Useful Information

Useful Information

PURCHASE PROCEDURE

The normal procedure when purchasing a property in France is to sign a preliminary contract, which is usually drawn up by the agent, and pay a deposit of 10% of the purchase price which is held either by the notary or some times by the agent in an escrow account. Completion normally takes place 2 to 3 months afterwards, at which time the purchaser pays the balance of the price + the conveyancing costs ('frais de notaire') which come to around 6.7% in the case of a resale, and around 2.5% if it is the first sale and the property is less than 5 years old.

NOTARIES

In France the notary's job is to register the sale of a property, and ensure that all the legal requirements are met with. The purchaser has the right to choose his notary (most agents can recommend a reputable one), and if the vendor also wishes to appoint a notary he may do so. This in no way affects the amount of the conveyancing costs, which at the moment come to a total of about 6.7% of the purchase price + the costs of the paperwork if a loan is involved. These costs are borne by the purchaser.

AGENTS

Estate agents in France can only operate with a licence, or 'carte professionnelle', and should also be members of a recognised association (syndic.) such as the FNAIM or UNIS. You are advised to check that any agent you are using DOES conform to these requirements and is therefore covered by professional insurance.

SRU LAW

The law, which came into effect in June 2001, provides the purchaser with a 7 day 'cooling off' period, during which time he can change his mind about buying the property with no questions asked. The only requirement is that he notifies his change of mind by registered letter before the expiration of the 7 day period. This law used to apply only to new properties, but now applies to ALL purchases by a private buyer. If the purchaser is a real estate professional, eg a 'marchand de biens', he does not benefit from this withdrawal period.

VIAGER

A 'VIAGER' is a property investment whereby a property is exchanged for a life annuity. The property purchase consists of two parts; a 'bouquet', which is a one-off down-payment and a 'rente' which is paid from the date of purchase until the seller dies. The actual price of the property is therefore unknown until the seller dies. Typically, the seller stays in the property – and this is known a 'viager occupé'. However, a 'viager libre' transaction allows the buyer to take immediate possession of the property. The 'rente' is a function of the property value and the age of the seller. The 'bouquet' is agreed by negotiation. The 'rente' element is arrived at by actuarial calculations, not by the health of the individual 'viager'. This is an investment with an unknown duration, although re-sale of the property is possible.

SURVEYS

Surprisingly, most French people are not used to having surveys carried out. New buildings nearly always carry a 10 year warranty on construction, but if you are buying your dream stone farmhouse (if you are lucky enough to find one!) there is nothing to stop you having a survey done, preferably within the 7 days' 'cooling off' period.

UTILITIES

Utilities should be transferred into the purchaser's name on the day of completion. Most agents will perform this service. If you are not a French resident the easiest solution is probably to arrange for a direct debit to your bank account, with the bills sent to your home address so that you can keep track. It is therefore advisable to open a French bank account before completion so that you are already in possession of all the forms.

CAPITAL GAINS TAX

Non-residents of France and French owners of secondary homes are liable for capital gains tax when they sell; after various deductions, this amounts to 19% of the profit for EUROPEAN residents, and 33% for residents of non EEC countries. French owners of secondary homes are liable for 31.3%.

INHERITANCE

It is important to know that French inheritance law is very different from that in England... the children cannot be disinherited. You should be aware that FRENCH law applies to any property you own in France, even if you are not a French resident. It is possible to leave your share of the property to the surviving spouse, but this will require a specific document to be drawn up, preferably at the time of purchase. Your notary or lawyer can best advise you how to do this.