Drought loss and shrinkage and swelling of clay soils: the remedies of the owner of a cracked asset

An investment building that cracks after a drought does not raise a technical question first, but a question of timetable. Between the date of the natural phenomenon, the municipal application for recognition, publication of the inter-ministerial order and notification to the insurer, several time limits run at the same time, and some cannot be recovered. An owner who waits for the insurance expert's report before deciding to act has often already lost leverage against the seller or against the builders. This guide traces the decision timeline applicable to an asset affected by shrinkage and swelling of clay soils (retrait-gonflement des argiles, RGA): the conditions of natural disaster cover, the fatal time limits for notification, recourse to summary proceedings for an expert under Article 145 of the French Code of Civil Procedure (référé-expertise), and then how to coordinate the actions against the insurer, the seller and the builders.

What natural disaster cover really covers in the case of shrinkage and swelling of clay soils

The regime rests on Article L. 125-1 of the French Insurance Code: any contract covering fire damage or any other damage to property located in France gives entitlement to cover against the effects of natural disasters. It applies to direct material damage that is uninsurable and whose determining cause was the abnormal intensity of a natural agent.

Since Order No. 2023-78 of 8 February 2023, in force no later than 1 January 2024, the text adds a criterion specific to RGA. For differential ground movements resulting from drought and rehydration of soils, the hazard may also result from the abnormal succession of drought events of significant scale. The distinction is operational: an asset cracked by the cumulative effect of several successive dry summers, without any single episode being of exceptional intensity, now falls within the scheme. To present abnormal intensity as the only criterion is to deprive oneself of a decisive argument before the expert.

The counterpart is found in Article L. 125-2, in the version resulting from Act No. 2026-403 of 26 May 2026. RGA cover is limited:

"However, for damage whose determining cause was the differential ground movements referred to in the third paragraph of Article L. 125-1, cover is limited to damage liable to affect the soundness of the building or to impede its normal use."

The same article sets the basis of compensation: up to the value of the insured property at the time of the loss, the compensation due covers the works needed to stop the existing damage resulting from the event where the expert assessment finds an impairment of the soundness of the building or a state of the property rendering it unfit for its purpose. The target of the cover is therefore stabilisation of the structure, not cosmetic renewal. The issue, for the owner of a cracked asset, is to have the expert assessment characterise the impairment of soundness or the unfitness for purpose: it is that characterisation that opens the right, not the length of cracks recorded.

Added to this are the ancillary costs under Article L. 125-4, often overlooked in compensation proposals: the cover includes reimbursement of the cost of geotechnical studies made necessary beforehand for the repair, together with the associated architect's and project management (maîtrise d'œuvre) fees, where these are necessary. In a building with several dwellings, the project management item is not marginal.

Step 1: recognition of the state of natural disaster, a prerequisite subject to a twenty-four-month constraint

The cover is not triggered by a finding of cracks but by an inter-ministerial order. The order determines the areas, the periods and the nature of the damage covered. Two points of timetable govern the owner's action.

First, the municipal application. Article L. 125-1 provides that no municipal application for recognition may give rise to a favourable decision where it is made twenty-four months after the start of the natural event giving rise to it. For differential ground movements, the text sets a specific starting point: this twenty-four-month period runs from the last drought event giving rise to the municipal application. The practical consequence is direct: the owner does not control the application, which belongs to the municipality, but has an interest in writing to the town hall without delay, enclosing a dated report on the damage. A municipality that does not file within the useful window closes access to the regime for all owners in its area.

Second, publication. The order must be published in the Journal officiel within two months of the filing of the applications at the prefecture, a period extended, exceptionally, to two months after the file is received by the minister responsible for civil protection where the inquiries carried out by the prefect exceed two months. The order sets out, for each applicant municipality, a decision reasoned clearly, in detail and in an understandable way, stating the means and time limits for appeal and the rules on access to administrative documents, in particular the expert reports on which the decision was based. This decision is notified to each municipality by the prefect.

