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Buying or selling a property in France
Although the French property market is well-regulated, the different legal system, language and culture can complicate the process of buying or selling a house in France. Therefore, it’s important to choose a reputable and independent solicitor with experience of dealing with French property to deal with the whole transaction and ensure that it’s as stress-free as possible.
Our team can provide bilingual assistance in relation to all aspects of buying, owning and selling property in France, whether you are a non-French speaking client or more familiar with France and its legal system. We are independent from French estate agents, developers and sellers and so will only ever act in your best interests.
Searching for a property
There are several sources available to help you find your ideal property in France. Estate agents and private owner websites, French property magazines and French Notary websites are a good starting point. Once you have chosen your desired region, the next step is to visit local estate agents and any properties that you have shortlisted.
Once your offer has been accepted and you are satisfied with the legal situation regarding the property, your solicitor will establish contact with the estate agent (agent immobilier or agent) and/or French Notary (Notaire).
At this stage (whether you are a cash buyer or using a mortgage) you will need to transfer the deposit, plus part or all of the balance of the purchase price and the Notaire’s fees, into the Notaire’s account. This transfer must be paid in Euros. Although the Notaire may speak English, they will conduct the transaction in accordance with local laws.
It is recommended that, at this stage, you involve the services of a reputable currency dealer, rather than your bank. A dealer is likely to obtain a better exchange rate and provide you with a hassle-free way to transfer funds quickly and efficiently. We can make recommendations when required.
If you require a French mortgage, we advise that you obtain a decision in principle before entering into any obligations concerning the purchase of the property. There are several mortgage brokers available to assist you with the selection of mortgages available on the market. We can make recommendations when required.
Purchasing an existing French property
If you are purchasing an existing property, the process is slightly different compared to buying a property in the UK:
When you are ready to make an offer on a property, the agent will ask you to make an offer in writing (letter or email) or sign a formal purchase offer (offre d’achat). We recommend that you seek independent legal advice before signing any documents.
Once the offer has been accepted, the agent or Notaire will draw up a preliminary sale and purchase contract. We will then ask the agent or Notaire to send us the contract, together with any technical reports relating to matters such as asbestos and lead on the property, infestation by termites, gas and electricity reports and energy performance.
A detailed Report on Contract is prepared and any additional clauses will be negotiated. When buying an existing property in France, we often recommend that you commission a full structural survey of the property. Although it is not commonplace to make a contract conditional upon a satisfactory survey, it is advisable to obtain the survey report before signing the preliminary contract or before expiry of your ten-day cooling off period. In most cases, you can sign the contract at home without requiring a witness. Once signed by both parties, you will be sent a copy in the post. You then have a ten-day cooling off period during which you can withdraw from the purchase. If you do exercise your right to withdraw and have already paid the deposit, it must be returned to you within 21 days.
You will be required to pay 10% (sometimes 5%) deposit to the agent or Notaire after the cooling off period has expired, assuming you wish to continue with the purchase and haven’t already paid the deposit on signature of the contract.
In the French property buying process, contracts are signed early. Therefore, buyers are permitted a ten-day cooling off period to withdraw from the process without having to give a reason. Once this period has expired, the buyer is committed to the purchase unless a key condition included in the preliminary contract is not fulfilled.
Once the cooling-off period has expired, you are then legally bound into the purchase of the property. However, the contract will contain certain Conditions Precedent (conditions suspensives) for your protection. You will be released from the contract and entitled to recover your deposit if, through no fault of your own, any of the conditions suspensives are not fulfilled by the date specified. However, be cautious – strict conditions contained in our Report on Contract apply.
If the agent drafted the preliminary contract, the Notaire will now carry out any local searches and Land Registry searches, as well as notify any person or body that may have pre-emption rights over the sale. At this point, if you are applying for a French mortgage, you must make a full application and obtain an offer by the date specified in the contract. It is vital that you (or your mortgage broker) keep track of the process. If it appears that your application may be refused, or that you may need extended time to obtain a mortgage offer, notify us as soon as possible.
In the meantime, we will prepare a Succession Report setting out the options for structuring your ownership of the property, specific to your circumstances. This report takes into account French/EU succession law and the French inheritance tax consequences. Once you have chosen your preferred method of ownership, we will inform the Notaire so that the necessary documents can be prepared in advance of completion.
Completion of the purchase generally takes 2-3 months following signature of the preliminary contract and once all the Conditions Precedent are fulfilled. The latest completion date is included in the preliminary contract, but this should not be regarded as a fixed date.
The parties and the Notaire (together with the bank if you are buying with the aid of a mortgage) will agree on a completion date. At this point, we will request a draft transfer deed from the Notaire to check that all the Conditions Precedent contained in the preliminary contract have been fulfilled. We will prepare a Report on Deed in advance so that you know what you are signing.
You must then transfer the balance of the purchase price, plus the Notaire’s fees, to their account so that they arrive at least one day before completion. In France, the buyer pays all of the Notaire’s fees (including Stamp Duty which is usually 7-8% of the purchase price). If you are buying with a mortgage, you will be expected to pay additional fees (approximately 1% of the mortgage) to cover the cost of preparing the mortgage deed and registering the property at the French Land Registry.
