Malcolm Bruce-Jones, chairman of Bruce International Properties, who studied law at Grenoble University, offers the following brief introduction to the legal aspect of purchasing property in France.
Buying a property in France is an adventure, but keep the adventure under control. It is too easy to let your heart rule your head when visiting France – be careful.
You must ask the right questions to the right people – but how do you know what the right questions are? How can you be sure you get the right answers, bearing in mind that, as helpful as the many selling agents and supportive organizations are, their time for any one client is necessarily limited.
Without doubt you must use experts.
The principal pitfall in purchasing property in France is LANGUAGE & UNDERSTANDING. It is extremely difficult for the inexperienced, non-French person to grasp the difference between purchasing a property in France and purchasing in other countries with which he or she may be
familiar. Napoleonic law has many seemingly contradictory nuances which, without the assistance of an experienced, bi-lingual specialist can be baffling and it can even become a risky business.
Having chosen the property you wish to make an offer on, the Agent will ask you to sign a “COMPROMIS DE VENTE” or a “PROMESSE DE VENTE”. A Promesse de Vente is an undertaking by the vendor to sell to the
purchaser i.e. is a form of option in favour of the purchaser. A Compromis de Vente is a contract between the purchaser and the vendor i.e. an agreement to sell and an agreement to buy. However in both cases there is a 10% deposit and an ultimate date for the completion of the sale.
The purchaser benefits from a “cooling off period” of 7 days commencing the day following the receipt of an original Compromis or Promesse signed by both parties. During this period the purchaser may withdraw from the agreement and recover any deposit paid without having to give any just cause.
Both agreements always include conditional clauses in favour of the purchaser whereby he may withdraw from the deal if certain matters are found to be unsatisfactory. Such as inadequate planning permissions or onerous third party rights or easements which might affect the enjoyment of the property. In addition the purchase being applied for can have included details of any loan. In the event of the loan being refused by the bank or financial institution, the purchaser may withdraw from the deal with a full deposit refund.
It is important to remember that both parties are bound by this preliminary agreement after the expiry of the “cooling off period”.
- The vendor may not sell to any other party – therefore gazzumping does not happen.
- The purchaser cannot withdraw from the deal except under specified conditions.
Conveyancing is done in France by Notaires who are in effect the legal agents of the Republic and their prime responsibilities are concerned with succession and the transfer of property and assets. While both of the previously mentioned agreements are most often signed in the offices of
real estate agents, in my experience it is infinitely preferable to sign in front of a Notaire, for the following reasons.
- Even though both documents are available in standard printed forms, there are parts that require completing to specifically refer to your particular purchase. It is therefore preferable to have the document prepared by a Notaire.
- Either document signed in front of a Notaire may be registered and officially recorded.
- Your 10% deposit is in the hands of the Notaire and, in the event of a withdrawal under the terms of the contract you will be better placed to receive your repayment.
It is customary in France for the Notaire who registered the Acte when the vendor purchased the property to act on behalf of both the vendor and the purchaser for the resale of the property. I do not believe many people would normally undertake such an important purchase without their own personal advisor – Notaire. The law is quite specific on this subject and it is the right of the purchaser and the vendor to have their own Notaries. There is no additional cost involved as the notarial fees are laid down by the Government and if there are two notaires they simply divide the fee by two. You should not therefore be surprised in the event that you receive pressure from certain quarters to use the Vendor’s notaire!
SURVEYS – In Britain it is customary to carry out a survey of a property prior to completion and the preliminary “exchange of contracts” is normally “subject to survey”. This is not the case in France. Both the Promesse de Vente and the Compromis de Vente specifically state that the property is being purchased “dans leur état actuel” -“in its present state”. Surveys can be done and often are done, usually by an architect, but this should be carried out before making an offer.
The normal delay between signing a Compromis or Promesse and the Acte Authentique (completion document) is 60 days. This can be reduced or extended within reason by agreement. During this time your Notaire will carry out the necessary searches and obtain, amongst others, a certificate from the Bureau des Hypothèques (the equivalent of the Land Registry) which will show the historical mortgage debts and whether these are outstanding or have been lifted. In this manner you are certain to be
purchasing a property without outstanding liabilities as your Notaire assumes the responsibility, as an officer of the Republic, of clearing all outstanding mortgages. In the event that the sale proceeds are not sufficient to clear the mortgages this can stop the sale and the purchaser is refunded his deposit.
FEES – Agents fees are normally included in the asking price of a property and are therefore paid by the vendor. Agency fees vary but the norms are 5% for houses and apartments, 10% for land.
Legal costs are paid by the purchaser and include the Notaires’ fees, stamp duty and registration fees. The tariffs for these costs are laid down by Government and are based on a basket of factors : the value of the sale, the amount of land, the geographical location and the age of the property, whether a mortgage is to be registered and if so, the value of the mortgage. As a rough guide you should allow 6% of the purchase price for legal costs and, if you are taking out a mortgage with a bank in France this will be registered at the Bureau des Hypotheques and will cost about 1% of the value of the mortgage.