The information is based on our understanding
of French property law and practice at the date of publication. We cannot
guarantee its accuracy. Specific advice applicable to your own circumstances
should be obtained from a French Notary and/or relevant professional bodies.
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 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 property
Having 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 Notaire A 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,
ie, 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.
About The Author
I publish and edit a free French
property magazine entitled Your-move-france. I also operate a website
your-move-france.co.uk. Both
are independent and not linked to any agent or organisation.
Article Source: www.articlecube.com
Property Finding Service Aude, Languedoc, FRANCE
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