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Once the buyer has decided which property to buy, and an offer has been accepted, the legal process is quite straight forward.
Notaires :
The notaire is part government tax collector, part private legal adviser. In matters of property, he is deemed to be neutral. It is normal for the same notaire to act for both parties, although it is acceptable to use your own notaire. Part of the duty of the notaire is to ensure that both parties understand the terms of the contract. English speaking notaires are listed here.
Estate agents :
Estate agents with a full "carte professionelle" are authorised to act as an agent of the seller. They often have pre-printed contracts. Unless the buyer is very confident of his French, and knowledge of French law, it is advisable to get your notaire to check the compromis before signing.
Compromis de Vente :
The compromis sets out the details of the transaction, and is an agreement to buy. Conditions (clauses suspensives) can be inserted. Typically this would be subject to "receiving a mortgage offer" or "planning consent". If there are no such clauses, normally the transaction must proceed. Typically, buyers will be asked to pay a 5% deposit (this often used to be 10%) and completion is normally around 3 months after signature of the compromis. Unless the buyer is very confident of his French, and knowledge of French law, it is advisable to get your notaire to check the compromis before signing. The buyer has a 7 day cooling off period during which he can cancel without penalty.
Promesse de Vente :
This is similar to a compromis, but the seller offers an option to buy within a fixed time. The buyer has a 7 day cooling off period during which he can cancel without penalty.
Surveys :
The "structural survey" and lenders surveys carried out in UK and other countries are rare in France. France has a system of surveys for different elements of the property. They are provided by the seller at his cost. Areas covered are (or will be) in respect of : Asbestos, Electrical Wiring, Energy Efficiency, Gas Installations, Lead, Natural or ‘Technological’ risks, Septic Tanks, Termites. Natural risks includes flooding, subsidence, etc. Article about surveys here.
Inheritance :
Inheritance laws and inheritance taxes, are different in each country. The effect on joint purchasers will vary depending on the legal status of the buyers. This area is one proposed for revision by Mr Sarkozy. Your notaire can advise you on current law. It should be resolved before the compromis is signed. n.b. there are various marriage contracts in France.
Acte Authentique :
When all the local searches have been completed, and the funds are in place, the parties will be required to sign the Acte Authentique in front of the notaire(s). It is possible to grant your notaire "power of attorney" to sign on your behalf. Once signed, the ownership of the property is transferred and the owner will receive a "certificate of purchase". The final copies of the contracts will arrive a few months later.
Costs :
There are a number of costs to consider.
Estate agents fees are normally included in the sale price of the property (so payable by the seller), but shown separately on the contracts to allow calculation of property taxes. They are on a sliding scale based on property value.
Notaires fees are also on a sliding scale and will normally amount to around 1.25% of the property value including VAT (TVA), search costs, etc.
Registration fees and taxes are on a sliding scale based on value and age of the property. Currently, a property valued at Euro 250,000, over 5 years old, would attract fees & taxes of Euro 14,100 (5.6%). The % rate decreases as property values increase. Properties under 5 years old are subject to reduced rates as an incentive to build more new houses in France.
Overall expect to pay 7 - 9% for property over 5 years old and 3.5% on property under 5 years old.
New properties, sold for the first time, attract VAT at 19.6%.
If the property is purchased with a mortgage, there are additional fees for registration and notaires fees amounting to about 0.5% of the amount borrowed. This is in addition to fees paid to the lender.
Furniture :
The seller may well want to reduce the property selling price by including an inventory of furniture, etc. in the sale contracts. The furniture is exempt from property taxes, and reduces any Capital Gains Tax (CGT) liability for the seller. The sellers objective is to minimise the taxable transaction price. Remember that this transaction price will be the buyers "cost" for CGT calculations when the buyer resells the property. n.b. CGT is only charged on second homes.
Tips :
Click here to see some useful tips about buying in this region. |
