Process (of buying Property in France)
In this section we cover the key basic stages of the French house purchase process and how it inter-relates with french mortgages, and it assumes you are purchasing a second-hand property - otherwise, different purchasing procedures apply in new build project cases (please contact us for more details if buying brand new property).
There is also some brief guidance about the costs associated with buying in France, together with some related topics.
This is only a basic and brief guide to the whole process and should not be viewed as a substitute for independent legal advice, of course.
We can happily provide you you with contacts for recommended UK based lawyers / solicitors - who will be able to provide you with individual legal advice and peace of mind, regardless of your location, and taking into account your own specific circumstances, aims and objectives.
The buying process in France is divided into two key stages:-
(1) the initial sales contact / the first stage: with the initial French sales contract normally being known as the'Compromis de Vente' or in some cases the slightly different format known as the 'Promesse de Vente' and :-
(2) the second stage is the final contract, known as the 'Acte de Vente'.
Stage 1 - "Compromis / Promesse de Vente".
When you have found a property to buy, made an acceptable offer, and have thus agreed the price with the agents or owner, you will be normally be asked to pay a 5% initial holding deposit (5% of the purchase price agreed) and enter into a 'Compromis de Vente' or 'Promesse de Vente' - the two French forms of what are a 'preliminary sales contract'.
You then have 10 days in which you can back out of the agreement to buy, and can do so without giving any reason(s).
Thereafter, only matters relating to written / included 'suspensive clauses' allow withdrawal from this formal contract. Its very important before signing any preliminary sales contract, if taking legal advice, you do so before signing it !
This Compromis or Promesse de Vente can be drawn up by either a licensed French Estate Agent or more normally by a French Notaire (the French State Official, who oversees all house purchase transactions).
In France, especially in rural areas, confusingly, some Notaire's sometimes also act as Estate Agents and, in some areas, there may be only one Notaire (who therefore has a 'monopoly' in that particular area).
It is perfectly feasible to appoint your own Notaire to deal with matters, and we have contacts for English (or English speaking) French Notaires, if required.
Upon you then paying the (usual) 5% initial personal deposit (in the recent past, 10% was the norm) and both you and the owners signing the initial Sales Contract, the property is then effectively "taken off the market", whilst you work towards completing the purchase.
You can actually sign this initial Sales Contract outside of France, if required... you do not have to sign it in France itself - whatever anyone may tell you ! However, you should bear in mind that the contract is not binding (subject to the 10 day cooling off period referred to above) until it has been signed by both purchaser(s) and vendor(s) / seller(s), so its not valid until signed by ALL parties to it (like any formal contract in fact)
If you delay signing it, you might lose the property - i.e. if you are in competition with other buyers, say.
The French Notaire ensures that:-
•the sale is conducted legally, in accordance with French Law.
•that the title to the property is authentic.
•the Contract represents the agreement reached between the buyer(s) and the seller(s) of the property.
The Notaire is not the buyers' or sellers' solicitor / lawyer in the normal sense - and some Notaries will refuse to give any "client specific advice", as this is not seen as their role.
If you wish to have proper client specific legal advice you need to appoint a bilingual solicitor / lawyer =, one who specialises in French property transactions. The solicitor and their fees would be in addition to the Notaire fees for acting.
Stage 2 - "Acte de Vente"
Normally, and typically around 12 weeks or so after the Preliminary Sales Contract has been signed (and after various formalities have been completed), you will then be asked to sign the "Acte de Vente" (Final Act/Deed of Sale). This is always prepared by a Notaire.
Lets look at these two stages again, in some more detail:-
The Preliminary Contract - "Compromis / Promesse de Vente"
This is a binding initial written agreement between you and the seller, in which you agree to buy the property and the seller agrees to sell to you. At this stage, you will normally be asked for (5% of the purchase price) deposit, which will be held safely in a special account, pending completion of the purchase.
It is quite normal to have various conditions inserted into sales contract. These are normally called 'conditions suspensive'. For example, if you will need a mortgage arranging to buy the property, you will need to ensure there was a condition suspensive entered to this effect into the inital contract. It will need to specify the mortgage amount, term and interest rates involved. If you were unable to obtain the specified mortgage, you could then withdraw from the Contract (upon providing suitable proof from the lender mentioned in the sales contract) and have your deposit returned.
The other common conditions inserted into the contract relate to planning matters, rights of way, etc.
