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| Info on the Buying Process |
| After you have found your property and agreed on the price, you can expect the following buying process. |
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What you find within this section
The Buying Process in general
Once you have found the house and have agreed a price the process is quite simple. A compromis de vente is drawn up, by the estate agent where the agreements of the purchase are laid out. Purpose is to clarify the agreement between the two parties before the Acte de Vente. The acte de vente is when the Notary actually writes out the sales deed, and the vendor is paid. The whole process takes usually two months, usually less if there is no loan involved. French laws allows Purchasors a 7 day cooling of period. This period starts when the compromis is complete and is delivered by registered post to each of the purchasors home adress. By the end of the cooling of period you are expected to have paid the deposit. Usually a bank money transfer to the Notary preparing the sales deed. The notary then starts his searches in preparation of the sales deed usually some 8 weeks later. Before the signature of the acte de vente, you should have the following : Inspected the property to insure all is there as when you last saw, read mains electricity, water and mains gaz meters, and check that furniture you agreed to take over is there ! Insured the property, especially needed if you have a morgage. The Notary will demand this proof of insurace. Transfered in time the remaining funds. Arranged procuration for any of your buying party not there. Many of the above can be taken care of by our negotiators, contact them for advice. Please note that some of the regulations, taxes or law may vary from time to time and we aim to keep the information up to date. Also we always recommend you to seek specialist advices in French law or taxes or regulations, as their application may vary with your specific situation.
Information on the Radio about Buying Property in France
Benjamin Haas, the owner of Burgundy 4U, gives you ten minutes of tips of buying property in France on Box424.com, radio on the internet information and entertainment for expats worldwide.
  Click here to listen to Benjamin and Peter Richard choosing PLAY AUDIO.
Glossary of Buying Terms
A
ACOMPTE ( DEPOSIT )
When the compromis de vente is signed, the buyer is expected to pay a deposit ( usualy 10%). This deposit will be deducted from the purchase price when the final deed is signed. If however the purchaser wanted for personal reasons not to proceed with the purchase then the deposit will be paid to the vendor (except if the cancellation is due to uncontrolled events – see Clauses Suspensives). At Burgundy4u we ask you to pay the deposit into the escrouw account of the Notary. We will give you their bank details for a bank transfer. You should allow 3-4 days for this money to appear in the bank account of the Notary. This deposit is not expected before the end of the 7 days cooling off period, but is god to prepare in advance the transfer, or the purchase of currency.
ACTE AUTHENTIQUE OR ACTE DE VENTE (“FINAL CONTRACT”)
The Final Contract is an official document, called the deed of sale. It incorporates the terms of contract and on its signature at the Notaire’s office, the property passes to the buyer. At the time of signing this deed, all moneys must be with the Notaire. You will get an ATTESTATION, a certificate of purchase, whilst you are waiting for the acte authentique to be registered with the cadastre. The original is kept with the Notary, and a copy of the acte de vente is send to you with the remaining funds which where reserved to ‘publish’ the deeds. This should not take longer than 3 months. Some departments are known to take longer, but backlogs are getting worked away.
AGENT IMMOBILIER (“ESTATE AGENT”)
The estate agent is a professional representing the vendor, the buyer or the tenant, during the purchase or the letting procedure of apartments, buildings, houses, parcel of lands… The estate agent is not the owner of the properties he or she is offering to sell or rent. The agent can only represent a sale if there is a mandat de vente or recherche ( a contract by which he is empowered to conclude a deal)
ASBESTOS SURVEYS (“ETAT D'AMIANTE”)
Vendors of houses and flats are required to append to their preliminary sales agreement a certificate stating the presence or absence of asbestos.
They must have a survey carried out by an authorised asbestos surveyor and, where necessary, provide proof that any measures stipulated in the surveyor's report have been completed.
B
BOUCLIER FISCAL (“TAX-SHIELD”)
From the 1 January 2007 the maximum tax that an individual will be required to pass is 60% of their income. Tax for the purposes of this rule consists of income tax, wealth tax, taxe foncière and taxe d’habitation.
C
CLAUSES SUSPENSIVES (“GET OUT” CLAUSES)
The Clauses Suspensives are there to protect the parties and are drafted as part of the Compromis de Vente. They permit the buyer to withdraw from the purchase under certain circumstances, such as not being able to obtain finance, having a request for outline planning permission refused. These clauses are an important element of the contract because until they become unconditional (within a stipulated time limit) the contract is unenforceable.
CONTRAT DE RESERVATION
The Contrat de Reservation applies on New Development. It is a preliminary private deed whereby the developer ("reserving party") agrees to reserve for the buyer ("reserver") an agreed area in a building he plans to build. The buyer pays a 5% deposit and indicates his financing plan.
COMPROMIS DE VENTE (“FIRST OR INITIAL CONTRACT”)
The initial contract results from the negotiation between the vendor and the buyer of a property. Either the Notaire or the Estate Agent can prepare it; it is then respectively called a Compromis de Vente or a Sous-Seing Prive. The Initial Contract, signed by both parties, is a legally binding agreement on both parties.
