Purchasing a property is an exciting experience, however, it is easy to let your heart rule your head. Not everyone has our wealth of experience in the French real estate industry and our experts have provided a brief introduction into the legalities of buying a house in France.
It is important that you ask the right questions to the right people and that is where Bruce International’s French property specialist expertise comes in handy.
The primary pitfall when buying property in the South of France is the language barrier. This factor makes understanding the buying process a challenge for non-French speakers mainly because the proceedings involved when purchasing real estate from abroad may vary from those that you are already familiar with. Napoleonic law has many seemingly contradictory nuances which, without the assistance of an experienced, bi-lingual property specialist, can become confusing, as well as risky!
When making an offer on your chosen property, the Agent will ask you to sign a “Compris De Vente” or a “Promesse De Vente”.
“Promesse de Vente” is an undertaking by the vendor to sell to the buyer (a form of option in favor of a buyer).
“Compromis de Vente” is a contract between the buyer and the vendor (an agreement to sell and an agreement to buy).
A 10% deposit is required for both the Promesse de Vente and Compris de Vente, and so is an ultimate completion date. The purchaser benefits from a 10 day “cooling off period” commencing the day following the receipt of an original version of one of these documents which has been signed by both parties involved in the process. The buyer may withdraw from the agreement and recover any deposit paid without having to give any just cause during this period.
These agreements always include conditional clauses in favour of the purchaser whereby he or she may withdraw from the deal if certain matters are found to be unsatisfactory (i.e. inadequate planning permissions, onerous third party rights or easements which may affect the enjoyment of a property). In the event of a loan being refused by a bank or financial institution, the buyer may withdraw from the deal with a full deposit refund.
An Acte Authentique also needs to be signed. This is document which is produced following the completion of a property sale.
Following the expiration of the “cooling off period”, both parties are bound by a preliminary agreement. Whereby:
• The vendor may not sell to any other parties
• The buyer cannot withdraw from the deal except under specific circumstances.
Conveyancing is done by Notaires – who are in effect the legal agents of the Republic. Their prime responsibilities are concerned with succession and the transfer of property and assets. It is infinitely preferable to sign in front of a Notaire, however, both agreement types are more often than not signed in the office of the real estate agents.
• In places, the document needs to refer to a particular purchase, therefore, it is preferable that documentation is prepared by an experienced Notaire
• If the document is signed in front of a Notaire, it can be registered and officially recorded.
• The Notaire will hold you 10% deposit. Therefore, in the event that buyers need to withdraw from the agreement under the terms of contract, they will be in a better place to receive their repayment.
In France, it is customary for the Notaire who registered the Acte Authentique when the vendor purchased the property to act on behalf of both the vendor and the purchaser for the resale of the property. Not many individuals would undertake such an important financial transaction without their own personal advisor (Notaire).
French law is quite specific on this subject and it is the right of the buyer and the vendor to have their own legal assistance at no additional cost (the notarial fees are covered by the French government).
Unlike the USA, it is not common for a property survey to be carried out prior to sale completion. Both the Promesse de Vente and Compris de Ventre documents state that the properties are being purchased “dans leur état actuel” (in its present state). However, surveys can be conducted prior to making an offer by an architect.
On average, the delay between signing a Compromis or Promesse and the Acte is 60 days. This can be extended or reduced 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 (this is the French equivalent of a Land Registry certificate). This shows the historical mortgage debts and whether there is any outstanding balance on the property or whether this has been waivered.
The Notaire assumes the responsibility – as an officer of the Republic – of clearing all outstanding loans, so that the buyer can purchase the property without outstanding liabilities. The sale can be stopped and the purchaser refunded their deposit if the proceeds received from the sale are not sufficient to clear these debts.
Agent fees are normally included in the property’s asking price and are therefore, paid by the vendor. These fees vary but normally depend on what you are purchasing; 5% for houses, villas and apartments and up to 10% for land.
Legal costs are paid by the buyer and include the Notaires’ fees, stamp duty and registration fees. The tariff costs for these are laid down by the French government and are based on numerous factors:
• Sale value
• Amount of land purchased
• Geographical location
• Age of the property
• Whether a loan is registered (if so, value of the loan)
Buyers should allow 7% of the purchase price for legal costs and, if they are taking out a loan with a French bank, this will be registered at the Bureau des Hypotheques and will cost approximately 1% of the loan value.