Information.

Purchasing Procedure

- Property viewings through Estate Agent
- Promise of Sale
- Right-of-Withdrawal Period
- Deposit
- Mortgage
- Solicitor
- Final Sales Agreement

Estate Agent (L’ Agence Immobilière)

The Estat e Agent guides and advises the purchaser and seller throughout the property transaction. The agency closely follows the progress of the transaction from the first viewing to the Final Sales Agreement and liaises with the solicitor to ensure a smooth procedure.

At no cost, the agency evalues chalets, apartments, farms, land and commercial property. They will also try to negotiate the ultimate selling price for the owner and buying price for the purchaser, depending on the conditions of the sale i.e. the urgency of the sale/purchase. The estate agency fees are generally paid by the seller and are included in the selling price at approx. 6% of the property price.

Promise of Sale

Once the real estate has been found and the price has been agreed between the two parties, the next stage involves signing a deed called the Promise of Sale. Although the Promise of Sale is a provisional sales agreement, this contract finalises the commitments of both parties and cannot be modified. All future obligations rely on the Promise of Sale.

We strongly advise our clients to include a clause with a suspensive condition stipulating that the acquisition is dependent on whether the purchaser is able to secure a mortgage. If the purchaser initially decides he does not need a loan but later changes his mind, he is still able to secure a mortgage through a bank, however it will not be possible to add the above mentioned suspensive clause.

Right-to-Withdrawal Period

Once the Promise of Sale has been signed by the seller, the purchaser has the right to withdraw from the Promise of Sale within a period of eight days from the signature of the current owner. If the contract is sent abroad, the eight days starts on the date the Promise of Sale is received by the purchaser by recorded delivery.

Deposit

The purchaser is required to place a deposit of 10% of the property price by cheque or a money transfer (SWIFT). French law stipulates that all real estate purchases must be paid in French currency. If the buyer cannot purchase or does not wish to purchase anymore, he looses the 10% deposit which is then given to the seller. Please note that should the buyer withdraw from the acquisition during the Right-to-Withdrawal Period, the deposit is refunded. In general, the deposit is placed with the solicitor, however certain Estate Agents, i.e. Arve Immobilier, are also certified to guarantee a deposit.

Mortgage

Should an investor require a loan to pay for a French real estate acquisition, he/she has generally one month to secure a mortgage. However, the quicker the loan is secured, the quicker the purchase is completed. Once the bank certifies that the mortgage has been granted, the clause in the Promise of Sale is lifted. A mortgage may be granted either by a French or foreign bank. However, it is easier to obtain a loan from a French bank. All French banks require a 30% cash contribution to agree to a mortgage.

The Solicitor (Le Notaire)

The French state confers the power to legalise Real Estate documents to a Public Official called the ‘Notaire’. Once the Promise of Sale is signed by all parties, the solicitor must collect various documents from the buyer, (birth and marriage certificates, occupational status, Proof of Identification) and from the seller (Asbestos Diagnosis and for apartments only; Certificate of square meter according to the law Carrez 18-12-96). The solicitor also requests other documents from diverse institutions (current creditors of the estate, town-planning regulations and the property title...).

Generally two months are necessary to collect and examine all the necessary documentation.

Final Sales Agreement (Acte Authentique)

After the Notaire has collected all the documents, the Final Sales Agreement is signed. The purchaser is not obliged to sign the agreement in person, he has the opportunity to give the power of attorney to someone else. At this point the buyer also pays the remaining 90% of the property price. A Bank cheque (not a personal cheque) is given to the Notaire, who then pays any creditor before refunding the balance to the seller. On this final day of purchase, the purchaser becomes the official owner of the property.

Joint Ownership Notion

The majority of apartments in France are in joint-ownership ; La Copropriété.
A joint owner benefits exclusively from his apartment, which is a private share. However, the main walls, the floor and the ceiling are the property of all the owners, jointly. The owners pay a charge every 3 months for maintenance, joint electricity and cleaning, generally cold water is also included and in some cases heating and hot water.

To manage the building there is a syndic. However, all decisions regarding the commonly owned property must be taken by the owners during an annual or bi-annual meeting. As the cost of a major project is shared between all the owners, we strongly advise all prospective buyers to carefully examine the minutes from the last joint-owners meeting. Please note that all the decisions voted for before the final sales agreement are charged to the seller.

Tax Implications

A prospective purchaser should consider the tax implications of their property investment. At the point of purchase a fee is collected by the Notaire and equals between 2.5-3% of the property price for a new construction and between 6-8% for other buildings. A sliding scale of charges is applied; i.e. the higher the property price, the lower the percentage. The charges include the solicitors professional fees and the registration taxes. The charges are added to the advertised property price. The Estate Agent can estimate the approximate charges that will be applicable to your purchase.

As an Owner: Being a real estate owner in France requires the annual payment of several taxes. The Real Estate Tax has to be paid by all owners and is calculated according to the total surface of ownership. The Residential Tax is to be paid by the inhabitants of the building and differs from one area to another. The Professional Tax is paid only by companies.

Sale: Any capital gain carried out within a Real Estate sale is subject to tax. A non-resident is subject to taxation at a rate of 33,33%. This percentage is applied to the capital gain once certain deductions have been made i.e. monetary devaluation, value of the work undertaken on the property, furniture to be sold…

The information contained on this page is noncontractual and any and all information is given only as an indication.