The Buying Process in France
This section deals with some of the aspects of the buying process in France but it is not a definitive guide and buyers need to familiarise themselves with the current regulations applicable to their circumstances, as these change from time to time.
Asking prices may be negotiable and may vary if the property has been listed on different websites at different times. It is only once negotiations are underway that a buyer may discover if previous offers have been refused, at what level, and can begin to gauge what the vendor may accept. Prices quoted by private sellers do not of course attract any agency commission, whereas in most instances in France, prices quoted by agencies usually include agency commission or ‘frais d’agence inclus'. Normally commission is paid by the vendor at the time of the ‘acte de vente’ from the proceeds of sale. It is important to find out how much the notaire’s fees will be on any property for which you are considering making an offer. Occasionally prices may be quoted ‘net vendeur’ (seller’s net price), so it is essential to clarify the breakdown of prices when discussing making an offer. ‘Acte en Mains’ refers to the final sale price inclusive of notaire’s fees and any agency commission applicable.
Negotiation and making the offer
Once you have found the property you hope to buy, it is wise to indicate your interest early on. In France, once an offer has been accepted then the property is removed from the market, whereas provided a seller knows another interested party want to view, they may decide to wait before accepting another offer. Initial verbal negotiations are not binding and usually involve several exchanges. The first step is to put forward an offer 'offre d'achat' either directly or through an agent in France. First offers are often met with a counter offer by the vendor and it is not uncommon for both parties to agree somewhere in the middle. If the sale is as a result of an inheritance, there may be more than one vendor, so it can take longer to establish whether or not the offer is acceptable. If you are trying to buy through an agent, they are, of course, experienced in negotiating a satisfactory conclusion to this process. They may even have an indication from the vendor of the level of offer that might be accepted.
At this stage the compulsory diagnostic survey or 'étude diagnostique' is carried out at the expense of the vendor, covering termites, lead and asbestos, wiring and septic tanks.
Once a price has been agreed for the property, it is a good idea to raise the question of any additional items of furniture or equipment that may be available to purchase separately. An inventory is frequently produced at this point in proceedings – should it not already exist.
In view of the implications of currency fluctuations, it is worth taking advice at this stage, since the payment of both the 10% deposit and the balance of the purchase price at the ‘acte de vente' will be in euros, as will the payment of the notaire’s fees and taxes.
Surveys are not normally carried out in France, consequently the clause ‘subject to survey’ is unlikely to be accepted. Some surveyors or ‘experts’ do exist. If you want a survey, you should try to have this done before signing the ‘compromis’. Alternatively the opinion of a registered builder can be sought.
Compulsory Diagnostic tests
The DDT or 'Dossier de Diagnostic Téchnique', is, at the time of writing, now a part of any sale and is a prerequisite and the obligation of the vendor to commission and pay for up to date reports. The notaire’s job is to ensure that the law is complied with. The surveys currently deal with the following subjects:
- Lead: A report on the presence or otherwise of lead in paintwork in properties built before 1949, dated within 1 year of the sale.
- Asbestos: This relates to properties with planning permission that predated 1.7.1997.
- Termites: A report on the presence of termites or other pests which are destructive, dated within 6 months of the sale.
- Energy Efficiency: The DPE ‘Diagnostic de performance Energétique' indicating likely energy consumption and heating costs is valid for 10 years.
- Gas Installations: A report on natural gas installation where the gas has been installed for 15 years minimum. Valid for 3 years.
- Electrical Wiring: A report on the wiring and electrical supply when it is over 15 years old. Certificat de Conformité within 3 years will suffice.
- Natural or Industrial Risks: Flood zone/prone to earthquakes etc. must be declared and any claims made by the vendor relating to natural disaster.
- Septic Tanks: Since 2013, septic tanks needed to be inspected and to conform. A survey report dated within 3 years of the sale is required.
