|(ne)> The Role of the Notaire|
> Setting up the Sale: The 'Compromis de Vente' (Pre-Sale Agreement)
> The Property Subject to Sale
> Completing the Sale: The 'Acte Authentique de Vente' (Deed of Sale)
> Formalities after the Sale
THE ROLE OF THE NOTAIRE
The Notaire is the person who ensures you perform the sale or purchase without risk. They will give you advice, draft the 'Compromis de Vente' (Pre-Sale Agreement) and perform all the necessary formalities of the sale once the agreement has been signed. They help you to take the necessary precautions and avoid common and costly errors that can occur during the buying process.
One of the Notaire's main roles is the writing of the Compromis de Vente (Pre-Sale Agreement). The terms of this agreement are subtle in nature and its complexity means drafting it cannot be done by someone who isn't familiar with the techniques and procedures.
As such, the Notaire is key to the whole purchasing process. You will be paying for their work and for this reason the choice of Notaire is important. Although the seller and purchaser may use the same or different Notaires, very often the seller will already have chosen a Notaire to represent him in the sale and will suggest that you use the same one to simplify the process. This may well be an acceptable solution, but before agreeing you should be satisfied that you are happy with their choice. Alpine Property know all the Notaires in our region, and as such, we recommend getting in touch with us for advice at this stage.
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SETTING UP THE SALE: The 'Compromis de Vente' (Pre-Sale Agreement)
When the seller and buyer have agreed a price, both parties enter into an initial bilateral agreement that sets out the terms of the sale. The signing of the form means the buyer and seller agree to the purchase of the property subject to financial guarantees. This contract is usually called the 'Compromis de Vente' or for off plan purchases a 'Contrat de Reservation. Both documents contain very similar information, but this guide will generally refer to the more common 'Compromis de Vente'.
It is this stage of the process which contrasts most with many other countries, such as the UK. While an offer may be accepted in the UK subject to contract such that either party may pull out at any time before completion, in France the initial contract will bind the parties to the sale to varying degrees. Essentially this means that 'gazumping' and the general anxiety and maneuverings rife in the UK system are avoided. It does, however, mean that the initial agreement should be treated with slightly more circumspection because of its binding effects.
The bilateral agreement between the two parties sets out the terms of the sale, and will often include various let out or escape clauses ('clauses suspensives') in order to protect the buyer, such as their ability to obtain a loan. A 'cooling off' period of seven days prior is built onto the process at this stage (see below).
What goes in the 'Compromis de Vente'?
There is certain mandatory information that should be included in the agreement, which the Notaire will set forth in writing. Careful attention should be paid to the information before signing and any aspects you are not clear on should be raised with the Notaire.
The 'Compromis de Vente' (Pre-Sale Agreement) must provide the following information:
- Identification of the property to be sold with its description, its dimensions, outstanding charges (such as a mortgage) and in the case of an apartment forming part of a Copropriété (co-ownership), any outstanding commitments (significant construction, repairs etc).
- A statement of the presence or absence of asbestos and any other substances required to be checked for by law (termites, lead etc).
- The terms of the planned sale, the date on which the offer will elapse and the conditions for taking up the option.
- The amount and date of payments.
- The amount of the security deposit or reservation indemnity.
- The date for taking possession.
- The latest date for signing the 'Acte Authentique de Vente' (Deed of Sale).
- Any Clauses Suspensives, such as the obtaining of loans or building permits.
- Servitudes: any conditions attached to neighbouring properties such as rights of passage or zoning restrictions, which could influence your purchase decision.
The Purchase Price
The 'Compromis de Vente' (Pre-Sale Agreement) will state the final purchase price of the property, indicated both in numbers and words. The amount in words will be decisive in the event of a difference between the two. In order for the sale to be effective, the purchaser and seller must agree on the price.
- Registration Tax or VAT
Various costs must be added to the purchase price: registration taxes or VAT if the sale is subject to such tax, which generally applies to the sale property in the course of construction, new buildings and for the first resale within five years after competition. You must pay careful attention to this, as property in the course of construction tends to state the price 'before tax'. Please see the Taxes Section at the end of this document for an explanation of the fees and taxes to be paid on purchase.