At Burgundy4u we believe in taking time in the preparation of it. As here all details of the agreed deal are laid out, and the brief for the Notary is laid out :
Agreed sales price, expected extra costs for stamp duty and Notary.
What is and is not included, eg furniture, rights of way
Technical information on the house, Lead in paint test, Asbestos, Energy efficiency of the house, and any other legal test requirements that we need to provide the purchaser before he commits.
Suspensive buying conditions, (ie the purchase only goes ahead if..). Examples are :
Obtaining a mortgage
Obtaining a positive building permission
D
DROIT DE RETRACTION (“7-DAY COOLING OFF PERIOD”) (LOI SRU)
Under this legislation, purchasers have a 7-day withdrawal or "cooling off" period (Droit de Rétraction or Droit de Réflexion). The payment of an earnest money deposit in the case of a unilateral purchasing agreement is prohibited under pain of the agreement being declared null and void.
DROITS DE SUCCESSION (“INHERITANCE TAX”)
The information about the Inheritance, relating to what is happening to the property if the owner dies, is in the final deed and is not always determined by the content of a will. The form of the purchase contract of the property will determine what happens to the property following the death of the owner. French law for inheritance is substantially different to the English one, you should seek advice from a specialised lawyer who understand the French law and implication for you.
DIAGNOSTIC DE PERFORMANCE ENERGETIC ( energy efficiency report)
The vendor is obliged to present a report detailing the energy consumption of a house, and its carbon emissions. In the same way as a Fridge in the shop has a letter from A to G, houses need to be given such a label. The following information is provided in this document :
a) kilowatts used per squared meter, with its corresponding letter from A to G. A being a consumption of less 51 kWh/m2 per year, and G more than 451 Kwh/m2 per year.
b) Total amount of euros needed to heat the house, cool the house and heat the water per year. (these figures should be seen as an indication )
c) Estimation of green house gas emitted (kg eqCO2/m2 per year)
d) Suggestions to improve the systems in the house.
e) Indication of investment costs and economies to be expected of these investments.
E
État des risques naturels et technologiques (Natural and technological risks)
This is another of the obligatory information that need to be given to the purchasor. The national and local government have defined risk areas related to for example flooding, land movement because of mining, technologcal risks like nuclear power stations etc. If the area is not concerned, the owner needs to declare if he has received insurance coverage for any similar damage, thereby also informing the purchasor of for example flash floods, regular strong winds etc.
A burgundy4u represantive will help you understand these documents, as a house in an official flood area might concern the river banks further down, and not the specific house high on the hill.
F
FRAIS D’ ACTE ( CONVEYANCING COSTS)
In France it is the purchasor that pays the costs of the Noatry and the « stamp duty» of a purchase. These are determined by official tables, ie fees and provision for buying taxes are fixed by the state. For a houses priced as off 100 000 euros, these costs are between 6.5% and 7%. The lower the price the higher the percentage. About 2% goes to the Notary, 5% goes to the local and national government. The tables cannot be exact regarding the taxes, that is why once the deeds are all published and literally stamps have been purchased, some money is left over. The Notary will hand this over together with the deeds some three months after the signature. If you take a loan registration costs also apply. Please contact a notary or an estate agent to have an idea what these costs are. Though remeber the costs are on the negotiated price. Some UK websites show the conveyancing costs in the sales price, but of course these will change according to the negotiated price. The Burgudy4u website advertises its houses, as all other french websites, excluding the conevyancing costs.
I
IMPOT SUR LA FORTUNE or ISF (“WEALTH TAX”)
The wealth tax applies to those who have net taxable assets exceeding 750,000 euros. For those domiciled in France, their assets worldwide are taken into account, and those domiciled abroad, only their French assets are included in the assessment.
The ISF applies to all assets save for business assets, antiques, works of art and intellectual property. The tax therefore applies not only to land and buildings, but also to bank accounts, stocks and shares, boats and yachts, horses, jewellery, gold, precious metals and even furniture and contracts of life insurance.
Various items are deductible, including tax liabilities, mortgages and bank overdrafts. The date for the valuation of assets is 1 January of each year.
Please note that taxes may vary if you live or not in France. It is recommended that you ask for specialist advice from a tax consultant who has knowledge of the French tax system.
IMPOT SUR LES PLUS VALUES (“CAPITAL GAINS TAX”)
It is payable on the profit realized on the sale of certain assets in France, including property, antiques, art, jewellery and stocks and shares. There is a flat rate of 26 percent for non EU residents and 16 percent for EU citizens not resident in France.
Your principal residence is not subject to capital gains tax, provided that it was your principal residence at the time of sale, or was your main residence less than one year prior to the sale.
A sliding scale exemption is applied to any other property that you have owned for at least five years. This amounts to 10% per year of ownership from the sixth year resulting in total exemption after 15 years. Should you be obliged to sell your home for family or worked-related reasons, you are also exempt from capital gains tax.