This requirement of reasoning and of access to the reports is an under-used lever where recognition is refused. A municipality that is not recognised while neighbouring municipalities are is justified in obtaining the expert reports on which the decision was based. The routes of appeal against the order fall within administrative litigation and call for case-by-case analysis; they must be examined as soon as the decision is notified to the municipality, and not after the insurer has refused cover.

Step 2: thirty days to notify, and this period does not run from the cracks

This is the point on which the greatest confusion persists. Article L. 125-2 provides that contracts, notwithstanding any contrary stipulation, are deemed to include a clause providing for the insured's obligation to notify the insurer of any loss capable of triggering the cover, as soon as the insured has become aware of it, and at the latest thirty days after publication of the order recognising the state of natural disaster.

Three consequences for an asset manager:

• the period is thirty days, not ten as under the earlier texts;
• its starting point is publication of the order in the Journal officiel, not the date the cracks appeared;
• the obligation is statutory and applies despite a contrary contractual clause.

The course of action is therefore to set up monitoring of the orders published for the municipalities where the portfolio is located, and to prepare the notification file in advance: dated and photographic description of the damage, history of the works, date of construction, technical reports already commissioned. For an SCI (French property holding company) holding several units in different municipalities, notification must be made asset by asset, each order having its own publication date.

Step 3: holding the insurer to its own timetable

Article L. 125-2 sets a sequence of time limits that the insured has every interest in recalling in writing, because it is sanctioned.

From receipt of the loss notification, or from the date of publication of the administrative decision recognising the state of natural disaster where that is later, the insurer has one month to inform the insured of the terms on which the cover is engaged and to order an expert assessment where it considers it necessary. It then presents a proposal for compensation or for repair in kind within one month running either from receipt of the estimate of loss sent by the insured where there is no expert assessment, or from receipt of the final expert report. From receipt of the insured's agreement to the proposal, the insurer has one month to instruct the repair contractor, or twenty-one days to pay the compensation due. Failing that, and save in cases of fortuitous event or force majeure, the compensation bears interest at the statutory rate from the expiry of that last period. These periods apply without prejudice to more favourable contractual stipulations.

The text also provides for an interim payment: an interim payment on the compensation due must be paid to the insured within two months of the date the estimate of the damaged property or of the losses suffered is submitted, or of the date of publication of the administrative decision where that is later. For a landlord who has to fund shoring or rehousing, this interim payment should be expressly requested, with the dated estimate in support.

The RGA insurance expert assessment: regulated time limits and required independence

For losses resulting from causes recognised in natural disaster orders made from 1 January 2025, the expert assessment follows a regulatory framework of its own. Article R. 125-11 of the French Insurance Code gives the expert four months from receipt of all the items sent by the insured to send the insurer an interim report giving the expert's final conclusion on the determining cause of the damage, the characterisation of the material damage and, where relevant, whether the right to cover is opened. An additional period of one month is granted where further technical investigations are carried out by a third-party firm to establish the determining causal link. The expert then has one month for the final report, and the insurer one month to send it to the insured.

Article R. 125-8 requires these experts to have with the insurance company no employment, shareholding or economic dependence link liable to impair their independence, nor any business link with the firms instructed to carry out the remediation works, nor any financial interest in the carrying out of the works recommended. Article R. 125-9 adds requirements of competence, with a benchmark of qualifications and experience in building, construction, civil engineering or geotechnics. Challenging an unfavourable expert report begins with examining these conditions.

Finally, Article L. 125-2 requires the final expert report to be sent to the insured and, for drought and rehydration losses, a record of the findings made at each visit. Where the conclusions of the report are disputed, the insurer informs the insured of the option of obtaining a second expert opinion on the terms provided for in the contract and of being assisted by an expert of the insured's choice.

Step 4: the référé-expertise under Article 145 CPC, and the new jurisdiction rule

The insurance expert assessment is commissioned unilaterally. It binds neither the seller, nor the builders, nor their insurers. Where the asset carries significant stakes, or where the origin of the damage is disputed as between drought, defective foundations and neighbourhood disturbance, the useful measure is the court-ordered expert inquiry ordered before any proceedings on the basis of Article 145 of the French Code of Civil Procedure:

"If there is a legitimate reason to preserve or establish, before any proceedings, evidence of facts on which the outcome of a dispute may depend, legally admissible investigative measures may be ordered at the request of any interested party, on application or in summary proceedings."