For other purchases, the seller must pay the VAT - deducting the VAT they paid on acquisition and construction realised before the sale.
- Conditions for payment of the purchase price
You are bound to pay the price accepted in the 'Compromis de Vente', in accordance with the terms and conditions set forth in it.
In addition to this information, there are certain formalities that will be performed in order to verify the validity of the 'Compromis de Vente':
The Identity and Capacity of the Parties
As part of the registration formalities, the Notaire must verify the first and last names of the sellers and buyers, as well as their place and date of birth. To confirm this, they must obtain birth records that are less than three months old at the time of the transaction. They must also verify the legal capacity of the parties by confirming that each one is an adult and is not subject to court protection (i.e. custodianship), which in France is indicated in the civil records of the person's birth certificate.
The marital status and regime of the seller is necessary to determine whether the spouse can act alone, or whether they require the agreement of their partner. If you have joint property rights, you cannot sell property without the consent of your partner.
Verification of Title
The Notaire ensures the seller is the actual owner of the property for sale by reviewing the deed of ownership. If the property for sale is subject to joint ownership, the sale requires the consent of all the joint owners.
Cooling Off Period
Once you have signed the 'Compromis de Vente' you have a period of seven days to reflect before it becomes binding. If you wish to withdraw from the purchase you must inform the Notaire by registered letter.
What to avoid
Do not pay money directly to the seller - you may lose your money if the seller is not empowered to sell or the property is subject to a mortgage. You should also ask certain questions before beginning negotiations with the seller of the property that the Notaire will be able to help with:
- If the seller is represented by a third party, is the person representing the seller authorised to do so by special mandate?
- If the seller is a farmer, merchant or the representative of a company, is there a risk
that your partner could be subject to bankruptcy or liquidation proceedings?
- If you are dealing with an individual deep in debt, is it possible that they have been subject
to excess credit proceedings?
- Is the seller subject to some form of legal protection?
Also remember that you won't be able to enter the property until signing the final deed of sale or paying the purchase price.
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THE PROPERTY SUBJECT TO SALE
Once the 'Compromis de Vente' has been signed there follows a period of generally two to three months in which enquiries are carried out to ascertain whether there are legal obstacles to the sale.
The Notaire carries out all of the work and will be professionally bonded in order to certify the accuracy of the work. The main enquiries that will be made are:
1. Verifying the identities of all the parties and previous owners.
2. Verifying the deeds of the property.
3. Searching for any rights of third parties (rights of way, which might affect the sale or use of property).
4. A land registry check to determine whether a mortgage exists on the property and that there are sufficient funds to repay it available to the seller.
5. At additional cost it is possible to request that a specialist surveyor be appointed to verify the boundaries and size of the property.
6. A check with the local planning office, usually at the Town Hall.
The Notaire will request a 'Note d'Urbanisme' or a 'Certificat d'Urbanisme' from the office to prove that no planning restrictions exist to prevent the purchase and intended use of the property.
Surveys of the property's condition by professional surveyors or 'experts' are unusual in France. It is more common to request local artisans to give an opinion as to the condition of the building and for them to give quotations for the work before entering into the initial agreement. French buyers would be more likely to approach an architect or 'expert' but even then it is unusual for them to be asked to prepare a detailed report as has become 'de rigueur' in many other European countries.
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COMPLETING THE SALE: 'L'Acte Authentique de Vente' (Deed of Sale)
Following the signing of the 'Compromis de Vente', over the course of the next two or three months, the Notaire will prepare the 'Acte Authentique de Vente' (Deed of Sale).
The Preparation of the 'Acte Authentique de Vente' (Deed of Sale)
As soon as the 'Compromis de Vente' is signed, the final deed of sale shall be prepared. The Notaire will be able to provide you with a probable date of signing of the deed of sale, and the deadline will be stated within the 'Compromis de Vente'. In order to complete the deed, the Notaire will ask for certain documents in order to perform various verifications with the administrations:
Personal Information and Origin of Ownership
The purchaser must provide their 'Livret de Famille' (if they are French) or a passport and Birth Certificate (if foreign) and, if applicable, their Marriage Certificate. The seller will also provide these and their title documents for the necessary checks.
