The legal process in France |
The Dordogne Property Agency guide to the legal process when buying a French property - An overview:
The French property market offers one of the safest and most reliable investments for overseas buyers who are looking to purchase a second home for holidays, investment or even to move abroad permanently. The long term health of the French property market has been created through a number of factors, not least the constant worldwide demand for the French lifestyle, a stable domestic marketplace, a dynamic and single-minded economy and well regulated laws to protect purchasers and sellers of property.
Despite this, the risks for the uninitiated purchaser can be very real, especially if they are not given good advice regarding their property purchase.
Below, we have provided you with an accurate summary of the legal process involved in purchasing a property in France. This is intended to give you an overall feel for the key stages of your purchase and is not intended to be an all-encompassing guide. As a client of Dordogne Property Agency you will receive a package of total assistance during your purchase, ensuring that you are professionally guided throughout all situations that you may face. This ensures total peace of mind for you at all times allowing you to concentrate on finding your dream home and then preparing to enjoy it!
Please contact us should you wish to discuss any aspects of your purchase in France.
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The notaire
A notaire is a public official acting principally on behalf of the French government. In the case of the sale and purchase of a French property, he or she is tasked with overseeing the entire legal transaction, much like a UK Solicitor. This includes the drawing up of binding contracts, property searches, guidance on French inheritance laws, checking vital documents and ensuring overall that the sale concludes to the satisfaction of the French law and more importantly, without any errors or omissions. The notaire is also responsible for ensuring that all the relevant taxes and fees, such as stamp duties, land registry fees and government charges, that are payable on the purchase of a French property are collected and paid promptly to the tax authorities. Following the purchase, the notaire is also responsible for informing the various French authorities about the change of ownership.
It is important to note that unlike the UK solicitor who manages property transactions, French notaires are obliged to act entirely impartially and can often be representing the interests of both the buyer and the vendor. In summary, the notaire is responsible to ensure that no costly mistakes are made and that the buyer and vendor complete each aspect of the transaction without risk.
In general, the vendor will request to use the notaire from whom they bought the property to handle the sale. This often does make sense as the notaire will have prior knowledge of the property and will already be in possession of much of the required paperwork. As a buyer, you can choose to use the same notaire as the vendor or you have the right to request your own notaire at no extra cost, although two notaires involved in the same sale can sometimes complicate or lengthen the purchase process.
During our time working in the region, we have successfully completed many sales with a number of highly professional and trustworthy notaires who are multi-lingual and who are fluent in English. If you buy a property through Dordogne Property Agency, we will be able to recommend one of our trusted local notaires, based in the Dordogne, to handle your sale in conjunction with us.
For our clients at Dordogne Property Agency, the bottom line is that together with our notaire partners, we will guide you safely through to a successful purchase without risk and with total peace of mind.
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The first sale contract (compromis de vente)
Once the notaire has been selected, the first sale contract, or compromis de vente, will be drawn up. This is the first stage of the sale and also the point at which you will pay your deposit in order to secure the purchase. As soon as the vendor signs the compromis de vente, they are legally bound to sell you the property at the agreed price. Buyers are not immediately committed to the sale upon signing as French law states that purchasers of property must be granted a statutory 7-day "cooling off" period to allow them to withdraw from the purchase without penalty. This is designed to ensure that buyers who have acted in haste or who may even have been coerced or pressured to buy, have the necessary time to reflect properly on their decision. This 7 day period only starts once both buyer and vendor have signed the compromis de vente and that a formal, written notification of the start of the cooling off period has been given to the purchasers by the agent or notaire. At this point the sale becomes legally binding on the purchasers, subject to any special conditions of sale that may have been agreed being satisfied before completion.
This system works extremely well and prevents a "sale chain" from building up. Once the vendor has signed the contract, they are unable to accept a better offer from another buyer so the problem of "gazumping" does not occur after this stage. Likewise, the vendor is protected because the buyer has legally committed to the terms of the sale and cannot attempt to renegotiate the price closer to the time of completion or indeed continue looking for other properties. The system also avoids the problem of unscrupulous buyers who are unable to make multiple offers on a range of properties.
