The Property Buying Process
Around 40% of all residential property sales in France are carried out privately, without the engagement of an estate agent. Although different from the process in other countries, the buying process in France is rather well documented and straight forward.
There are a series of steps in the process of buying a property in France and the entire process takes about 3 months to complete. At a high level, the steps involved include:
Offer – Making an offer is usually done in writing which is then presented to the owner so that they can study it and respond. Ensure that any offer you sign includes a clause which says “this offer is subject to the signing of an official “compromis de vente”.
Signing of initial contracts – Once an offer has been accepted both the seller and the buyer sign an initial contract called ‘Compromis de Vente’. This is a legally binding document stating the details of the property and sale.
A cooling off period – Once the compromis de vente is signed there is a 7 day cooling off period in which time the buyer has the option of pulling out without any penalties or fear of losing their deposit.
Paying the deposit – A deposit of usually about 5-10% is required. After the cooling off period the buyer will forfeit this deposit should they pull out of the sale.
The conveyance process – This process takes about 3 months to complete and is carried out by a Notaire.
Final payment and completion – On completion the final payment is made to the Notaire and the deed of sale or ‘Acte de Vente’ is signed by both buyer and seller.
Costs to consider
Besides the cost of the property itself the buyer must also factor in other costs during the property buying process.
Purchase Deposit – due on the day you sign the Compromis de Vente, which is usually 5-10% of the purchase price. The deposit is held by the Notaire or until completion.
Notaire Fees – The cost of legal fees and associated taxes on an existing property are approximately 7% of the purchase price. The Notaire fees pay for the land or property registration (stamp duty) and the actual payment to the Notaire for his services. All Notaire fees are calculated on the same basis, but you are free to choose your own Notaire.
Agency Fees (if selling through an agent) - Agent’s selling fee is around 5-7% and it usually included into the sales price and usually paid by the seller. The important thing is to make sure that the price stated by the agent is the price you pay.
The Professionals Involved
There are a number of professionals involved and it is important that you understand those involved and what their role in.
The Estate Agent - Estate agents (agents immobiliers) usually work locally and therefore only have properties for sale within a certain area. The agent earns commission from the sale of the property and will try to obtain the best possible price for it, but will know what price the vendor will accept.
Buyer’s Agent - Buyer’s agents will search the entire market for properties that match your requirements and price range. Some will charge a fee, others will take a percentage commission from the immobilier instead so it doesn’t cost you anything extra at all.
The Notaire -The Notaire is a public official and is highly qualified in the French legal system. The state confers powers on the Notaire to legalise property purchase transactions that cannot be enforced by any other means. A Notaire is deemed to be a public official, provides security to the contracts he supervises and is liable for his professional acts. A Notaire is responsible for the conveyance, preparing the various documents and confirming the seller’s title to the property. The Notaire also has indemnity insurance, which provides a financial guarantee to the client. The purchaser is free to choose their own Notaire, but can use the same Notaire as the vendor. As the fees are fixed, using two different notaires will not increase the total fee as it will be split between the two notaires. If you are located in another country if is advisable to use a multilingual notaires.
Architects / Surveyors - An architect or surveyor should be consulted if you are considering the purchase of an older property or a renovation project. They will have experience of planning and obtaining the necessary permissions and certificates, and be able to give an estimation of the costs involved.
Compromis De Vente
Once you have found a property that is suitable and your offer has been accepted by the vendor, you will be required to sign a sales contract, the Compromis de Vente. The notaire or agent can draft the Compromis de Vente, which will be written in French, but may also have an English translation. The Compromis de Vente is a legal contract; you should read it carefully and consult your notaire before signing to ensure that all the details and conditions are correct. Areas to pay particular attention to include:
Details and identities of the vendor and the purchaser (you).
A full description of the property.
The surface area of the property and land.
The purchase price, the breakdown of fees and those responsible for payment.
Details of the notaire and sales agent.
Details of any fixtures and fittings included in the sale.
Results of report on energy consumption (DPE), asbestos, electricity, lead, and termites.
Natural risks – report on avalanche risk, earthquake, flooding and landslides, provided by the commune.
Details of your mortgage, including the dates for when you should have your mortgage and when you should complete.
Any let-out clauses (clauses suspensives) and the penalties that will be incurred by you or the vendor if completion doesn’t take place. The most common is a clause stating that your agreement to purchase is subject to you obtaining mortgage finance.
Even though you may have a clause suspensive in the Compromis de Vente stating your agreement to buy is subject to mortgage finance, if you do not make reasonable efforts to obtain mortgage finance in time then you could lose your deposit.
Once the notaire has carried out the legal aspects of the sale, a time and date is arranged for completion. Once you know when you will be completing on your property purchase you will need to ensure funds can be transferred and cleared in time for the completion date. The final deed of sale, which is signed on completion, is known as the Acte de Vente. It will contain much of the same information as the original Compromis de Vente along with the date you may move into the property. Usually a translator will be requested for you if you have problems reading and speaking French. You will be asked to produce your birth certificate and passport together with a marriage certificate or divorce decree, if applicable.
If you are unable to attend the meeting to sign the Acte de Vente, you can give a trusted person a Mandat (power of attorney), which authorises them to act on your behalf. Once the Acte de Vente has been signed and witnessed, the notaire has to pay the taxes, settle the accounts of the purchase and sale, and register the deeds and mortgage. A few months later you will receive a certificate informing you that the title has been registered. The original title deed is kept by the notaire, but he is able to make authorised copies.
Property Taxes & Insurances
There are two taxes on all residential property in France which are collected by the state for the local authorities.
Taxe Fonciere (Land Tax) - Whoever occupies a property on the 1st of January is responsible for paying the tax fonciere for the entire year, which is usually paid around October. Once a property has been sold, the buyer must re-imburse the seller pro-rata for the amount paid on the day of the sale act, and the seller remains liable for paying the full year.
Taxe D’habitation (Local Tax) - The occupant of a property on 1st January is liable for the payment of taxe d’habitation, and has no right to be re-imbursed by the buyer, as for taxe fonciere. If the property is only used occasionally, if it is furnished and supplied with water and electricity then the tax must be paid. The amount will vary from one region to another and depend on the size of the property.
Charges De Copropriete (Communal Charges) - If you own a property such as an apartment within a complex there will be maintenance and service charges, charges de copropriété, to pay. You should consider these costs carefully before signing the Compromis de Vente. The charges will depend on the size and quality of the complex, such as whether there are lifts, a pool, gardens, tennis courts and other facilities.
There are many communities and websites that can offer much needed help, advice and useful tips. Below are a selection of interesting articles and information sites that you may find helpful.