Decree No. 2025-619 of 8 July 2025 added two paragraphs of territorial jurisdiction, in force since 1 September 2025 and applicable only to proceedings begun from that date. In principle, the court with jurisdiction is, at the applicant's choice, the one that could hear the case on the merits or the one within whose district the measure is to be carried out. But the text adds: by derogation from the second paragraph, where the investigative measure concerns a building, the court of the place where the building is situated has sole jurisdiction. For a Paris-based investor holding an asset in the regions, the choice is settled: the summary proceedings are brought before the court of the place where the building is situated, with no option. A wrongly addressed application costs months.

The strategic value of the référé-expertise lies in its effect on time limits. Article 2241 of the French Civil Code provides that a claim brought before the court, even in summary proceedings, interrupts the limitation period as well as the time bar. Article 2239 adds that limitation is suspended when the judge grants an application for an investigative measure made before any proceedings, the period starting to run again for a duration that may not be less than six months from the day the measure was carried out. One reservation is needed, however: how these mechanisms interact with the ten-year period under Article 1792-4-1 of the French Civil Code is a matter for case law and cannot be deduced from the texts. When acceptance of the works is approaching its tenth year, prudence dictates not relying on suspension alone and bringing the relevant actions.

The second value is the scope. Summary proceedings make it possible to call to the inquiry, within one adversarial framework, the seller, the identified builders, their insurers and the multi-risk insurer, so that the report is enforceable against them. Conducting a court-ordered inquiry against the insurer alone, and then discovering a foundation defect attributable to a builder still within the ten-year period, leads to starting again. The legitimate reason, the framing of the expert's mission and the conduct of the operations are set out in our article on summary proceedings for an expert before a property or construction dispute.

Step 5: coordinating the three recourses rather than treating them one after another

Against the multi-risk insurer

Article L. 114-1 of the French Insurance Code lays down a two-year limitation period for actions arising from an insurance contract. By way of exception, resulting from Act No. 2021-1837 of 28 December 2021, actions arising from an insurance contract relating to damage resulting from ground movements caused by drought and rehydration of soils, recognised as a natural disaster on the conditions provided for in Article L. 125-1, are time-barred after five years from the event giving rise to them. A mandatory reservation: the Act provides that these provisions do not apply to contracts in progress on the date of its publication, namely 30 December 2021. Before any strategy based on the five-year period, the date the contract was taken out must be checked.

Against the seller

The buyer of a property that is already affected has the warranty against latent defects. Article 1641 of the French Civil Code covers latent defects that make the thing unfit for the use for which it is intended, or that so impair that use that the buyer would not have acquired it, or would have paid a lower price. Article 1648 requires the action to be brought within two years of discovery of the defect. The crux is the date of discovery: the reappearance of cracks that were covered with cosmetic render before the sale is open to argument. The burden of proof and the buyer's time limits for acting are set out in our analysis of Articles 1641 to 1649 of the French Civil Code.

A more mechanical ground is added. Paragraph IV of Article L. 125-5 of the French Environmental Code, in the version in force since 1 January 2025, requires the seller or landlord of a built property that has suffered a loss compensated under Article L. 125-2 of the French Insurance Code to inform the buyer or tenant, in the risk statement (état des risques), of any loss that occurred while the seller or landlord owned the property or of which it was itself informed. The same article requires the risk statement to be handed over at the first viewing and mentioned in advertisements. The sanction is set out in paragraph V: the buyer or tenant may seek termination of the contract or ask the court for a reduction in the price. On the timing of this information and the option open to the buyer in the event of breach, see our analysis of the risk and pollution statement.

Article R. 125-6-1 of the French Insurance Code completes this scheme for RGA: on a sale of the insured property, where the seller has the expert report provided by the insurer, the seller must inform the buyer of the works needed to stop existing damage that have not been carried out although they were compensated or give entitlement to compensation, this information being attached to the risk statement and annexed to the preliminary agreement or, failing that, to the notarial deed.

