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Fact
File - Buying in France
Buying a property in France has become
very popular over the past few years by many Europeans,
particularly the British. People buy for a number of reasons
- holiday homes, investment property or moving to the country.
The French administrative formalities are bound up in "red
tape", and a property transaction is no exception. However,
the system is in many ways better and safer than that applying
in most other countries, including England and Wales. The
French law concerning property is more like Scottish law
than English and Welsh and it is not possible to agree one
price with one buyer and then agree a higher price with
another one and "Gazump".
First of all you make a written offer
on a property that is accepted by the owner, you will usually
be expected to put down a deposit of 10% of the purchase
price, which you may forfeit if you change your mind, unless
there is a bona fide reason for doing so or if you having
a mortgage and this is not accepted. The process of the
purchase transaction must go through a
"notaire"
(notary) who is the only person who can make the title searches
and obtain certain legal documents necessary to make the
transaction possible.
The purchaser can choose the notary he wants to handle the
transaction. The purchaser is responsible for the payment
of the "notary fees", which depending on the selling price,
can be as much as 8% on small old properties (though around
6.5% is more usual), or as little as 1.5 to 2.% on newly
built properties, with an additional cost of around 1 -
1.5% if a mortgage is to be registered on the property.
It should be noted that prices of property are generally
advertised exclusive of these charges. The notary does
not get the entire fee. His fees are determined by the French
state (on a scale which is the same for all notaries), the
state take a much larger part (similar to property taxes
in Belgium, stamp duty in the UK etc)
If an owner wants to use his/her notary - which is allowed
under French law - be aware that you have the right to choose
your own notary who will work in collaboration with the
owner's notary. It is quite common to have two notaries
working on the same transaction, with no additional cost
to the purchaser as fees are shared. However, the delay
may be a little longer due to the necessity for the two
notaries to correspond with each other. If you do not speak
and understand French fluently it is advisable to use a
notaire who understands your language.
Once the two parties have come to an agreement on the sale
price, the terms and conditions of the sale are discussed
with the notary who then prepares the preliminary contract
or "compromis de vente".
This contract is just as important as the final document
transferring title as it must contain all the clauses and
conditions precedent to the sale. These include clear title,
easements, certificates stating whether the property conforms
to current legislation on asbestos and other matters, and,
most importantly, whether the purchase is subject to the
condition of obtaining finance.
Once the compromis de vente
has been signed It is usual at this stage to pay a deposit
of 10% of the purchase price (5% when purchasing property
"off plan"). This can be done by payment, by cheque, which
must be drawn on a French bank, or bank transfer, will normally
be made to a notary. The compromis de vente signed
by both parties is sent to the purchaser and from the date
of receiving it he/she has seven days in which to change
his/her mind.
At the end of this period, the contract becomes binding
and the transaction is now "under compromis". The owner
cannot sell to anyone else, nor change the price, and if
he refuses to sign the final document the purchaser can
obtain a court order forcing him to sell. The purchaser
can pull out of the deal without loosing the deposit if
one of the clauses or conditions precedent inserted in the
contract has not been fulfilled. Otherwise he may be able
to pull out but will almost certainly loose the deposit.
It then takes a further 2 / 3 months for the notiare to
prepare all the necessary paperwork before getting the parties
together to sign the title deed "acte
definitive". When both the parties have signed
and the purchaser paid the remaining 90% or 95% of the purchase
price as well as the notary fees the purchaser becomes the
legal owner of the property and receives the keys.
Capital
Gains Tax Non-residents of France and French
owners of secondary homes are liable for capital gains tax
when they sell; after various deductions, this amounts to
16% of the profit for EUROPEAN residents, and 33% for residents
of non EU countries. French owners of secondary homes are
liable for 16% + 12%(28% total).
Inheritance-
Wills
It is important to know that French inheritance
law is very different from that in England… the children
cannot be disinherited. You should be aware that FRENCH
law applies to any property you own in France, even if you
are not a French resident. It is possible to leave your
share of the property to the surviving spouse, but this
will require a specific document to be drawn up, preferably
at the time of purchase. Your notary or lawyer can best
advise you how to do this. Look into making a will in France
as well as your country of residence.
N.B. This information should not be relied
on for accuracy and is presented here without the responsibility
of jml Property Service and the website it is being displayed
at. ©jml property Services 07-05
©jml
property service 07/05
Euro-villalocation.com,
in association with jmlvillas.com
_________________________________________________
jml
Property Services sont
des membres de Le British Chamber of Commerce Côte d'Azur
- France
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Buying in France 
