Tuesday 17 February 2015

A Quick Look at the French Property Buying System...

What's in store if you find a house you want to buy...
There are a number of ways you can house hunt in France...

•  Visiting Notaire's offices in whatever region, town or city you are drawn towards.

•  Visiting Immobiliers whose websites you may have found....

•  Driving through areas of the country that have an appeal and calling into
   Immobillieres or Notaire's offices on spec.

•  Surfing the internet and browsing property portals and websites. It is so very convenient... 
But it's good to know who you may be dealing with and a little (if not more) of how the system works.

You've happened upon this article because you're looking for a house using the latter method. That's great. Naturally we think we offer a comprehensive and well informed way of viewing... allowing you to scan through a thousand or so properties across Normandy and Brittany from the comfort of your computer, laptop, tablet or smart-phone. We work with around 20 agents across both regions and have done so since 2002... after we found out for ourselves in 1999 how ad hoc and 'full of holes' the system at the time was. All the agents we work with are fully registered and operating legally under French law (it's good to check this kind of thing). Our agents are English speaking and all can help you through what may seem initially a complicated system. It isn't. It's just what the French have been up to for the last five hundred years and it works very well. We place a contracted agent's properties on our sites as well as it appearing on those of the agents with whom we work...and, when clients make contact with us we make appointments for them to view in the most sensible order without crowding too many into a tight schedule. Let's have a look at a typical client situation... Let's assume you have travelled to view and fallen hook line and sinker for a house that looked worthy of viewing when you saw it on a website and can now be sure that it's what you want... because it isn't surrounded by intensive chicken farming sheds or on the edge of an industrial estate...

ALL PROPERTY TRANSFER IN FRANCE IS HANDLED BY A NOTAIRE. The Notaire is an employee of the state and it is he/she who must oversee the transfer of property between Vendor and Purchaser. It's similar, but not identical, to what goes on in the UK - except you don't have to panic yourself witless about how slowly things appear to be happening because in France - it happens when it happens! But there may seem to be a 'mañana' element about things. In the UK you may get on to your solicitor to see if you can hasten the process. In France you should and will, quite naturally, direct enquiries through the agent/Immobiliere. In France the Notaire acts for both parties. That's always a surprise for buyers from the UK. Our own experience was very straightforward - without any reason to be concerned about this or anything else. We have seen problems occur when purchasers have involved their own solicitor back in the UK or having insisted that a second Notaire acts for them whilst the Vendor too has their own Notaire. The phrase "when in Rome... rings true for a smooth transfer." Merely make sure that the agent is fully aware of all your needs and wishes (in writing if you wish) and then listen out for these wishes to be brought up at the main points of signing the documentation. The Notaire also deals with all of the searches. Incidentally - in the event of two Notaire's working on a property transfer then they split/share the charges and so the cost is no greater than just one Notaire being involved

THE OFFER to BUY So... you have seen something that looks just right for you and you have expressed your interest to proceed to the person who has shown you the house. Maybe you've even made an offer of a price lower than the one advertised. Be careful here because it is only an offer of the full asking price that secures the house irrevocably as yours... In France, strictly speaking, if you make an offer to buy in the presence of the vendor and they accept - then that constitutes a contract... So be a little reserved and show your enthusiasm to the agent when you are back in the car or at their office. In some instances the buyer may be asked to sign a pre-printed form known as an offre d'achat (offer to buy)... This establishes your interest... and signals the need to proceed to...

THE COMPROMIS de VENTE Legal documentation is drawn up by the Notaire...And the first document in the buying process is The Compromis de Vente. You will no doubt have heard this term before. This is the document which must carry the Vendor's agreement to sell at the stated price, what is included buildings and land etc., and any exclusions... special stipulations regarding the compromis being signed subject to funds being forthcoming from a lender (the law always assumes that a mortgage will be being sought). It's an agreement also on behalf of the Purchaser to pay the price as stated... So, it's a contract between both parties to proceed at the figures agreed. There is a 7 day Cooling off Period.(for the Vendor the Compromis is binding and there is no going back). But the signing of the Compromis is the time when the deposit (usually 10% of the purchase price) will be required - and if the cooling period elapses and there has been no formal withdrawal in writing then that deposit will be forfeited. The Compromis can be sent to the purchaser (back to their current home address) for signature and returned for the process to continue to the Acte Finale...

STRUCTURAL SURVEYS For many years there did not appear to be a parallel profession in France to that of the UK's Structural Surveyor within the buying process... The rule seemed to be... "you like the house... you go ahead"... but things have changed... the buying process has now legally to include a survey which will establish the state of the property in terms of the presence of termites, the presence of asbestos, and the energy efficiency of the building if it has a system of heating. Electrical wiring is also a concern - any new installations must be passed by EDF... The Septic Tank (fosse septique) must also have passed a survey and it must be what is known as 'all water'. Here's an instance of the reluctance of French property owners to observe the deadlines for conforming to new regulations... Let's just say that the winning post keeps on being moved further away from the 'start'. An all-water fosse is what you want and it is the seller's responsibility to see that it has been done. We can supply contact information regarding Surveyors (usually ex-pats themselves) who have set up in business on the French side.... where more and more buyers are arriving from Great Britain too - so it's a system that works for all parties. Some feel more comfortable doing it this way. Also there are many builders (and ancient buildings are a lot easier to 'survey') who are prepared to offer their advice and guidance and follow on building services. We know a few of these too.