Against the builders

Article 1792 of the French Civil Code is the most direct ground where the structure is recent:

"Any builder of a structure is liable by operation of law, to the owner or the purchaser of the structure, for damage, even resulting from a defect in the soil, that compromises the soundness of the structure or that, affecting it in one of its constituent elements or one of its items of equipment, renders it unfit for its purpose."

The express mention of a defect in the soil is decisive for RGA: the builder is released only by proving an external cause. Article 1792-4-1 discharges the builder after ten years from acceptance of the works; Article 1792-4-3 subjects the other actions against builders and their subcontractors to a limitation period of ten years from acceptance.

The builder's fault can also be shown through the prevention scheme in Articles L. 132-4 to L. 132-6 of the French Construction and Housing Code, in force since 1 July 2021. In areas exposed to RGA defined by order of the ministers responsible for construction and for the prevention of major risks, the seller of undeveloped building land provides a prior geotechnical study, annexed to the preliminary agreement or the deed, which follows the successive transfers of the land. For residential buildings, or buildings for mixed professional and residential use, with no more than two dwellings, the project owner sends this study to the builders before any works or project management contract is concluded, and the contracts must state, where applicable, that the works incorporate the measures made necessary by the risk of differential ground movement resulting from drought and rehydration of soils. The absence of the study from the sale file, or of the contractual statement, should be checked as soon as the file is opened.

Finally, where structural damage insurance (dommages-ouvrage) has been taken out, Article L. 242-1 of the French Insurance Code gives the insurer a maximum of sixty days from receipt of the loss notification to notify its decision on whether the cover applies in principle, then ninety days from the same notification to make an offer of indemnity, and fifteen days to pay after acceptance. The additional period for exceptional difficulties requires the insured's express acceptance and may not exceed one hundred and thirty-five days. Where the insurer fails to meet these periods or makes a manifestly insufficient offer, the insured may, after notifying the insurer, incur the expenses necessary for the repair, the indemnity then being increased by operation of law by interest at twice the statutory rate.

The RGA indemnity can no longer be freely applied

For losses occurring from 1 January 2024, Article R. 125-6-1 of the French Insurance Code requires the indemnity received under the cover to be used for the effective restoration of the property in accordance with the recommendations arising from the expert report. The obligation does not apply if the cost of the restoration works exceeds the value of the insured property at the time of the loss. The insurer informs the insured owner of this obligation, or of its absence, when sending the compensation proposal.

The control mechanism is precise. Where the insurer does not instruct the repair contractor, the insured sends it the invoices showing that the works have been carried out. If, within twenty-four months of agreeing to the compensation proposal, extended if need be by twelve months where the time needed to obtain administrative authorisations or to carry out preliminary studies requires it, the insured has not begun the works, the insurer may serve formal notice by registered letter or electronic registered mail. The insurer may make payment of the balance conditional on receipt of the invoices, paying that balance within twenty-one days of receiving them, and failing that may request repayment of the advance already paid. Article L. 125-2 adds that this use is not conditional on prior adoption of the order referred to in the third paragraph of Article L. 121-17.

For an investor, the consequence is a holding decision. Collecting the indemnity, not carrying out the works and selling at a discount exposes the investor to repayment of the advance and to the obligation to inform the buyer of the compensated works not carried out. The exit strategy must be settled before agreeing to the compensation proposal, since it is that agreement that starts the twenty-four-month period.

The decision timetable to adopt

The useful chronology comes down to six steps, the first three of which are constrained by statutory time limits:

• write to the municipality asking it to apply for recognition, bearing in mind the twenty-four-month cut-off running, for RGA, from the last drought event giving rise to the application;
• notify the loss no later than thirty days after publication of the order;
• send a dated estimate of loss to start the two-month period for the interim payment and the one-month period for the compensation proposal;
• have the regularity of the expert assessment checked against Articles R. 125-8, R. 125-9 and R. 125-11, and ask for the final report and the visit records;
• where appropriate, bring the référé-expertise before the court of the place where the building is situated, calling the seller, builders and insurers;
• settle the strategy for applying the indemnity before accepting the proposal.