Clearance of Priority Rights
For any sale of property, the Notaire must confirm that the municipality where the property is located has no priority purchase rights on the property.
If you are using a loan to fund the purchase, the Notaire will contact your bank to find out the conditions of the loan. Before the sale, the bank will receive a draft deed for which the Notaire will ask its agreement. If this is given, the Notaire will receive the funds on the date planned for the signing of the 'Acte Authentique de Vente'.
Signing the 'Acte Authentique de Vente'
If all of the formalities are performed and the Notaire has all the documents necessary to establish the 'Acte Authentique de Vente', they will propose a date to sign the document. Both parties are entitled to a copy of the draft document in advance - it will set out all the details of the sale as confirmed by the searches. The Acte will also set down the various dates (completion, moving in) and the price, the Notaire's fees and taxes to be paid.
If there are no further queries then both the seller and the buyer are required to attend the Notaire's office to sign the finalised 'Acte Authentique'. Both parties must agree to attend a meeting within 15 days of notification, although it is not essential that the buyer attends in person -you can give power of attorney to someone else to act on your behalf.
Prior to the signing, the Notaire will read the 'Acte Authentique' to you and explain the meaning of its contents. You should ask if there are any clarifications you may need.
One of the most important matters on completion is that the purchase money is transferred to the Notaire's account. If payment is not received by the Notaire on the appointed day, then he will not be authorised to have the deed signed and completion will have to be postponed, and so it is vital that the funds are organised well in advance. You may transfer funds to the Notaires "Clients Funds" account by SWIFT inter bank transfer.
Once signed, the Notaire will then send the 'Acte Authentique' to the Local Land Registry for registration. It will take approximately six months before registration is completed. When it is returned the Notaire will keep the original document but a certified copy will be handed over to the buyer. In the meantime the buyer will hold an attestation from the Notaire, which will act as a certification of ownership when dealing with certain entities such as utility providers.
Once the deed is completed, the keys can be handed over and it's time to open the champagne!
What can go wrong?
One of the parties doesn't want to sign the 'Acte Authentique de Vente'
If one of the parties has changed their mind and no longer wants to sign, the other party may consult their lawyer in order to apply to the court of general jurisdiction. They may seek a judgement that the sale is effective, or damages against the recalcitrant party. In general, a buyer who refuses to sign the 'Acte Authentique' is liable to pay the seller damages of 10% of the purchase price. Obviously, this only applies where none of the clauses suspensives applies.
The death of the seller
If the property's seller dies prior to signing, the purchaser can obtain the signature from the seller's heirs. The heirs are bound by law to comply with the undertakings of the deceased, and in case of refusal action may be brought against them to enjoin them to perform the sale.
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FORMALITIES AFTER THE SALE
The Notaire's role continues after the 'Acte Authentique' has been signed:
Publication of the Sale
The Notaire will publish the 'Acte Authentique' at the mortgage registry where the property is located. This formality is accomplished within two months of the signing of the 'Acte Authentique' and makes the sale binding against third parties, such as creditors and neighboring landowners.
Notification to the Managing Agent of the 'Copropriété' (co-owned)
If the property sold is a 'Copropriété', the Notaire will notify the managing agent of the building by registered letter with return receipt within fifteen days of the transfer of ownership.
Once you have signed the 'Acte Authentique', you are liable for taxe fonciere (property taxes). Although the seller remains legally liable for such taxes for the rest of the year, a provision is usually provided in the initial agreement which apportions these taxes between the purchaser and the seller for the current year; therefore you pay for how many months you have owned the property.
Collection of these taxes will normally be done through the Notaire, although it is possible to provide a fixed sum for them at the time of sale, taking the previous year's taxes as the basis for this.
Delivery of Title
After a period of between three and eight months, the Notaire will provide the purchaser with their certificate of title.
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