THE ACTE FINALE Between the signing of the Compromis and the more formal Acte Finale (on average this can take between 8 and 14 weeks)... our own signing was 4 months after the Compromis because 7 brothers and sisters, who by then were in all corners of not just France but, the world, had to agree the principle as well as the figures and sign and return the documentation. By and large the searches in France take a similar time as they would in the UK.

NOTAIRE'S FEES These are regulated by the French Government and vary according to the price of the property (a sliding scale which reduces in percentage as the value increases). Also - even though the fees are referred to as Notaire's Fees, in fact the fees that the Notaire finally receives are around 1%. The remainder covers stamp duty, registration taxes and disbursements.
  • Older Property - The total fees and taxes payable for the purchase of an existing property are between 7% and 10% of the purchase price, excluding estate agency fees, although for very low priced transactions it may be higher.
  • New Property - You will pay around 2% in fees and registration taxes, plus VAT at the rate of 20.0% (remember that's on New Property not old) on the purchase price (except for sales between private individuals), excluding estate agency fees.
Are you still with me?...It's worth saying here, because the process sounds complex (as does any when you begin to study the legislation in detail) that you should not feel nervous, confused or vulnerable.

In fact as I have understood it over the years it is the French government's taxation differential between new property against old (it's the age which has the greater appeal to Brits)...newer property is more attractive from a final price point of view and that has resulted in so much 'ancient' housing stock (shunned by many French)... the older, dearer by comparison, still very attractive from our side of the channel...being very attractive... in other words - their loss is our gain. See also the section below... headed Making a French Will.

The Acte Finale itself has, in the past, always been a meeting held at the Notaire's office where the document is read through in full and, at the end of each section/sub section all parties must initial to indicate that they have seen and understood the clause concerned and then, on the final page, to sign and date their approval of the whole document... (a lot like a police statement... But I swear I can't remember how I know that...officer!) After that there will be a trip to the nearest bar to seal the deal with a drink. Actually that last bit isn't strictly adhered to anymore. Traditionally both parties - buyer and seller, would both be present... In our case and that of many - especially in the case of an executor's sale - the vendor might nominate a proxy to sign - sometimes an employee of the Notaire may sign on behalf of the vendor and often, in some cases the agent or another proxy, may sign on behalf of the purchaser...All of these eventualities, of course have to be covered by letters of authority to cover the deputisation element of things.

INHERITANCE: Making a French Will. This is a good idea for the simple reason that your property in France (if you live there) will be part of your world wide assets. If you live elsewhere but own property in France then French Inheritance law affects the house you have there

1. If you are a resident in France these rules will apply to all of your worldwide assets, except for property held abroad - somewhere else other than France; if you are not a French resident, then it will apply to all real estate you own in France

2. The inheritance laws discussed below are those that apply in an intestate inheritance or, in the absence of prior inheritance planning measures being taken

3. Only that element of the estate belonging to the deceased is subject to inheritance laws. In the case of a married couple, it will normally be 50% of their shared/joint wealth.

If you were  to die leaving your  spouse as survivor and two children, the spouse will receive 1/4 of your estate and the children 2/3 of your estate, with the remaining 1/12th freely disposable, e.g. to your surviving spouse.

These rules apply in the absence of any inheritance planning steps having been taken, such as a French marriage contract, purchase en tontine, a will or gifts etc.
If you were to die leaving no spouse but two children, the children will automatically be entitled to two thirds of your estate, and you are free to dispose as you wish of 1/3 of your estate.

Accordingly, it is possible to increase the rights of the surviving spouse, but this requires that some prior inheritance planning steps are taken to bring it about..

The watchword probably should be... best advice is a French will to act as an adjunct to any arrangements may be necessary. 

NB:- My notes above on these matters are by no means comprehensive... they are a quick guide to the salient points. There are nuances which may have to be addressed in specific cases which differ from the norm and any specific elements or peculiarities should be addressed to the agent with whom you view the property and/or with whom you sign the initial offer.

Our Service is Free of Charge to the purchaser (and vendor as it happens)... Our service of introduction to the agent responsible, on whose books the properties you have seen on our websites - which you may have elected to view are covered by a commission only payable after the signing of the Acte Finale.

Chris Slade - A House in Brittany Limited (February 2015)

No comments:

Post a Comment

Watch out... There's a Banker About!!

Buy a House in Brittany or Normandy - Definitely! But... Don’t do a Dave! Buying Abroad?  Got a minute? Read this... It could sa...