A Guide to Buying French Real Estate...
Previous pageThis is a document that many estate agents ask you to sign before visiting a property for sale. Check the wording very carefully as this document has often been used to intimidate the possible purchaser to buy THAT property exclusively through that agent, even if you do not want to deal with them for that transaction. Unless you have every confidence in the agent’s abilities and experience, that he will represent your interests, that he will answer all your questions fully and honestly, and that he will continue to assist you with the purchase right through to the day when you get the keys, do not sign it. A Bon de Visite that is used by an agent for insurance purposes or at the specific request by the owner to justify a visit to the property is acceptable, but this is rare.
Check the wording carefully and cross out any words or phrases which may prohibit you from having the choice of dealing with another agent .
French Inheritance Law is weighted in favour of the children. If the purchase of a property was made “en indivision” as most sales are in France, the surviving spouse must accept the co-ownership of the property with the children of the marriage, as well as with all the children of any previous marriage.
There are a number of simple legal steps that can be taken to protect all parties depending upon their individual needs and it is best to discuss this part of the purchase carefully with us before entering into a contract in order to avoid possible family disputes at some later date. Note: The clause “Tontine” does not necessarily apply in the same way as under British law
When the buyer and the seller come to an agreement for the purchase of a property, it is usual for the buyer to provide the seller with a written "Offre dAchat (Offer to Purchase)". This initial document is accompanied by a token payment, normally 10% of the purchase price, which shows the good faith of the purchaser to the transaction and more importantly, temporarily takes the property off the market. Among other details, the specifies the agreed sale price of the property, any particular and immediate conditions that may be applicable to the transaction, and various other details pertaining to the transaction. The "Offre d’Achat" must be signed by both parties which is your safegaurd against gazumping. The seller must write his acceptance to the purchaser’s offer and reconfirm the agreed price next to his signature.
The initial payment required is a maximum of 10% of the purchase price and this should be held in trust by your Notaire (State appointed conveyancing officer). It is most important that this amount is nominated in writing as a "payment on account" and not a "deposit". There are legal reasons for this for the protection of the purchaser.
From the Offer to Purchase, the Notaire can quickly draw up a "Compromise de Vente (Initial contract)" which is the initial and basic contract between the parties and in which all particulars of the property are clearly stated, together with any specific conditions or "let-out clauses" which may apply to the purchase. This document is also known as a "Sous-Seing Prive" or a private agreement in writing. It is signed by both parties, usually in front of the Notaire.
It is very important to consider your financial arrangements before signing any document. In order to protect the individual, a French law called Loi Scrivener dated 13 July 1979 dictates that all contracts for a dwelling or commercial property with a dwelling, must indicate whether the purchaser wants to obtain a loan. If a mortgage is required, there should be a let-out clause included in the contract which benefits the purchaser if s/he is not able to secure the loan for the purchase. It is essential to note some details of the proposed loan in the document, such as the amount, the term, the interest rate, etc. This law does not apply to loans obtained outside of France . Languedoc Property Management has access to several different types of loans including fixed interest, variable interest, and bridging finance.
If the buyer is paying cash for the purchase, s/he must hand write a statement
to that effect.
The balance of payment for the purchase must be made at the time of the signing of the title deed. Unless this payment is received, the Notaire will not be able to have the deed signed and there will be a necessary postponement. It is best that the purchaser opens a French bank account which makes it easier to transfer money from another country, and to pay essential bills concerned with the property such as utility services and insurances, etc. It is essential to have a French bank account where a mortgage is in effect on the property.
If you are transferring money direct to the Notaires account, you will need to know his bank and account details including the IBAN and BIC or SWIFT code. With your own French bank account, you can pay the Notaire by bank cheque at the time of signing the title deed.
Transferring money from overseas is usually done by electronic transfer using the SWIFT system. Although a telegraphic transfer travels across the world at a speed in excess of 300,000 km/second, it usually takes at least seven days (and sometimes more!) to arrive at its destination account in France. Please be warned that as well as paying a substantial fee to the sending bank for this service, French banks will also charge you a fee of around 30 for receiving the deposit. There are a number of faster, more efficient, and cheaper ways to transfer money : If the amount being transferred is less than 7,600 Euros (aprox. 4,850), most French banks will accept foreign currency personal cheques for deposit into an existing account and these will be credited at the current days exchange rate for a fee ranging from 12 to 23 dependng upon that banks charges. The funds are normally cleared within 3-4 days. For the efficient transfer of funds from the U.K. or elsewhere we strongly suggest using the currency brokers HIFX plc. This company usually provides a far better exchange rate than banks and there is no transfer fee. Please call us for full details and personal contact numbers with this company. For more details and personal assistance in opening a bank account and doing fund transfers do not hesiatate to contact us at any time.
The searches by the Notaire at the Bureau d'Hypotheque (Land Titles Office) must not show any mortgage or other debt attached to the property that will not be covered by the sale price. There must also not be any right of pre-emption on the property that has not been exercised, nor can there be any easement or right-of-way which has not been declared to the purchaser. The zoning certificate must also show no administrative right or claim to the property, such which may compromise the rights of the purchaser in any way.