The contract always sets out the following:-
1.Description and "definition" of the property being sold
2.The confirmation of the seller's title (ownership) of the property
3.Anticipated date for completion of the "Acte de Vente"
4.The price, the fees and the method of payment
The Compromis de Vente is effectively a binding contract unless something is revealed by searches or planning permission (if required) is not forthcoming etc. Please note that the binding nature of the Compromis applies once the 10 day cooling offer period as been passed.
Deed of Sale - "Acte de Vente"
This is effectively a Title Deed, showing legally who is the owner and containing a definitive description of the property, its boundaries etc.
The "Acte de Vente" is always drafted by a Notaire - even if the "Compromis de Vente" was drawn up by an Estate Agent. You must normally sign this in person and in France (or else it must be signed by a person attending the Notaire's Office with a valid prior arranged proxy to sign on your behalf).
After the Preliminary Sales Contract (Compromis de Vente) has been signed, the Notaire will then be make the following checks prior to drafting up the Deed of Sale ("Acte de Vente"):-
1.That the property being sold matches the Land Registry records
2.The identity of both buyer and seller (proof will be required)
3.That the seller actually owns the property
4.If there is any adverse planning matters affecting the property
5.If any existing mortgage can be repaid, in full, from the sale proceeds
Fees and Taxes / other matTERS relating to sales
If you buy via an Estate Agent, you will normally find their fees are 'included' within the property price. Estate Agents' fees (in France) are higher than would normally be the case in the UK and elsewhere - often 5% of the price (or even more). Where Estate Agents' fees are included in the purchase price, you can normally, but not in all cases, borrow against the estate agents fees if you are seeking a French mortgage.
Usually, for property more than 5 years old, these will often amount to around 6 to 7% of the purchase price at the lower price ranges or perhaps a little less further up the price range - within this rough guideline you have various items such as the Notaire's fee, Land Registry charges, Local and Regional taxes, VAT (i.e. French TVA) etc. Please note the we have access to a Notaire fee calculator, and can always indicated or check the fees quoted, although we must stress it is up to the Notaire (s) concerned to confirm what the fees will be in your own case, as they are the ones actually charging them, of course.
You should note that completely different costs are involved with a property built in the last 5 years.
Ownership of the property, inheritance laws etc :-
You need to be aware that in France the rules governing what happens to a deceased person's assets are very different to those in the UK and elsewhere - as are the rules on income taxes, and various other types of direct taxation.
There are various different ways in which ownership of property assets can be held in France, including an option to hold the property in the form of shares in a special type of "company" arrangement.
This is a quite complicated topic, where you should obtain proper independent legal advice before you sign any paperwork. We would normally recommend clients instruct a bi-lingual UK solicitor, well versed in French house purchase. It could be a false economy not to do so. Details of reputable firms / solicitors, who are very experienced in this type of work, can be provided for you upon request.
"How do I get the deposit money over to France " ? :-
For smaller amounts, the best way is often via a French Bank account you have already set up before needing it ! You'll need one, in any event, to pay for the various expenses of ownership once you own the property. For larger amounts, you might wish to use a Currency broker - we have some good contacts on this topic for our clients of course - details on request.
Your home is at risk if you do not keep up repayments on a mortgage or other loan secured upon it
The Sterling (or local currency) equivalent of a foreign currency mortgage will vary with exchange rate movements
All mortgages are subject to status and individual lenders' criteria.
All mortgages must be paid by direct debit from a banking account within the French banking system which must be arranged prior to any legal property completion.
Please note that any introductions to any other firms, advisers, solicitors, French notaires or other individuals outside French Mortgage Connection's control are always given without warranty on our part and any dealings you may subsequently have with third parties are strictly a matter between yourself and the firms or individuals in question.
IMPORTANT : We are obliged to mention that you should ensure that you have an appropriate "clause suspensive" (the full title = "clause de condition suspensive d'obtention de prêt") regarding any proposed / needed borrowing inserted into the compromis de vente (or other relevant type of initial French sales contract) you may subsequently enter into. You are advised to seek independent legal advice to ensure that the wording of any clause suspensive is appropriate and watertight. Under such clauses, if wishing to be protected by it, you are normally required to apply for your mortgage within certain timescales (usually 10 to 14 days), and prove you have a mortgage within 1 month of your signature(s) on the contract.
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