The recurring mistake is to treat the matter as an insurance file up to the compensation proposal, and then to look for a recourse under ordinary law once the disappointment has materialised. That sequence loses the time limits under Article 1648 of the French Civil Code against the seller and, where the structure is recent, the ten-year window. The three axes must be investigated simultaneously from the notification: reading the insurance contract and its date of subscription, examining the acquisition deed and the risk statement annexed to it, finding the date of acceptance of the works and whether structural damage insurance exists.

Before accepting any compensation proposal on a cracked asset, have the origin of the damage characterised with all sides present and the stabilisation works costed by an independent expert, then check that all potential persons responsible have been called to the investigative measure. An indemnity accepted on a unilateral report locks the file at the very moment it should be opened up.

Frequently asked questions

What is the time limit for notifying a drought loss to one's insurer? Thirty days at the latest after publication of the order recognising the state of natural disaster. Article L. 125-2 of the French Insurance Code deems contracts to include, notwithstanding any contrary stipulation, the obligation to notify the insurer as soon as the insured is aware of the loss and at the latest within that period. The starting point is publication of the order, not the appearance of the cracks. The former ten-day period is no longer the applicable rule.

Are all cracks compensated under shrinkage and swelling of clay soils cover? No. Article L. 125-2 limits the cover, for differential ground movements, to damage liable to affect the soundness of the building or to impede its normal use. Compensation covers the works needed to stop the existing damage where the expert assessment finds an impairment of the soundness of the building or a state of the property rendering it unfit for its purpose, up to the value of the insured property at the time of the loss. The characterisation made by the expert assessment therefore governs whether the right is opened.

Which court should be applied to in a référé-expertise for a cracked building? The court of the place where the building is situated, exclusively. Since Decree No. 2025-619 of 8 July 2025, applicable to proceedings begun from 1 September 2025, Article 145 of the French Code of Civil Procedure provides that, by derogation from the rule of option between the court on the merits and the court of the place where the measure is carried out, where the investigative measure concerns a building, the court of the place where the building is situated has sole jurisdiction.

What is the limitation period for an action against the insurer for a drought loss? Five years, by exception to the two-year limitation period under Article L. 114-1 of the French Insurance Code, for actions relating to damage resulting from ground movements caused by drought and rehydration of soils recognised as a natural disaster. This exception comes from Act No. 2021-1837 of 28 December 2021. It carries a major reservation: it does not apply to contracts in progress on the date the Act was published, namely 30 December 2021.

The municipality did not obtain recognition of the state of natural disaster: what levers are there? The order must set out, for each applicant municipality, a decision reasoned clearly, in detail and in an understandable way, stating the means and time limits for appeal and the rules on access to administrative documents, in particular the expert reports on which the decision was based, the decision being notified to the municipality by the prefect. Obtaining those reports is the first step in any challenge. The ways of appealing against the order fall within administrative litigation and call for a dedicated analysis. In parallel, actions against the seller or the builders do not depend on recognition of the natural disaster.

Can the indemnity be kept without carrying out the works? In principle no, for RGA losses occurring from 1 January 2024. Article R. 125-6-1 of the French Insurance Code requires the indemnity to be used for the effective restoration of the property in accordance with the recommendations of the expert report, unless the cost of the works exceeds the value of the insured property at the time of the loss. After twenty-four months from agreement to the compensation proposal, extended if need be by twelve months, the insurer may serve formal notice on the insured, make payment of the balance conditional on receipt of the invoices and, failing that, request repayment of the advance paid.

Must the seller of a house that has already been compensated tell the buyer? Yes. Paragraph IV of Article L. 125-5 of the French Environmental Code requires the buyer to be informed, in the risk statement, of any loss that gave rise to payment of an indemnity under Article L. 125-2 of the French Insurance Code and occurred while the seller owned the property. Article R. 125-6-1 of the French Insurance Code adds, for RGA, information on works that were compensated but not carried out, attached to the risk statement and annexed to the preliminary agreement or the notarial deed. Failing that, the buyer may seek termination of the contract or ask the court for a reduction in the price.