Please note that taxes may vary if you live or not in France. It is recommended that you ask for specialist advice from a tax consultant who has knowledge of the French tax system.
L
LEAD SURVEYS (“RISQUE D'ACCESSIBILITE AU PLOMB”)
The vendor to all preliminary and final sales agreements must append a lead-based paint survey. Lead pipes are not checked, just if there is lead in the paint. In this report a mention is also made of the general condition of the house, but only to the extend if the house is dangerous to live in. It can in no way be compared to a survey. The Lead Survey should be part of the compromis de vente.
M
MANDAT DE VENTE ( SALES CONTRACT)
This is the contract between the vendor and the estate agent. This contract in France is ususally on a non-exclusive naure. That is why you see several estate agents representing the same house. At Burgundy4u, we pride ourselves with having more and more mandat de vente EXCLISIVE. This is where the vendor agrees to sell only through the one agency. This is especially handy when the owners are not there, and key handling is managed by the one agency.
N
NOTAIRE (“SOLLICITOR”)
The Notaire is known as the solicitor, he is a member of the legal profession entrusted by the French Republic to authenticate deeds, thus bringing more security to both signatories. It is also thanks to them that the French system for real estate transactions is noted to be one of the most secure in the world. The Notaire is a neutral body in the transaction as he acts as a public official. Hence it is mostly unnecessary to appoint a dedicated Notaire.
P
PRET IMMOBILIER (“MORTGAGE”)
A mortgage is a temporary, conditional pledge of property to a creditor/bank as security for repayment of a loan. This is what usually takes the longest time to sort out after the Compromis de vente has been signed. The Purchaser has by law 30 days time to sort out the mortgage counting form the day the compromis is officially delivered to him. There are costs involved with a Mortgage, cost to register the loan with the cadastre (land registry) and usually administration costs by the financing bank. You will need the completed compromis to formally apply for the mortgage. Of course you will already have had an idea of your ability to get the funds before the offer went out. Let us know if you need help with finding a competing loan offer in your language. Burgundy4u has contacts with English speaking banks in France, that can give you a free loan offer.
PROJET D’ACTE (“DRAFT TITLE”)
The Draft Title is prepared by the notaire. We at Burgundy4u, ask for a copy so that we can use it to translate to you if you so require. The Draft Title includes all the information relating to the Final Contract terms and conditions.
PAIEMENT (PAYMENT)
Cash, credit cards or foreign ( non french) bank cheques are not accepted as legal tender by Notaries. It is best you order a bank transfer or by at a cost a guaranteed bankers cheque.
It is best if you use a currency exchange dealer such as HIFX or Baydonhill, to plan when best to buy Euros at the best rate. You get this way a better exchange rate than high street banks, and better service at lower cost. Your Currency contact will help you decide when to buy your euros. Your burgundy4u representative will provide you with the IBAN and BIC codes for the Notaries bank account.
PISCINE ( swimming pool)
All swimming pools in France need to have proper protection to avoid accidental drowning by children. This can be a fence round the pool, a cover that can be walked on, or an agreed alarm system that alerts if there is somebody in the pool. The Notary will demand a proper certificat as proof that these measures have been taken.
S
SAFER – SOCIETE D’AMENAGEMENT FONCIER AND D’ETABLISSEMENT RURAL
The SAFER is involved in property purchase when the property land is over (5000m²) 1ha. In this instance, the SAFER has an automatic right of pre-emption in order to preserve the land, which it feels should either continue or remain in agricultural use. The SAFER rarely exercises this right, but the Notaire is obliged to notify the SAFER before proceeding to the sale. Should the SAFER object the sale, than any agreement is null and void, the purchaser shall then recover its deposit.
S
SERVITUDES (EASEMENTS)
It is common in France that rights of way, or other easements are present. It is important that you are aware of any before you sign the compromis de vente. Common rights of way are
T
TAXE D’HABITATION (“RESIDENTIAL TAX")
The Taxe d’Habitation is a local services tax. The occupier of the house or flat on the 1st of January is liable to pay the tax, whether he owns, rents or occupies it free of charge. There can be some exemptions for over 60’s and if the property is incapable of occupation due to extensive renovations. The latest will need to be proved and the exemption confirmed by the local mayor!!
TAXE FONCIERE (“PROPERTY TAX")
The Taxe Foncière is a land tax paid to the local authorities by all owners of real estate in the municipality concerned.
TERMITES (“ETAT PARASITAIRE")
The vendor of a property is also required to carry out a termite survey, less than 3 months prior to the preliminary agreement for the sale. In BURGUNDY the local government has decided that it is NOT needed to do this test, as they are not found in our area. Notwithstanding we ask the vendor to declare in the compromis de vente that there are no termites in the house.
TVA OR TAXE SUR LA VALEUR AJOUTEE (“VAT”)
The current TVA rate in France is 19.6%. Building work done on houses older than 2 years, and not considered as a complete renovation have a lower VAT rate of 5.5%. This is now valid till end 2009.
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Notaires de France
French website about Juridical Services, english available |
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