The Buying Process in France
Asking prices may be negotiable and often vary if the property has been listed with various agents at different times. It is only once negotiations are underway that our French colleagues reveal if previous offers have been refused, at what level and can begin to gauge what the vendor may accept. Prices quoted include agency commission (frais d’agence inclus) unless otherwise stated. Normally this is paid by the vendor at the time of the sale from the proceeds of sale. It is important to ask the agents how much the notaire's fees will be on any property for which you are considering making an offer. Occasionally agents may quote ‘net vendeur’ (seller’s net price), so it is essential to clarify the breakdown of prices when discussing making an offer. Agents sometimes refer to ‘Acte en Mains’, which is the final sale price inclusive of notaire’s fees and agency commission.
Negotiation and making the offer
Once you have found the property you hope to buy, you should tell the agent (or us) as soon as possible. Initial verbal negotiations are not binding and usually involve several exchanges, but as there may be other interested parties through the same or other agents, making them aware of your interest at an early stage is vital. The first step is to put forward an offer (Offre d'achat) either through Sifex or the agent in France. First offers are often met with a counter offer by the vendor and it is not uncommon for both parties to agree somewhere in the middle. If the sale is as a result of inheritance, there may be more than one vendor, so it can take longer to establish whether or not the offer is acceptable. Our colleagues are experienced in negotiating a satisfactory conclusion to this process. They may even have an indication from the vendor of the level of offer that might be accepted. At this stage the compulsory diagnostic survey (étude diagnostique) is carried out at the expense of the vendor, covering termites, lead and asbestos, wiring and septic tanks. Once a price has been agreed for the property, it is a good idea to raise the question of any additional items of furniture or equipment that may be available to purchase separately. An inventory is frequently produced at this stage.
In view of the implications of currency fluctuations, it is worth taking advice at this stage, since the payment of both the 10% deposit and the balance of the purchase price at the acte de vente, will be in euros, as will the payment of the notaire’s fees and taxes.
Surveys are not normally carried out in France, but surveyors (experts) do exist. Alternatively the opinion of a registered builder can be sought.
In our opinion it is sensible to use the same notaire as the seller, because he will know the property well which simplifies matters and saves unnecessary delays. However we strongly recommend that you safeguard your own interests by employing the services of a bi-lingual lawyer to examine and go through the compromis de vente with you. The other significant advantage is that he can also advise you on inheritance law and tax implications and whether or not to create an S.C.I. (Société Civile Immobilière) whereby the property is owned by a company.
Compromis de Vente
Once agreement has been reached between buyer and seller, the notaire draws up the first contract, usually a compromis (occasionally a promesse de vente).
This legal contract is in French, although sometimes there is an English translation. It must be carefully studied to ensure that all details are correct. It normally contains the following elements:
- The identity and details of both purchaser and vendor.
- A full description of the property, its surface area and the land.
- The purchase price and breakdown of fees including who is to pay the fees.
- Details of any fixtures and fittings to be included in the sale
- Results of the diagnostic reports, which are a legal requirement.
- Details of the notaire and estate agent.
- Details of financing, including the date when the mortgage offer is expected.
- Any conditional clauses (clauses suspensives).
- A 10% deposit is paid to the Notaire at this stage .
(If you have a conditional clause in your contract, ensure you are aware of the dates and conditions applicable, should you need to prove that you have not been offered a loan. Failure to do so may cause you to lose your deposit.)
After signature of the compromis de vente, there is a seven-day cooling off period in which a buyer can withdraw. This runs from when both parties have signed the compromis de vente and received a copy. Thereafter the contract is legally binding.
Acte de Vente
In the compromis there is usually an indication of a date by which the final contract (acte de vent) must be signed. Before this can take place, the searches have to be carried out by the local authorities and results obtained, including the release of any rights to pre-emption by the SAFER if applicable. A notaire's involvement is obligatory in the transfer of property in France and their fees are strictly regulated and equate to conveyancing and stamp duty in the U.K. Only a small proportion of the overall sum is charged by the notaire himself, the balance being government taxes. It is always wise to establish at the outset what the charges are. Where a loan is involved, a fee of 1% applies for the notaire registering the mortgage with the Bureau des Hypothèques.
When the notaire has finished his searches, he contacts both parties to confirm the date and sends them a draft of the acte de vente. Although the acte resembles the compromis, there are subtle differences and of course it is vital to have this checked. You will be asked to produce your birth certificate and passport as well as marriage certificate and divorce decree if applicable. If you are unable to be there in person, you can award power of attorney (pouvoir) to a third party to act on your behalf.
It is imperative that the notaire is in receipt of funds before the signing of the acte de vent can take place and important therefore to allow enough time for the transfer of currency. If there is a mortgage, the buyer needs to instruct the notaire to ask for the funds from the lender.
Upon signature of the acte, the notaire pays the taxes due* and settles the accounts as well as registering the sale, the deeds and the mortgage, if applicable. The notaire generally keeps the original title deed although it is possible to obtain notarised copies. A few months later the buyer receives a certificate confirming that the notaire has registered the title.
It is a legal requirement to have buildings insurance in place on the date of the acte, whether taking over the existing policy or applying a new one.
Two annual property taxes apply in France.
- Taxe foncière is charged every autumn and is levied on buildings and land.
- Taxe d’habitation is paid by whoever is in occupation on the 1st January.
*At the time of the acte, the taxe foncière is split pro rata between buyer and seller by the notaire. This tax is charged every Autumn.