Property Sales Process | Selling Costs

Introduction:

The legal process of selling a property is the same as that for buying. However, vendors should bear in mind certain things. Firstly, there is the question of when to sell to ensure that demand is strong to ensure you get the best price; secondly, there is the challenge of marketing your property; thirdly, you must negotiate well to ensure you get the best price and protect your interests; fourthly, there are certain specific legal obligations which sellers must fulfil; and lastly, there are selling costs for which vendors are liable.

Selling property in France generally takes longer than in the UK.

Legal requirements:

Sellers have three main obligations under French law:

First, a duty of care to deliver what has been agreed to be sold
Secondly, to ensure that the buyer enjoys quiet possession free from any claims by third parties
Thirdly, a liability in respect of undisclosed defects: The seller must inform the buyer of any hidden defects of which he/she is aware. Vendors must also inform about easements and any charges affecting the property and must produce evidence of a thirty-year title.

If you have a mortgage on your property, this must be redeemed on completion of your sale.

"Taxe d'habitation" is payable by the person in occupation on 1 January for the whole of the forthcoming year; "taxe foncière" can be apportioned with your buyer and most sale contracts will expressly require this. (For a full explanation of taxe d'habitation and taxe fonciere refer to property ownership costs section.)

The process of selling property in France

1. Market research

Before you do anything, check out the market. Unless you're forced to sell, steer clear of slumps when prices are depressed and perhaps consider letting out long-term until the market recovers as an alternative.

2. Preparing your house for sale

It is worth doing some research by consulting with local agents to get advice on how to prepare your home to increase its attractiveness to prospective buyers.

3. Finding a buyer

The normal means of marketing a property for sale in France is via an estate agent (“agent immobilier”) who can also value your property. If you used an agent to buy your French home, it could make sense to use the same one to sell it, as they will already know the property.

An agreement with an estate agent – "mandat" – must be in writing, for a fixed duration and specify the commission. There are two different types of estate agent agreement. The “mandat simple” gives you the option of instructing several estate agents and normally also allows you to sell the property yourself without an agent. Alternatively, you can enter into a "mandat exclusive" with a sole agency under which all or part of the commission will be payable to the agency, even if you were to locate a purchaser yourself. Mandats are usually for a three-month period but can be extended; you can usually terminate the contract once the three months are up by giving notice by registered post.

Estate agents' commission is generally between 5 and 10 per cent, plus VAT. It is usually payable by the vendor but in some circumstances the purchaser will agree to pay.

You can sell quite easily privately without using an agent via numerous websites (for example, www.pap.fr (“particular a particular”)) and printed journals. The key advantage here is avoiding the high estate agents' fees. It's also possible to sell your property at auction.

4. Organising legal representation

It is mandatory to use the services of a notary (“notaire”) when selling 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.

Vendors 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 selling costs as the 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 vendors it is important that the lawyer you instruct to represent your interests 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 respect meaning that British vendors tend to use dually qualified British solicitors.

5. Negotiation of sale

It is important that you and your buyer 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. 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 that mortgage finance is being sought; in this instance, if the mortgage is declined, the purchaser will not lose his deposit.

On signing, the buyer pays a deposit usually of 10 per cent of the overall purchase price, with the balance due on completion.

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 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. Money transferred from buyer to vendor

The notaire is responsible for collecting the various fees and taxes due after completion and paying them to the tax authorities. The estate agency will also collect their fee at this point. For a full breakdown of the various costs for which the vendor 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 matrimonial law which applies to owner will have an effect on their ability to sell the property freely. In the absence of a prenuptial contract, property acquired by married couples will be subject to the French matrimonial regime. One spouse will then need the approval of the other to sell the matrimonial domicile.

The “Pacte Civil de Solidarite” (or PACS) is a contractual arrangement for couples who wish to live together, having some of the benefits of marriage with respect to taxes and laws on inheritance. It can also be entered into by same sex couples. Where property is purchased by PACS couples, it will be presumed to be owned 50-50, unless the deed stipulates differently.

If your property is co-owned (“en copropriété”), your buyer will require your "règlement de copropriété" . If you do not have a certified copy of this, the managing agent (“syndic”) of the copropriété and/or your notaire should be able to supply you with a copy. Before completion the notaire must by law confirm with the managing agent in writing that you are up to date with your service charge payments. You must also specify the exact surface area of your property as soon as a sale contract is signed.

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 receive the original price paid in exchange.

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.