Before the Compromis de Vente can be signed, some inspections must be made to the property for the purchaser’s benefit. These include the issue of a certificate showing the results of an entomologic inspection on all the woodwork and carpentry in the building (an inspection for termites and other wood-destroying insects), a report advising on any materials in the building which may contain asbestos or lead, and a report on the basic co-efficient of insulation.
The Notaire is a public official appointed by decree who comes uder the jurisdiction of the Minister of Justice. He is responsible to the State for receiving all Acts, titles, and contracts which are to be authenticated and he has a fiduciary responibility to the State to ensure that all correct taxes and imposts are charged and collected. The Notaire has the responibility to counsel clients and prepare all manner of contracts relating to land and property, marriage settlements, family donations, wills, inheritance matters, etc. In other words, he advises and informs on all questions relating to private, family, fiscal, commercial, and administrative matters.
As a public official, the Notaire in France is legally able to represent both parties in a real estate transaction. We strongly recommend that you use the services of your own selected Notaire to represent your interests rather than sharing the one representing the vendor, as often happens in France. Please call us for more details.. The Notaire must inform you of the professional fees which he will charge you for his services, and he must provide an accurate accounting of the costs involved in all transactions. Because the Notaire must complete all the searches prior to the completion of the sale, the time delay between the signing of the Compromise de Vente and the "Acte Authentique (Title Deed)" can be up to 2 or even 3 months. The Notaire must read the Title Deed through completely to both the purchaser and the vendor, and he must make any relevant ammendments required to the document as he proceeds. He has the responsibility to receive the monies for the transaction from the purchaser, pay the vendor, pay the taxes, and instruct the agent, intermediary, or vendor to pass over the keys to the new owner. Where applicable, he liaises with the bank in the preparation of the mortgage deed. Note : If French is not your mother tongue, it is imperitive and required that an official translator be present at the signing of the Acte Authentique.
A number of Notaires also act as real estate agents in France, an activity which is considered as being a conflict of interests in many other countries. For a number of reasons we recommend that the purchaser engage his own selected and independent Notaire to represent his specific interests.
Often it is not convenient to travel to France specifically just to sign the Compromis de Vente.. For this purpose a Procuration, or Power of Attorney can be prepared for either the Notaires clerk (the Notaire himself is not allowed to act as the Power of Attorney for either the vendor or the purchaser) or an agent or intermediary to act on your behalf. This Power of Attorney must comply with French law and it is a detailed document which includes all the required details of the transaction and of the parties concerned. A Power of Attorney for the Compromis de Vente is a relatively simple mandat and Languedoc Property Management can organise this quite easily. However, a Procuration for the signing of an Acte Authentique is a little more complicated. Where there is no mortgage or loan involved, this document must be signed on each page in the presence of a Public Notary or an Honorary Consul in the country of residence of the purchaser. The Notary Public also signs each page and affixes his seal and stamp to the document. It is wise that the Public Notary provides a Notorial Certificate of Identity or similar to accompany the Power of Attorney document. Where a loan through a French bank is used for the purchase, the Procuration must be signed and witnessed at a French Embassy in the country of residence of the purchaser.This document must be signed on each page in the presence of a Notary Public in the country of residence of the purchaser. The Notary Public also signs each page and affixes his seal and stamp to the document. It is wise that the Notary Public provide a Notorial Certificate of Identity or similar to accompany the Power of Attorney document.
If you are not thoroughly, fluent in French, using an intermediary with a Power of Attorney can save some predictable embarrassement, especially with judicial phrases and expressions which are hard enough to understand in your mother tongue. Notaires are required to seek the assistance of an English translator in these cases but this is often overlooked. If you prefer to be there and sign these important documents yourself (recommended) Languedoc Property Management can organise the services of an official translator at minimal cost.
France has a 7 day “cooling off” period following the decision to purchase. When the Compromis de Vente is signed, the purchaser has 7 days of reflection starting from the following day. The purchaser may, within this period, cancel the transaction without loss of any monies paid on account for the purchase of the property. There are also a number of “Clause Suspensives” or let-out clauses that may be applicable with your purchase such as, for example, the sale of another property by the buyer, the proceeds of which are needed to finance the new purchase. Each transaction is individual, so different clauses may apply for your purchase and we are here to assist you with this security.
Please understand that any information provided in this brochure is not a
substitute for professional legal opinion or advice on legal and/or financial
issues. It is strongly recommended that any real estate or property dealings
be principally dealt with by appropriately qualified legal and financial persons
and the authors of this text will not be held liable for, nor will accept any
responsibility for any loss or damage sustained as a result of the reading
or the acceptance of the contents of this text, nor for any changes or variations
in legal statutes or laws which may be contradictory to or at variance with
this text, nor for any misinformation or incorrect advice which has been provided
in good faith and believed to be correct. We can, however, recommend efficient
and responsible legal and financial expertise upon request.