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How To Buy Property In France |
By:
G D Gibbs |
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The information is based on our understanding of French property
law and practice at the date of publication. We cannot guarantee
its accuracy. Specific advice applicable to your own
circumstances should be obtained from a French Notary and/or
relevant professional bodies.
Finding the right property
You may have already decided on a specific area or you may have
a French region in mind, having been there on holiday for
example. Finding a property in France is a similar process to
that in other countries. There are many estate agents in France
(agents immobiliers) who will put you in touch with people
selling property. Alternatively, there are estate agents in the
UK, for example, who have details on French properties. There
are also many specialist magazines available for people
interested in the French way of life. These publications offer
useful contacts and property advertisements.
Many home buyers are attracted by the fact that property prices
in France appear to be lower than abroad. There are reasons for
this and before you start you should be aware of the following
points:
• French domestic property is not usually bought as an
investment. Apart from some very fashionable or highly sought
after areas, prices usually rise in line with inflation.
Therefore, you would need to own a home for at least three years
to recover the high fees associated with buying, even before
considering maintenance or improvement costs. • France has a
similar population to the UK but is three times the size. There
is therefore less pressure on land and hence lower prices. •
That isolated farm cottage set between vineyards and a stream
may require major renovation. It might not have the same appeal
to a French family, hence the lower price and you should
consider possible difficulties of resale in the years to come.
Initial agreement to purchase a property
Having found a suitable property, you will negotiate and enter
into an initial agreement with the vendor. This agreement is
called a ‘Compromis de Vente’ or ‘Contrat de réservation’ and is
a binding contract between the buyer and seller which sets out
the terms and price of the sale.
For new properties being built the most common contract is a
‘contract de reservation’ (a reservation contract). There are
various other contracts such as a promise to purchase (promesse
d’achat), an exchange of letters (l’échange de lettres) and an
offer of sale (l’offre de vente), all of which offer little
protection to the buyer, and generally should be avoided. The
preliminary contract will include a full description of the
property, the latest date by which completion must take place,
the price, any escape clauses and the identity of both the
vendor and purchaser. The preliminary contract can be signed
either at the notaire’s office or at the estate agency.
If you are making a purchase with a mortgage, you should at
least instruct the notaire/estate agent to make your purchase
conditional upon obtaining a mortgage: ‘conditions suspensives’.
This will offer you further protection under French Consumer
Law. Upon signing this preliminary agreement the purchaser has
to place a deposit with the notaire, which is normally 10% of
the purchase price and will be deducted from the sale price. The
property is then taken off the market. It is better to think of
this deposit as a payment on account or a penalty for breaking
the contract. Having said this, a law passed on 1 June 2000 does
grant you a seven-day cooling off period during which time you
can withdraw from the agreement. * Stamp Duty and registration
fees will need to be paid at completion when the agreement will
be filed at the notaire’s office. As a guideline, the notaire’s
fees, Stamp Duty and Registration fees will add up to around 6%
to 8% of the purchase price for existing properties. For new
properties they will amount to around 2% to 4% of the purchase
price. As the French tax and succession regimes are different
from many other countries, to ensure tax efficiency and problem
free transfers on death you may wish to consider instructing a
solicitor based in your home country to advise you.
By law, the purchaser can insert clauses into the agreement. The
seller, of course, has to agree to these.
* Although the preliminary contract is binding on both the
seller and the purchaser after this cooling off period, you
should note that the sale will still be subject to the notaire
formally checking the title to the property.
The Notaire A French notaire is a publicly appointed official
who is responsible for ensuring the property has good title (ie,
no irregularities in the ownership) and that the purchase or
sale is correctly transacted. Because notaries are personally
responsible for the contracts drawn up they must be objective in
the advice they give and be impartial in their dealings with the
parties concerned. A notaire represents neither the seller nor
the buyer but the French Government. They can also act for a
client anywhere in France. The same notaire therefore usually
acts for both the vendor and the purchaser. This is not
obligatory and you can appoint your own notaire if you wish. The
fees (paid by the purchaser) are fixed by law and will be split
between both notaires if two are appointed. You should be aware
that the notaire’s job is to finalise the agreement he has been
told has been recorded. He is not there to advise or warn the
purchaser of any inadequacies in it. His role is therefore very
different from that of a solicitor. If you are making a purchase
with a mortgage, you should at least instruct the notaire/estate
agent to make your purchase conditional upon obtaining a
mortgage: ‘conditions suspensives’. This will offer you further
protection under French Consumer Law. Upon signing this
preliminary agreement the purchaser has to place a deposit with
the notaire, which is normally 10% of the purchase price and
will be deducted from the sale price. Completion Completion is
when the final deed of sale is signed and legal ownership is
transferred to the buyer. It is at this point that the balance
of the purchase price plus any extras such as the notaire’s
fees, taxes and duties are due. The monies will be paid directly
by the bank to the notaire. The final act is the signing of the
deed of sale (acte de vente) which will take place in the
notaire’s office. It is normal for both parties to be present
when the deed of sale is read, signed and witnessed by the
notaire. It is good advice to attend in person at the notaire’s
office for the signing and witnessing of the deed of sale.
However, if this is not possible you may invoke a power of
attorney. Each page has to be initialled by both the seller and
buyer and both must sign the last page after writing in French
‘bon pour accord’ which means they have understood and accept
the terms. There are no title deeds as such in France and proof
of ownership is provided and guaranteed by registration of the
property at the Land Registry. The Land Registry’s stamp is put
on the deed of sale and the notaire gives a certified copy to
the buyer around two months after completion of the sale. Rates
and Taxation Taxe Fonciere This is a land tax. The size of the
property determines how much is paid and owners of new
properties are exempt for the first two years. The tax is paid
by the person owning the property on 1 January of each year with
payment due in the final quarter of the year. However, if the
property ownership changes then the purchasers must usually
reimburse the sellers for their share. Taxe d’habitation This is
a local services tax. It covers the services and maintenance
provided by the local council and again is payable annually in
the last quarter of the year. The estate agent will advise you
of the taxes in relation to your own property and tell you how
much you will need to pay. The tax demands will be sent to the
address of the French property. French Inheritance laws and
Taxation These are specialist areas and we strongly recommend
that you seek professional advice. French inheritance laws are
particularly different to those abroad. You are well advised to
take legal advice on these matters before completing the
purchase. You may also be liable to French tax if you derive any
income from the property, ie, letting fees. You must register
with the French Taxation Centre for Non-Residents when you buy
the property. France has signed taxation treaties with most
countries which means that you avoid double taxation.
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Article Source: http://www.statssheet.com/articles/article44402.html |
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