The first sale contract or compromis de vente will set out the terms of your agreement with the vendor and will cover the following type of information:
- The personal details of the buyer and the vendor
- The exact address and a detailed description of the property, including all relevant plots of land being sold
- Obligatory certificates, provided by independent experts confirming a range of information about the property (see "reports" information below)
- Whether the sale is to be funded by a loan, the proposed loan terms and timings for the loan application
- The agreed sale price of the property including estate agent's fees
- The notaires fees and taxes to be paid
- If a loan is to be used to fund the purchase, the estimated loan registration costs
- The value of the deposit required
- The presence of any servitudes or rights of way which may affect your decision to buy the property
- Any special conditions or clauses suspensives which are required to be satisfied in order for the sale to be successfully completed, e.g. if the sale is dependent on planning permission being granted for a conversion of a barn or perhaps a loan application for a French mortgage being approved
- A date by which the contract must be signed and a date by which the deposit must be paid along with details on how this is to be paid
- A provisional completion date and the latest date by which the sale can complete before one or other of the parties can legally compel a completion to take place
Additionally, a number of reports and other documents will be attached to the contract.
- A copy of the "cadastral plan" or land plan showing the true limits and boundaries of the property being sold, as recorded by the land registry department
- A local "risk report" which shows any known risk to the property or surrounding areas from technological or natural hazards such as industry, landslip, flooding or earthquakes, etc.
Statutory property reports - The vendor is responsible for the cost and provision of an independent expert to check the property and provide certificates which must accompany the compromis de vente, covering the following:
- The presence and location of any asbestos products that may be in the property
- The presence of any old lead paint found in the woodwork, shutters, old doors etc (older properties only)
- Confirmation that the property is not at risk from the presence of termites along with a summary of any other insect activity (even though this may not present an actual risk to the property itself) within the property – This report is only required in certain parts of France
- A report giving an overview of the estimated energy consumption and related C0&sub2; emissions of the property based on its current condition
- In certain case where gas is supplied to the property, a certificate to confirm the condition of the installation of appliances
- With effect from 1st January 2009, a report on the condition of the electrical installation will normally be required
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The deposit
The deposit required to secure your purchase is likely to be in the range of 5% - 10% of the advertised sale price of the property. Therefore, before coming out to France on a buying trip you should ensure that you have the deposit funds readily available as these will be required very soon after your offer has been accepted. Your deposit is always secure and will either be held safely by the notaire in a government protected bank account or, by the French estate agent in a similarly guaranteed bank account until such time as the sale is completed.
You should never agree to pay the deposit or any other form of guarantee, directly to the vendor of the property or any other individual.
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The final sale contract (Acte Authentique de Vente)
Once both parties have signed the first sale contract the notaire will commence a range of duties. At the end of this period he will eventually draw up the Acte Authentique de Vente or final sale contract.
This process normally takes 2-3 months to complete. If you are funding your purchase with a French mortgage, then the entire process may well take the full 3 months, due to the time required to process your mortgage application and the subsequent loan approval process. Depending on the nature of the many searches conducted by the notaire, there may also be other circumstances where the entire process can take a bit longer. We will normally be able to indicate this to you well in advance.
The notaire spends this seemingly quiet time performing the following type of searches:
- Confirmation that the vendor is indeed the legal owner of the property and entitled to sell the property and that all the existing property owners have given permission to sell the property (in the case of husband and wife, siblings or family members and so on)
- Searches to ensure that any outstanding mortgages on the property are removed at completion
- Searches to confirm the land boundaries and to check any existing rights of way or servitudes that have not been indicated beforehand
- Where extensive works have been carried out on the property, searches to ensure that full and correct planning permissions have been obtained from the local authorities and that the works completed conform with local building regulations in force
- Confirmation that the local or government authorities have waived any priority rights of purchase on the property
- In the case of a property with tenants, confirmation that the existing tenant has waived his or her priority rights on the sale
- In the case of a purchase using a loan, the notaire will liaise with the bank to confirm their approval for loan and timings for the release of funds
During this period, it is important that you discuss your inheritance requirements with the notaire. Your personal family situation will govern the nature of the final deed of sale and your requirements will be taken into account.
