the property.
• Rules of conduct and remuneration.
• Rules of competence.

The provisions of the law come into force as follows:

• 1^st October 2016 for the provisions related to advertising, general and pre-contract information, foreign currency loans and concerning the annual percentage rate of charge.
• 1^st January 2017 for the pre-contractual information sheet.
• 20 March 2017 concerning continuous training.
• 21 March 2019 for the requirement for additional professional experience training for lenders.
• 1^st July 2016 for the rest of the law, in particular:

“Sub-section 4” Property Valuation

Art. L.313-20,. When the lender proceeds to value or have valued a property intended for residential use financed with the aid of a loan as referred to in Art. L.313-1 he will ensure that: 1. This is performed by a property valuation expert who can demonstrate his professional competence and who is independent of the process of deciding to grant a loan in order to provide an impartial and objective valuation; 2. He will apply reliable valuation standards which take into account internationally recognised standards. A decree of the Council of State will define the conditions of this article, notably those in relation to the competence and independence of the valuer.

Art. L.313-21. The valuation referred to in Art. L.313-20 consists of determining the value of the property after analysing all of the documents provided by the lender which are relevant for determining the valuation in accordance with applicable standards.

Art. L.313-22. The valuation referred to in Art. L.313-20 gives rise to the writing of an expert assessment report which in accordance with the standards referred to in the para. 2 of the same article takes into account the legal, economic, technical and fiscal factors which enable the value of the property to be established. “This valuation is recorded on durable media. The list of documents retained by the lender is specified by decree. “Art. L.313-23. The lender will retain appropriate archives concerning the types of property accepted as collateral as well as the procedures which apply to it in terms of awarding the types of loans referred to in para. 2 of article L.313-1.

The full text of Order 2016-351 can be found here.

The full text of Mortgage Credit Directive 2014/17/EU can be found here.

Source NET IRIS