Buying French Property
 

GUIDE TO BUYING PROPERTY IN FRANCE

Sale and Purchase Agreement
Once you have agreed basic terms with the seller you will need to sign a sale and purchase agreement, either a Promesse de Vente or a Compromis de Vente.

Whilst it is possible to sign such an agreement through a suitably qualified estate agent, you would be far better off undertaking these formalities through an independent notaire.

Indeed, if possible, you should engage your own notaire to act for you as the role of the notaire in French property contracts is more limited than that of a solicitor in the UK. No additional fees are payable, as the basic fee is shared between the two notaires. We would rarely consider it necessary to appoint a UK solicitor to act for you.

If you do not speak French the notaire should offer interpretation facilities, but you may be better off organising your own.

You would also be well advised to make your own pre-contract enquiries, ideally prior to signing the sale and purchase agreement.

If you are seeking a mortgage to purchase the purchase then a suitably conditional clause needs to be entered in the agreement. You may also wish to insert other conditional clauses, notably those in relation to planning.

You will be asked to provide a deposit, normally 10% of the purchase price, although it can be a lesser sum, as the law does not stipulate a minimum percentage deposit.

Once the agreement has been signed, and you have received your copy, you have seven days during which you are entitled to withdraw from the contract, without penalty. If you do decide to withdraw, you should send a recorded delivery letter to the notaire and seller within the seven-day period. Your deposit will then be returned to you by the notaire.


Surveys
Property buyers in France benefit from a number of obligatory surveys  that the seller is required to have carried out. The main surveys are for asbestos, lead, termites, energy efficiency, natural or industrial risks, gas installations, and electrical safety.

These surveys fall far short of a full building survey, so you need to be wary about placing any reliance upon them in relation to the overall condition and structural integrity of the property.

If you have any doubts as to the boundaries of the property, or new ownership boundaries are being created, then it may be necessary to appoint a land surveyor to undertake a survey to determine the boundaries.


Local Search
Once the sale and purchase agreement has been signed, then the notaire is tasked with undertaking the usual searches to ensure you have proper title, and that there are no encumbrances on the property.

They will also need to ‘purge’ the property of any rights of prior acquisition that may be held by the local council or the French national land agency, called SAFER.

These enquiries normally take around two months to complete.


Ownership Structure
There are different forms of ownership structure through which you can hold your French property, which can have important implications in French inheritance law, so you do need to give full consideration to this issue.

Broadly speaking, depending on your circumstances, you can own the property en indivision, en tontine or through a property company called a Société Civile Immobilière (SCI).

A property held en indivision is the most common method of joint ownership and in English law is equivalent to a ‘tenancy in common’. The property is purchased by two or more persons, with each one holding a stake in the property in whatever terms that may be decided between them.

A property held en tontine is used to avoid the entrenched inheritance rights of children in French law, so that no part of the property passes to them during the lifetime of any of the existing owners. Under tontine, there is no recognition that each owner has a separate share in the ownership of the property, as is the case with indivision.

If neither buying indivision nor en tontine suits your needs, then you may wish to consider establishing a company to buy the property. The type of company is called a Société Civile Immobilière (SCI). An SCI is a rather specialist type of company that is constituted for the ownership and management of property.

Where an SCI is used for the purchase of a private home, the owners effectively then become non-paying tenants or occupants of the property owned by the company.

It is beyond the scope of these notes to go into the advantages and disadvantages of each type of ownership, but for a comprehensive review you can go to Property Ownership Structures in France.


Completion
Completion of the sale takes place through signing of the deed of sale, in the form of acte authentique. Completion takes place in the notaires office, on condition of course, that all the local searches are satisfactory, and that the balance of funds outstanding have been deposited with the notaire. If you are unable to be in France to sign the deed of sale, it is possible to do it by proxy, but you would be well advised to read and understand full details of the document prior to completion.


Fees and Taxes
The total charges payable for an existing older property are between 7% and 10% of the purchase price. In the case of a new property, the charges are around 3.5%, although VAT on the purchase price is also payable.

Although they are often referred to as ‘notaire fees’ (frais de notaire), in fact the actual fee is only about 1%! The rest comprises registration taxes and disbursements.
In the case of a residential property less than 5 years old, being sold for the first time, VAT at the rate of 19.6% is payable, which is included in the sale price. No registration taxes are payable, other than stamp duty at the rate of 0.7%.

For a comprehensive consideration of the whole legal process you can visit Buying Property in France.

By kind permission of IFP


 

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