Completion then takes place at the Notaire’s office by signature of the final transfer deed (Acte de Vente). Parties can sign the deed in person or, if they are unable to attend, they may sign a Power of Attorney (Procuration) in advance of completion. This authorises a third party, usually the Notaire’s clerk, to sign the transfer deed on their behalf. In the UK, the Power of Attorney needs to be witnessed by a lawyer or Notary Public and sent to the Foreign & Commonwealth Office to receive an official stamp (Apostille), making it valid for use in France.
You will have responsibility for insuring the property following completion. We can recommend bilingual insurance brokers if required.
You are also responsible for paying local property taxes (taxe foncière and taxe d’habitation) following completion. It is customary for the occupier of the property to pay the taxe d’habitation for the entire calendar year on 1 January. The taxe foncière, on the other hand, is generally apportioned between seller and buyer, with the buyer responsible for paying the amount due from the completion date to 31 December of the year in question.
Buying a new-build or off-plan property
If you are buying a new-build, sometimes referred to as an ‘off-plan property’ (Vente en l’Etat Futur d’Achèvement or a VEFA), the buying process follows a different course:
Once your offer has been accepted, you are required to sign a reservation contract (Contrat de Réservation). The reservation contract will contain a schedule of payments specifying when subsequent instalments must be paid. However, strict consumer protection laws dictate what information the contract must contain.
As a buyer, you are also required to pay a deposit of up to 5%, depending on when the final transfer deed is due to be signed. In return, the seller reserves the property for the buyer.
Once the foundations of the property are complete (or sometimes at a later stage) the buyer should visit the Notaire’s office to sign the transfer deed and pay the next instalment plus the Notaire’s fees. In this case, Notaire’s fees are lower than for an existing property (usually 2-3% of the purchase price). Parties can either sign the deed in person or, if they are unable to attend, they may sign a Power of Attorney (Procuration) in advance of completion. This authorises a third party, usually the Notaire’s clerk, to sign the transfer deed on their behalf. In the UK, the Power of Attorney needs to be witnessed by a lawyer or Notary Public and sent to the Foreign & Commonwealth Office to receive an official stamp (Apostille), making it valid for use in France.
Signature of the transfer deed constitutes legal completion of the purchase but does not signify physical completion and handover of the property to you. Instead, it means that the legal title to what has been built so far is transferred to you. You will become the legal owner of the remainder of the property as each specified stage of the building works is completed and the corresponding instalment has been paid. The transfer deed will also determine which type of legal completion or reimbursement guarantee is being provided by the seller. The seller is legally obliged to give you a 10-year guarantee against structural defects (garantie décennale), full details of which should be set out in the transfer deed.
Once the property has been physically completed, the seller will invite you to attend a handover meeting on site. At the meeting, both parties will agree a list of snagging items to be made good by the seller by a specified date. You must pay the final instalment of the price to the seller and, in return, the keys of the property will be handed over to you.
Buying a leaseback property
A leaseback property transaction is a specific type of purchase of a new build property which forms part of a holiday resort (Résidence de Tourisme). The scheme was introduced to encourage investment in tourist destinations throughout France and increase the supply of quality housing.
During the transaction, the buyer agrees with the seller (on handover of the completed property) that the buyer will sign a commercial lease (bail commercial) with a management company. The management company will then rent out your property to holiday makers for a short time period.
To encourage people to invest in these properties, French VAT (TVA) although normally applied to new build purchases, is not charged on the sale price. However, in return, you must account for the VAT you receive from the management company on the rental payments.
Whilst the build and purchase process is the same for non-leaseback new build properties, the commercial lease between you and the management company is an element specific to leaseback purchases and should be examined in detail. The nature of the rental payments and your potential exit strategy from the leaseback scheme are particularly important. You should also consider how many weeks’ occupation of the property you would like and whether this corresponds to your entitlement under the scheme in question.
If you are purchasing a leaseback property, we recommend that you research the reputation and trading history of the management company who will be leasing your property. Leaseback investments are certainly not suitable for everyone and, therefore, independent legal advice should be sought before committing to such a purchase.
Properties located in co-owned residence or housing developments
If you are considering purchasing a property in a co-owned residence (Copropriété) or housing development (Lotissement), additional considerations should be made.
Not only will you be purchasing the property in question, but also a share in the ownership of the common parts of the residence/development, including communal areas, green areas and swimming pools or tennis courts etc. Your share in these common parts should be specified in the purchase deed and have direct correlation to your voting rights regarding how the residence/development is run, the proportion you must contribute to running costs and the cost of any agreed work.
In 2014, a new law came into force (Loi ALUR) in relation to the sales of apartments in co-owned residences and required the seller to provide the buyer with much more paperwork to review before signing the preliminary contract. This included the minutes of the last three annual general meetings, a document regarding the financial health of the residence and the co-ownership regulations (Règlement de Copropriété – Etat Descriptif de Division).
If you are buying a property on a housing development, there will be similar documents which are binding on all members of the residents’ association, i.e. all owners of property on the development, which is usually entitled “Statuts de l’Association Syndicale”. As part of our service, we will review these documents and report to you on key points.