Finding the right propertyYou may have already decided on a specific area or you may have a French region in mind, having been there on holiday for example. Finding a property in France is a similar process to that in other countries. There are many estate agents in France (agents immobiliers) who will put you in touch with people selling property. Alternatively, there are estate agents in the UK, for example, who have details on French properties. There are also many specialist magazines available for people interested in the French way of life. These publications offer useful contacts and property advertisements.
Many home buyers are attracted by the fact that property prices in France appear to be lower than abroad. There are reasons for this and before you start you should be aware of the following points:
- French domestic property is not usually bought as an investment. Apart from some very fashionable or highly sought after areas, prices usually rise in line with inflation. Therefore, you would need to own a home for at least three years to recover the high fees associated with buying, even before considering maintenance or improvement costs.
- France has a similar population to the UK but is three times the size. There is therefore less pressure on land and hence lower prices.
- That isolated farm cottage set between vineyards and a stream may require major renovation. It might not have the same appeal to a French family, hence the lower price and you should consider possible difficulties of resale in the years to come.
Initial agreement to purchase a propertyHaving found a suitable property, you will negotiate and enter into an initial agreement with the vendor. This agreement is called a 'Compromis de Vente' or 'Contrat de réservation' and is a binding contract between the buyer and seller which sets out the terms and price of the sale.
For new properties being built the most common contract is a 'contract de reservation' (a reservation contract). There are various other contracts such as a promise to purchase (promesse d'achat), an exchange of letters (l'échange de lettres) and an offer of sale (l'offre de vente), all of which offer little protection to the buyer, and generally should be avoided. The preliminary contract will include a full description of the property, the latest date by which completion must take place, the price, any escape clauses and the identity of both the vendor and purchaser. The preliminary contract can be signed either at the notaire's office or at the estate agency.
If you are making a purchase with a mortgage, you should at least instruct the notaire/estate agent to make your purchase conditional upon obtaining a mortgage: 'conditions suspensives'. This will offer you further protection under French Consumer Law. Upon signing this preliminary agreement the purchaser has to place a deposit with the notaire, which is normally 10% of the purchase price and will be deducted from the sale price. The property is then taken off the market. It is better to think of this deposit as a payment on account or a penalty for breaking the contract.
Having said this, a law passed on 1 June 2000 does grant you a seven-day cooling off period during which time you can withdraw from the agreement. * Stamp Duty and registration fees will need to be paid at completion when the agreement will be filed at the notaire's office. As a guideline, the notaire's fees, Stamp Duty and Registration fees will add up to around 6% to 8% of the purchase price for existing properties. For new properties they will amount to around 2% to 4% of the purchase price. As the French tax and succession regimes are different from many other countries, to ensure tax efficiency and problem free transfers on death you may wish to consider instructing a solicitor based in your home country to advise you.
By law, the purchaser can insert clauses into the agreement. The seller, of course, has to agree to these.
- Although the preliminary contract is binding on both the seller and the purchaser after this cooling off period, you should note that the sale will still be subject to the notaire formally checking the title to the property.
The NotaireA French notaire is a publicly appointed official who is responsible for ensuring the property has good title (ie, no irregularities in the ownership) and that the purchase or sale is correctly transacted. Because notaries are personally responsible for the contracts drawn up they must be objective in the advice they give and be impartial in their dealings with the parties concerned. A notaire represents neither the seller nor the buyer but the French Government. They can also act for a client anywhere in France. The same notaire therefore usually acts for both the vendor and the purchaser. This is not obligatory and you can appoint your own notaire if you wish.
The fees (paid by the purchaser) are fixed by law and will be split between both notaires if two are appointed. You should be aware that the notaire's job is to finalise the agreement he has been told has been recorded. He is not there to advise or warn the purchaser of any inadequacies in it. His role is therefore very different from that of a solicitor. If you are making a purchase with a mortgage, you should at least instruct the notaire/estate agent to make your purchase conditional upon obtaining a mortgage: 'conditions suspensives'. This will offer you further protection under French Consumer Law.
Upon signing this preliminary agreement the purchaser has to place a deposit with the notaire, which is normally 10% of the purchase price and will be deducted from the sale price. Completion Completion is when the final deed of sale is signed and legal ownership is transferred to the buyer. It is at this point that the balance of the purchase price plus any extras such as the notaire's fees, taxes and duties are due. The monies will be paid directly by the bank to the notaire.
The final act is the signing of the deed of sale (acte de vente) which will take place in the notaire's office. It is normal for both parties to be present when the deed of sale is read, signed and witnessed by the notaire. It is good advice to attend in person at the notaire's office for the signing and witnessing of the deed of sale. However, if this is not possible you may invoke a power of attorney. Each page has to be initialled by both the seller and buyer and both must sign the last page after writing in French 'bon pour accord' which means they have understood and accept the terms.
There are no title deeds as such in France and proof of ownership is provided and guaranteed by registration of the property at the Land Registry. The Land Registry's stamp is put on the deed of sale and the notaire gives a certified copy to the buyer around two months after completion of the sale. Rates and Taxation Taxe Fonciere This is a land tax. The size of the property determines how much is paid and owners of new properties are exempt for the first two years. The tax is paid by the person owning the property on 1 January of each year with payment due in the final quarter of the year. However, if the property ownership changes then the purchasers must usually reimburse the sellers for their share. Taxe d'habitation This is a local services tax. It covers the services and maintenance provided by the local council and again is payable annually in the last quarter of the year. The estate agent will advise you of the taxes in relation to your own property and tell you how much you will need to pay. The tax demands will be sent to the address of the French property.
French Inheritance laws and Taxation These are specialist areas and we strongly recommend that you seek professional advice. French inheritance laws are particularly different to those abroad. You are well advised to take legal advice on these matters before completing the purchase. You may also be liable to French tax if you derive any income from the property, i.e. letting fees. You must register with the French Taxation Centre for Non-Residents when you buy the property. France has signed taxation treaties with most countries which means that you avoid double taxation.
The Author Gibbs publishes and edits a free French property magazine entitled Your-move-France which is independent and not linked to any agent or organisation. © G.D. Gibbs
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Finding the right property You may have already decided on a specific area or you may have a French region in mind, having been there on holiday for example. Finding a property...