If like Ron and Brenda you're considering buying an older property in France there are several reports the vendor must supply you with by law. Some of these checks are the vendors responsibility but others are optional for you to complete. To help you work out who does what, we've put together some useful tips...
Offer & Contract
French law does not recognise the concept of “subject to contract” and therefore an offer to purchase a property should not be made unless you are absolutely certain that you wish to purchase. You should consider all the conditions that you wish to include in the contract before the offer is made.
The next step is to sign either a Promesse de Vente or a Compromis de Vente. This may be prepared either by the Notaire or the agent.
Contracts are signed early on in France and contain Conditions Suspensives. These are conditions which must be satisfied before completion can take place and make the contract conditional. Until the conditions have been fulfilled, completion of the contract is uncertain. If any of the Conditions Suspensives are not satisfied, the contract is deemed to be null and void and the Purchaser is entitled to the return of his deposit.
These conditions are important and need to be checked carefully; in particular the contract may need to be amended to take into account the fact that a mortgage is needed to finance the purchase. This clause cannot be added at a later date. Remember, the drafting of the contract is very important and a pre-printed form can never replace professional advice. The consequences are too serious not to ensure that advice is taken before signing the contract.
French contracts are also usually conditional upon rights of pre-emption not being exercised. French law gives certain parties the right to buy in place of the purchaser (e.g. the local authority). If the right is exercised the deposit will be returned to the purchaser.
Since June 2001, the purchaser of a residential property is given a seven day cooling off period during which he can withdraw from the contract without penalties. However, experience has shown that whilst it gives more confidence to the purchaser to sign in haste, it makes it more difficult afterwards to renegotiate essentials terms of the contract.
The notary or notaire is the French lawyer who deals with property transactions. In many cases, the name of the Vendor's notaire is inserted in the contract. A Buyer should not automatically agree to this and should consider instructing his own notaire. We can assist with this. It is you as Purchaser who pays the notaire's fees, if there are two notaires involved, there is no extra cost to the Purchaser as the notaire's fees are fixed by law and the fees are shared.
Searches & Mortgages
Following signature of the contract searches are made. The notaire will obtain the equivalent of a Land Registry search from the Conservation des Hypothèques. This search will disclose any restrictions on the vendor's right to convey title and the existence of charges. The proceeds of sale must be sufficient to pay off any charges revealed. This period allows the buyer sufficient time to raise a loan.
In addition, either a Note d'Urbanisme or a Certificat d'Urbanisme is obtained. This is a document from the local authority which declares the existing use of the land and administrative restrictions or requirements which apply. The Certificat may also give information on whether building is allowed, the density and other details of development. If the Certificat d'Urbanisme is positive, planning permission - Permis de Construire, should be granted for the proposed use.
The signing of the Acte de Vente, the final deed of sale, has to take place before a notaire. The expenses, the Droits d'Enregistrement and the notarial fees are also paid at the signature of the Acte de Vente by the purchaser. If you do not wish to or are unable to attend completion in person you can appoint an attorney to execute the Acte de Vente on your behalf using a Power of Attorney or Procuration. This document must be written in French, signed before a Notary Public and forwarded to the Foreign & Commonwealth Office where a Certificate - l'Apostille is annexed to give legal effect in France.
You may find The Acte de Vente, a document many pages long in French legal jargon, bewildering. An independent advisor can vet this document and explain the procedure to you in your own language and in terms you can understand. Fees: These comprise the notaire's fees, stamp duty and registration fees. Where the property is more than five years old, these will amount to approximately 6.5% of the purchase price. These are payable in addition to the purchase price.
For newly built properties, French VAT at the rate of 19.6% and usually included in the price is payable and in addition, notaire's fees and taxes of approximately 2% to 3% of the purchase price are payable. If a loan is secured on the French property, additional notaire's fees will be payable.
These comprise the notaire's fees, stamp duty and registration fees. Where the property is more than five years old, these will amount to approximately 6.5% of the purchase price. These are payable in addition to the purchase price.
For newly built properties, French V.A.T. - T.V.A. at the rate of 19.6% and usually included in the price is payable and in addition, notaire's fees and taxes of approximately 2% to 3% of the purchase price are payable. If a loan is secured on the French property additional notaire's fees will be payable.
Set out below is a non-exhaustive list of the main expenditure you should include for your budget purposes when purchasing a French property:
1. Taxe d'habitation: council tax, deadline - 15th December.
2. Taxe foncière: land tax, deadline - 15th October.
3. Income tax: declaration must be filed by 30th April. Please seek expert advice if you intend to work in France or rent out the property.
4. Wealth tax: this is due if the value of your assets in France amount to 770,000 Euros or over; declaration (*) must be filed by 15th July. We are able to assist you in this matter.
5. 3% tax return: this applies to all companies which own properties; declaration must be filed annually.
6. Services charges if the property is located in a co-ownership.
7. Insurance and services.
8. Regular servicing for the equipment (e.g., septic tank, boiler, chimney, etc.)
9. Taxe d'enlèvement d'ordures ménagères: tax for the refuse removal (now included in the taxe d'habitation).
10. Redevance télévisuelle: TV licence. (now included in the taxe d'habitation).
You should also ensure that insurance of the property is arranged from the date of completion. You may wish to take over the Vendor's policy.
Once the property is yours you will need to apply to the French services for the electricity, gas, water and telephone to be registered in your name. As from the date of completion you will be responsible for the bills for these supplies. The notaire can give you what is called an attestation, proof that you own the property, which may be required when an application is made to transfer the supplies.
French Bank Account
You may also like to consider opening a non-resident French bank account from which to pay by direct debit your accounts for electricity, water, etc as post to France from England is notoriously unreliable. You will thus avoid the frustration of arriving at your property only to find the electricity has been cut off because EDF has not received your cheque.