Once all the searches are complete, the notaire will be able to draft the final deed of sale and propose a firm date for the signing. You will normally receive 2 to 4 weeks notice of the intended date of completion. Both buyer and vendor are entitled to receive a copy of the agreement before the meeting which will be set for a mutually convenient time (as long as the date of the final signing falls within the time limits set in the compromis de vente).
At this point, the notaire will also confirm to you the final balance due in order for the sale to complete, allowing time for any international money transfers to arrive in time for the signing.
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The final signing
Before attending the final signing, a representative of Dordogne Property Agency will always visit the property to ensure that it is in the same condition as when you agreed the purchase and to check off any items that are being left behind. During this visit, we will also read the meters for any services that are to be transferred. If you are available when we make this inspection, we would be delighted for you to accompany us to the property. This final visit to the property is often a useful time to meet the vendor and run through any specific points about the property and perhaps to explain how any important equipment or the main utilities work.
The signing will always take place at the notaire's office. The notaire will formally read through the deed and explain, in full, the meaning of its contents. Any remaining clarifications needed can be requested at this point. Many of the excellent bilingual notaires with whom we work, are able to explain and address any queries in English during the final signing. Your bilingual contact at Dordogne Property Agency will also attend the final signing with you to assist with any last-minute matters.
Most of our clients like to come to France for the final signing however, depending on their personal commitments, this is not always possible. In this case you can grant the notaire, a parent or a friend, power of attorney to sign the final deed of sale on your behalf. You should let us know well in advance if you would like to sign in this way as additional paperwork will need to be drawn up.
Before the signing, you should ensure that the final balance has arrived with the notaire otherwise the sale cannot complete. We will provide you with plenty of notice of the final funds required. Funds can easily be transferred to the notaire's bank account by international transfer and Dordogne Property Agency are able to recommend currency transfer specialists if the balance is being sent from a non-euro account.
You will need to take out an insurance policy to cover the property and contents to be in force from the date of completion. Your Dordogne Property Agency representative will be able to recommend an English-speaking insurance partner and arrange a quote for you well in advance. Once the final signing is completed the vendor will also terminate their own insurance policy on the property.
Once both parties have signed the agreement, the notaire will issue the buyer with a certificate of ownership as proof that you are the legal owner of the property. Then it's time for the vendor to hand over the keys – and for you to celebrate!
Welcome to home ownership in France!
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Tying up the paperwork
When you buy a property in France, you will receive a full copy of your deed of title. Before you can receive your full copy of the deeds, the notaire must register and publish it with the relevant authorities which can take approximately 6 months to complete. In the meantime, the certificate of ownership given to you at the end of the final signing will enable you to provide proof of purchase when required. Once the purchase is fully registered, a copy of the original deeds will be held in archive by the notaire and you will be sent a copy for your own records.
Owners of French property are liable for local taxes, similar to UK council tax, and usually there is a pro-rata refund paid to the vendor by the purchaser on the day of the final signing for any taxes due for the relevant year. The notaire generally communicates the required refund with the final balance statement, although sometimes the tax refund can be agreed to be paid after the final signing when the actual bill is received by the vendor. The details will be communicated to you by us or through the notaire.
It is very important to open a French bank account to pay for your utilities and local taxes and you should do this well in advance of the completion of your sale. If you are funding your purchase using a French mortgage provider, your contact will be able to help you set up an account with a local bank and may well insist that you bank with them. Alternatively, your contact at Dordogne Property Agency will be able to help you to arrange your French bank account with a suitable bank and branch.
Once the final signing is complete, on your behalf we will personally inform the relevant utility companies of the change of ownership, providing the final meter readings as well as your contact details and bank details for setting up of direct debit style payments.
For any other services such as telephone, broadband internet, satellite TV, etc. Dordogne Property Agency can advise you on suitable contacts for all of these services and many more.
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Champagne!
Time to celebrate!
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