You may wish to use the same notaire as the seller, because he will be familiar with the property, or you may wish to instruct your own notaire. Another way to safeguard your interests, especially if you do not instruct your own notaire, is to employ the services of a bi-lingual lawyer, to examine and go through the ‘compromis de vente’ with you. The other significant factor is that you can receive advice on inheritance law and tax implications and whether or not your circumstances make it advisable to create an S.C.I. (Société Civile Immobilière) whereby the property is owned by a company.
Compromis de Vente
Once agreement has been reached between buyer and seller, the notaire draws up the first contract, usually a ‘compromis’ (occasionally a ‘promesse de vente').
This legal contract is in French, although sometimes there is an English translation and bi-lingual notaire’s exist who can translate everything if so desired. This first contract must be carefully studied to ensure that all details are correct. It normally contains the following elements:
- The identity and details of both purchaser and vendor.
- A full description of the property, its surface area and the land.
- The purchase price and breakdown of fees including who is to pay the fees.
- Details of any fixtures and fittings to be included in the sale
- Results of the diagnostic reports, which are a legal requirement.
- Details of the notaire and estate agent.
- Details of financing, including the date when the mortgage offer is expected.
- Any conditional clauses (clauses suspensives).
- A 10% deposit is paid to the Notaire at this stage .
If you have a conditional clause in your contract, ensure you are aware of the dates and conditions applicable. In order to have your deposit returned to you due to a failure to get finance, you have to have complied with all deadlines and provided all the information requested and have acted in good faith. Failure to do so may cause you to lose your deposit.
After signature of the ‘compromis de vente', there is a cooling off period of ten days in which a buyer can withdraw. This runs from when both parties have signed the ‘compromis de vente and received a copy. Thereafter the contract is legally binding.
Acte de Vente
In the ‘compromis’ there is usually an indication of a date by which the final contract (‘acte de vente’) must be signed. Before this can take place, the searches have to be carried out by the local authorities and results obtained, including the release of any rights to pre-emption by the French rural land agency, "SAFER" if applicable. A notaire's involvement is obligatory in the transfer of property in France and their fees are strictly regulated and equate to conveyancing and stamp duty in the U.K. Only a small proportion of the overall sum is charged by the notaire himself, the balance being government taxes. It is always wise to establish at the outset what the charges are. Where a loan is involved, a fee of 1% applies for the notaire registering the mortgage with the ‘Bureau des Hypothèques’.
When the notaire has finished his searches, he contacts both parties to confirm the date and sends them a draft of the ‘acte de vente'. Although the ‘acte' resembles the ‘compromis', there are subtle differences and of course it is vital to have this checked. You will be asked to produce your birth certificate and passport as well as marriage certificate and divorce decree if applicable. If you are unable to be there in person, you can award power of attorney or‘pouvoir' to a third party to act on your behalf.
It is imperative that the notaire is in receipt of funds before the signing of the ‘acte de vente’can take place and important therefore to allow enough time for the transfer of currency. If there is a mortgage, the buyer needs to instruct the notaire to ask for the funds from the lender.
Upon signature of the ‘acte finale', the notaire pays the taxes due* and settles the accounts as well as registering the sale, the deeds and the mortgage, if applicable. The notaire generally keeps the original title deed although it is possible to obtain notarised copies. A few months later the buyer receives a certificate confirming that the notaire has registered the title.
- Buildings Insurance: It is a legal requirement that this in place on the date of the acte, whether taking over the existing policy or applying a new one.
- Swimming Pool Security: If a pool is more than 1 metre below ground, the enclosure or the pool itself must be secure and comply with current French regulations..
- A Smoke Alarm: This has been compulsory since March 2015. Alarms must meet EN14604 European standards with CE Logo or NF En14604 equivalent and must display a power indicator, have a ‘test’ button and be battery powered with a minimum operating time of 12 months.
Two annual property taxes apply in France.
- Taxe foncière is charged every autumn and is levied on buildings and land.
- Taxe d’habitation is paid by whoever is in occupation on the 1st January.
*At the time of the 'acte', the ‘taxe foncière' is split pro-rata between buyer and seller by the notaire. This tax is charged every autumn.