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Introduction:
France's legal system is very different from the British one and so it is advisable to use an English-speaking dually qualified solicitor to get advice on the key issues such as tax, mortgages, inheritance, surveys and foreign exchange. But with France the second most popular place for Brits to buy abroad after Spain, the buying process is far from insurmountable.
The usual way to purchase property in France is on the open market via an estate agent. Alternative methods of buying include the internet and purchasing at auction.
It is mandatory to use the services of a notary (“notaire”) when buying property in France. See below for an explanation of the notary's role.
There are no legal restrictions on foreign ownership of real estate in France.
The process of buying property in France :
1. Finding the right property
The first question you need to ask yourself is what kind of property you are looking for. In particular, you should consider whether you are looking for a pure investment, a permanent residence or a holiday home. Once you have established this, you are in a position to zero in on exactly what you're searching for and can start researching areas.
Property is generally more affordable in France than in the UK. However, Paris and the Riviera are notable exceptions and prices are also rising fast in areas popular with foreign investors such as the Dordogne and Normandy. It's also important to bear in mind the kind of factors that appeal to French as well as foreign buyers as such aspects will make your property easier to sell when you come to this.
There are now lots of ways of hunting for property in France including:
- Specialist publications – Over the last few years, the number of specialist magazines and property supplements in the UK aimed at British buyers looking to purchase property in France has rocketed. These publications contain adverts from estate agents operating in France as well as adverts from lawyers who are dually qualified and can provide legal advice in English; they also contain ads from Britons and some French vendors looking to sell their property privately.
- Property websites – There are now a lot of property websites advertising property for sale, offering advice and in some cases organising the purchase process. Such websites normally contain databases of properties that you can search by criteria such as area, price and number of bedrooms.
- Property exhibitions – Property exhibitions will be advertised in property publications and on property websites. By going to an exhibition you can talk to experts in person.
- Searching the small ads in France – When you are in France, you can search through the small ads, which will be featured in the free regional newspaper.
- French specialist publications – It is also worthwhile leafing through a specialist publication such as “de particulier a particulier” which is aimed at putting vendors and purchasers in touch with each other (see www.pap.fr for details)
2. Organising legal representation
It is mandatory to use the services of a notary (“notaire”) when buying property in France . The French notaire is a highly qualified lawyer who acts as a publicly appointed official and is neutral, acting for neither the interests of the purchaser nor those of the vendor. The notaire's main role is to ensure that all taxes are paid and to register the property sale with the French land registry.
Purchasers should therefore look to instruct a second lawyer to represent their interests. In theory this could be a qualified notaire which, in theory, would not increase the purchase costs as the notary fee is supposed to be fixed and divided between the notaries. (To confuse matters further, notaires sometimes also act as estate agents in addition to their legal role…)
For foreign purchasers it is important that the lawyer you instruct should be bilingual as well as having knowledge of both French law and the legal system in your own country. It is rare for French notaries to be qualified in this manner meaning that British purchasers tend to use dually qualified British solicitors.
3. The survey
In France, mortgage lenders do not require a survey, although some ask for a property valuation from a valuer or estate agent. The French do not have the equivalent of the British chartered surveyor and structural surveys are carried out by architects or local tradesmen. In the UK, by contrast, almost all lenders insist that a professional valuation be carried out by a surveyor before a mortgage is granted. Carrying out a survey prior to committing to a purchase will also identify any defects which might have renovation or resale implications. You should seek professional advice on what level of survey would be appropriate for the property you're thinking of buying.
4. Arranging mortgage finance
All sales in France are subject to appropriate mortgage finance being in place, unless the buyer specifically states in the preliminary contract that financing will not be required. The preliminary agreement will also state the maximum interest rate acceptable to the purchaser as well as the repayment period of the loan.
If the buyer's proposed loan is refused after he/she has already signed a preliminary agreement, the purchaser must try to obtain alternative finance. If this also fails, the buyer can pull out of the preliminary sales agreement and get the deposit refunded (this is known as “la loi scrivener”).
Mortgage offers must be in writing and have to be accepted within 30 days. The purchase must then be completed within four months of the acceptance of the loan offer.
For full details on mortgage finance see the relevant section below.
5. Negotiating a sale
It is important that you and your vendor are clear about which items are included in the sale and which are to be removed. If any items are to be left behind, an inventory signed by both parties should be attached to the sales contract and the value of the items should be included in the sale.
Once both parties have agreed a price and what the sale relates to (“the object” of the sale), an oral agreement for a sale on those terms is made. Foreign buyers should be ready to negotiate over the asking price as vendors will often demand over-inflated prices for their properties on the assumption that foreign buyers will not realise they're being conned.
The oral stage of the real estate buying process is informal and not actually legally binding.
6. Signing a preliminary agreement
Once both vendor and purchaser are happy with the terms of the sale, a preliminary agreement – known as a “compromis de vente” – is prepared by the notary and signed by both parties. The preliminary agreement sets out the actions which must be completed before a final sales contract can be entered into. These conditions will include such things as the buyer obtaining suitable finance and the seller making certain that the title to the property is free and clear of encumbrances and claims by third parties. If a mortgage is being sought, the compromise de vente must contain a clause confirming this; then, if the mortgage is declined, the purchaser will not lose her deposit.
On signing, the buyer pays a deposit usually of 10 per cent of the overall purchase price, with the balance due on completion. It is advisable that this money be paid to either a qualified solicitor or a designated notaire who will hold the money in escrow until all of the requirements of the compromis de vente have been met.
7. Seven day cooling-off period
By law, there is then a seven-day cooling-off period, during which the buyer may withdraw from the purchase if he or she chooses.
8. Legal searches
There follows a period of generally 10-12 weeks during which searches on the property are carried out, including land registry searches, local authority searches and planning permission searches.
9. Completion
At the end of this period, the purchaser pays the balance of the purchase price to the vendor. The purchaser must also provide the notaire with a copy of his/her birth certificate translated into French and, if applicable, a copy of a Marriage Certificate also in French before completion. The final contract (“acte de vente”) is signed in front of the notaire by both the purchaser and the vendor and then ownership of the property passes to the purchaser.
10. Fees and taxes
The notaire is responsible for collecting the various fees and taxes due on completion and paying them to the tax authorities. The notaire will collect his/her fees, the taxes due and the balance of the purchase price as one single all-encompassing payment. The estate agency will also collect their fee at this point. For a full breakdown of the various costs for which the purchaser is liable see below.
11. Land registration
After the balance has been transferred to the vendor and all fees and taxes have been paid, the deed of sale is registered at the Land Registry by the notaire.
Special situations and exceptions:
The laws governing the purchase of a property will depend to some extent on the type of property you buy. For example, a vineyard or farm will be subject to different procedures and costs than a normal residential property.
If a house has more than 1 hectare of land, the "Société d'Amenagément Foncier et d'Establissement Rural" (SAFER) has an automatic right of pre-emption in the case of land which it feels should continue to be used for agricultural purposes. Such interventions rarely occur in practice, but the notaire is obliged to inform SAFER to give it the chance to object to the sale. If SAFER does object, then any sales agreement will be declared null and void and purchasers can recover the deposit they paid on signing the preliminary contract.
A vendor can annul a sales contract at any time up to two years after completion if they discover that the price at which your property was sold was less than seven-twelfths of the market value at the time of sale. To find out if you have made a poor bargain, you can inspect the public records of the "conservation des hypothèques". In the absence of extrinsic evidence, the French court will require three valuations. If it is determined that the property was sold at too low a price, the buyer then must either pay the balance of the “fair” price or return the property to the seller and receiving the original price paid in exchange.
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