Purchasing property abroad can be a daunting undertaking for even the most informed buyers. Although many people will have had some sort of idea of the steps involved in conveyancing, most likely after having been involved first hand in property transactions at home, buying property abroad remains a unique experience for most people.
From the beginning to the end of the purchasing process, you need to stay informed. To help you along the way Alpine Property will outline the conveyancing process and the financial implications of buying as well as pointing you in the direction of legal and financial professionals if and when this proves necessary.
This guide covers all elements of the sales process, as well as some more general advice concerning buying property in France.
The Notaire is the person who ensures you perform the sale or purchase without risk. He 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. He will 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 his 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 the seller’s choice. Alpine Property knows all the Notaires in its region, and as such, we recommend getting in touch with us for advice at this stage.
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'.
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 his ability to obtain a loan. A 'cooling off' period of seven days is built onto the process at this stage (see below).
There is certain mandatory information that should be included in the agreement, which the Notaire will prepare. Careful attention should be paid to the information before signing and any aspects that are unclear should be raised with the Notaire.
The 'compromis de vente' (pre-sale agreement) must provide the following information:
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 buyer and seller must agree on the price.
Registration Tax or VAT
Various costs must be added to the purchase price. VAT generally applies to the sale of 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.
For other purchases, the seller must pay the VAT - deducting the VAT paid on acquisition and on construction realised before the sale.
For all tax issues consult the Notaire or an accountant before taking any decisions.
Conditions for payment of the purchase price
The buyer is bound to pay the price accepted in the 'compromis de vente', in accordance with its terms and conditions.
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 places and dates of birth. To confirm this, he must obtain birth records that are less than three months old at the time of the transaction. The Notaire 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 he/she requires the agreement of his or her partner. A seller with joint property rights, cannot sell the property without the consent of their 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 within the 7 day period.
What to avoid
Monies should never be paid directly to the seller – it may be lost if the seller is not empowered to sell or the property is subject to a mortgage. A buyer should also ask certain questions before beginning negotiations with the seller of the property that the Notaire will be able to help with:
Also remember that you won't be able to enter the property until the final deed of sale is signed or the purchase price paid.
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:
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.
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 is prepared. The Notaire will be able to provide the parties with a probable date for signing 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 verify certain information.p>
Personal Information and Origin of Ownership
The buyer must provide a '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 be asked to approve the draft deed of sale. If the bank approves the terms of the sale, 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', he will propose a date for signing 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 Notaire’s searches. The acte will also set down the various dates (completion, moving in) 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 a power of attorney to someone else to act on your behalf.
Prior to signing, the Notaire will read the 'acte authentique' to the parties and explain the meaning of its contents. There is an opportunity to ask questions if any clarification is needed.
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, so it is vital that the funds are organised well in advance. You may transfer funds to the Notaires "Clients Funds" account by SWIFT interbank 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 certificate 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 his mind and no longer wants to sign, the other party may consult his lawyer in order to apply to the court of general jurisdiction. He may seek a judgment 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 buyer can obtain the signature from the seller's heirs. The heirs are bound by law to comply with the seller’s undertakings, and in case of refusal action may be brought against them to force them to complete 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 neighbouring landowners.
Notification to the Managing Agent of the 'Copropriété' (co-owned property only)
If the property sold is within a 'copropriété', the Notaire will notify the managing agent of the building of the sale by registered letter with recorded delivery within fifteen days of the transfer of ownership.
Once you have signed the 'acte authentique', you are liable for ‘taxe foncière’ (property taxes). Although the seller remains legally liable for such taxes for the rest of the year, a provision is usually made in the initial agreement which apportions these taxes between the buyer and the seller for the current year; therefore the buyer will pay for the number of months he has 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 buyer with his certificate of title.
Purchasing Property 'Off-Plan'
Where property is purchased from a developer, a particular form of purchase agreement is used to reflect the particular circumstances of this kind of sale. This agreement is called either a reservation agreement (contrat de reservation), where a developer is selling a number of properties on the same site (a lotissement) or a contrat d'achevement de travaux where a single property is involved. This contract incorporates the same elements as the compromis de vente but in addition allows the purchase to be completed in stages.Each staged payment corresponds to a verifiable stage in the construction process. It is usual for these stages to be:
Purchasing Property in ‘Copropriété’ (Joint Ownership)
If you are buying a property in ‘copropriété (generally apartments), it is wise to review the bylaws and shared expenses; in particular, the joint owners' rights and obligations regarding buildings, walls and maintenance of common areas.
Dimensions of the Property being Sold
The Loi Carrez law requires the surface area of properties in joint ownership to be precisely stated. If the dimensions of the property are not indicated, the sale may be rescinded at the buyer's request within one month from signing the deed of sale. The buyer can rely on the statement of the surface area in the deed of sale - if the actual surface area is inferior to the surface area stated in the deed by more than 5%, the purchaser may claim a proportional reduction of the purchase price.
The Copropriété Bylaws
When buying a property in ‘copropriété’, it is important to read the ‘copropriété’ bylaws. The document will describe, among other things, which areas of the building are common spaces and which are privately owned, as well as their conditions of use.
The buyer will acquire a proportion of the joint property and all associated costs, such as general maintenance and gardening. He will be also be able to determine the acknowledged purpose of the building - whether it is entirely lodgings, or whether professional activity can be based there etc.
Building Obligations in Joint Ownership
The Notaire will request a certificate from the ‘copropriété’ syndicate as provided under Article 5 of the Decree of March 17th, 1967. This document outlines all useful information on the sale and the apportionment of expenses between the seller and the purchaser. This information may detail any debts owed by the seller in respect of the 'coproprété’ as well as any prior decisions of the syndicate regarding building work that hasn't been completed or paid for.
The Notaire will ensure that there are no outstanding debts before passing on the financial information to the buyer. The purchase agreement will state the date on which decisions of the ‘copropriété’ syndicate will financially bind the buyer.
The Maintenance File (Carnet d'Entretien)
To ensure that the building is in a satisfactory state of repair, the buyer may review the maintenance file (carnet d'entretien) that is held and kept up to date by the syndicate. The Notaire may also show the buyer the technical diagnostic if it is the first sale of a lot following a division, or a transfer occurring within three years from the date of the diagnostic.
Legal, financial and tax explanations on this website are provided for illustrative purposes only. Whether acting as a buyer or a seller, you should always obtain detailed legal or financial advice from a Notaire or accountant before going ahead with any purchase or sale.