July 9, 2015 by admin
SOME THINGS TO CONSIDER WHEN BUYING PROPERTY IN FRANCE
Contracts, inheritance and right of withdrawal
1. In France, agents immobilières (estate agents) act on behalf of the seller. The estate agents’ fees are agreed with the seller and are normally included in the property’s asking price.
2. A buyer/seller, in France, will have to use the services of a notaire (notary public) for property transactions. The notaire checks that the property is free of a mortgage, guarantees and records ownership and handles payments between buyer and seller. The notaire will not verify everything you need/want to know regarding the property. Therefore, if you wish to proceed with your own pre-contract enquiries (for example planning consent) you will need to appoint a French specialist property lawyer. If issues of concern arise you will need to include these as conditions of purchase in the compromis de vente (preliminary purchase agreement/contract). The clause ‘subject to survey’ is not used in France, so you will have to be specific when stating the conditions of purchase.
3. If they so wish the buyer and seller may each have their own notaire.
4. Veiled purchase price payments will be avoided if no payments are made outside the accounting records of the notaire.
5. As a prospective buyer you ought to contact a tax adviser who can explain the very complex French inheritance laws to you. New European cross-border inheritance laws will come into effect in August 2015, a further reason to seek legal advice.
When purchasing a property it is advisable, for tax purposes, to seek advice on which is best suited to you, sole ownership, joint ownership, or company ownership.
6. Properties may be in need of refurbishment. Old buildings often have problems with roofs, leaded components, termite infestation and asbestos, among other issues. Seek advice from experts regarding the potential cost involved.
7. Buyer and seller sign a compromis de vente or offre d'achat (preliminary purchase agreement/contract) before signing the acte authentique (the purchase contract). Any planned mortgage must be recorded in the compromis de vente. If you are unable to obtain a bank loan as planned, you may be able to withdraw from the compromis de vente, but only if you have made your purchase subject to a bank loan being approved. In addition you may have to prove that you have duly followed the required application procedure for a bank loan.
If your compromis de vente is conditional, do not sign unless all the conditions are included in the contract. On signing the compromis de vente do not pay the deposit to the seller or to the estate agent. The deposit should be transferred to the notaire's bank account.
8. If you intend to buy any contents, see to it that a completed fixtures and fittings form is included in the acte authentique.
9. Rural properties may be subject to servitudes (easements). These are restrictions on the right of use or possession of property, agreed to by one party for the benefit of another party. Common servitudes are rights of way regarding for example the flow of water, right of planting and of harvesting and grazing of horses and cows. The seller must also disclose whether or not the property is subject to any other legal interests, including tenancies and licences. These must all be specified in the compromis de vente.
10. After signing a compromis de vente a seven-day period follows during which you may withdraw from the contract without stating reasons.
11. The seller is obliged to provide the notaire with a number of statutory survey reports regarding for example, asbetos, lead, septic tanks, energy efficiency and termites (legislation on termite-infestation varies by region). These reports will be recorded in the acte authentique. Frequently, additional survey reports are required by law. You will have to check this with the notaire.
You must also be aware of other legislation in France, such as the legal obligation to implement security measures for swimming pools to help prevent drowning (for example specific gates or protective covers). Failure to comply with the legislation carries a penalty fine of €45.000.
12. In France when a compromis de vente has been signed, certain parties may have an automatic right of prior acquisition or pre-emption on the property in question. These could be sitting tenants, the local community and SAFER, the national rural land agency.
13. Due to all the statutory and other checks that need to be carried out once the compromis de vente has been signed, allow for a period of at least two months before you can sign the acte authentique.
14. On signing the acte authentique ownership of the property is transferred and recorded by the notaire in the livre foncier (Land Register). You can ask the notaire for an Attestation (certificate confirming ownership).
15. A few days prior to signing the acte authentique the purchase price funds will have to be sent via bank transfer to the notaire’s bank account.
16. Cost of purchasing:
Real estate transfer tax and the notaire’s fees add up to between six and eight percent of the purchase price.
Agency fees are between four and six percent and are normally included in the purchase price.
17. Ongoing charges:
Be aware that some annual taxes apply in France, such as the taxes foncières (land tax) and taxe d'habitation (local tax) as well as charges for waste disposal, among others.
18. Who is allowed to buy what:
There is no purchase restriction with respect to nationality.
In the event that you wish to purchase a monument (listed property) and apply for French tax benefits or grants the choice is either ‘Stay (limited) open to the public or relinquish tax benefits and/or grants.
19. The most interesting regions:
In addition to Paris, prime locations include the Côte d'Azur, Provence and Languedoc-Roussillon. The coasts of Normandy, Brittany and Aquitaine, and inland, Périgord (Dordogne), Burgundy and Gascony are also in high demand.
After years of highs, prices are currently in flux. France is shifting from a seller's to a buyer's market.