10 steps to heaven
If your New year’s resolution is to buy a house in france, christophe dutertre lists 10 key points you’ll come across along the way...
1 MAKING AN OFFER
Properties in France are mainly marketed by estate agents, who are registered and must hold a professional certificate (carte professionnelle). They may ask you to sign a bon de visite to prove that you were introduced to the property by them. Notaires also have the right to market properties for their clients, but not all notarial offices have a sales department.
An offer can be made verbally or in writing. However, verbal offers do not necessarily bind the person who makes it to a contract and it could be complicated for the other party to prove. For this reason, written offers are usually requested by the agent or vendor. The offer must set out the terms, i.e. property description, proposed price and any conditions for the purchase.
2 THE SALES CONTRACT
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This is where both parties agree terms and conditions. The contract enables the notaire to conduct the searches before completion. Two contracts are used in France. The promesse unilaterale de vente commits the vendor to sell to the purchaser. The buyer is not committed and benefits from a fixed period to decide whether or not he wishes to proceed. This is mainly used by Paris-based notaires. The second contract, the promesse synallagmatique de vente, or compromis de vente, commits both parties to the transaction.
At this stage, the vendor has to disclose any information regarding the property, e.g. any renovation or extension which may require a guarantee similar to the British NHBC insurance. The contract must also state whether the buyer needs a mortgage.
3 COOLING-OFF PERIOD
In the UK, a binding contract is not entered into until you or your solicitor are satisfied about searches, surveys and mortgage offers. In France, the compromis de vente binds the parties to the transaction at a much earlier stage. However, buyers have seven days following the signing of the contract in which they can change their minds and withdraw from the contract.
4 THE NOTAIRE
Notaires in France are public officials appointed by the Ministry of Justice, with their own system, which is distinct from those of avocats or solicitors. They are empowered to place the French state seal on any deeds they prepare, which fall into the category of a public document and are difficult to challenge. The notaire has a duty of care towards his clients and cannot restrict his duties in the way a solicitor can when agreeing the terms of his retainer with a client. All property sales in France require a notaire to preside over them. The notaire can act for both parties and he is obliged to be impartial. Purchasers can appoint a separate notaire to act for them or they can rely on the notaire appointed by the vendor or estate agent.
5 THE SEARCHES
It takes a minimum of two months from the signing of the initial contract for the notaire to carry out his searches. He first notifies any public bodies who might be the beneficiaries of a pre-emption right, i.e. they have first option to buy the property. These public bodies include the town hall (mairie) or, if the property is in a rural area, SAFER, the local farmers’ committee. The notaire will also request a town planning certificate (note de renseignement d’urbanisme) from the mairie, which will reveal any rules applicable to the property. The land registry provides a document called the �tat hypoth�caire, which indicates who owns the property, and lists any registered charges or easements.
UK and French inheritance law needs to be taken into consideration to minimise tax liabilities and provide the buyers with the best purchasing structure.
A purchase en indivision is similar to the English tenancy in common, whereby each co-owner’s share is governed by the ‘intestate’ succession law in France. Bequeathing the deceased’s share to the surviving spouse by will is limited where there are reserved heirs (e.g. children).
A purchase with a clause tontine is the French ‘joint tenancy’, under which the property passes to the surviving spouse/partner and overcomes French inheritance law. On the second death, the property is inherited by the survivor’s heirs. This clause is often used by couples who have children from a previous relationship and may not wish them to inherit. The clause can’t be added post-completion.
Alternatively, married couples can sign a French marriage contract in order to choose the communaut� universelle avec attribution au survivant regime. This is a postnuptial agreement where the property automatically passes to the surviving spouse, as with a tontine. Unlike with a tontine, children from previous relationships have five years to claim their statutory rights against the surviving spouse.
These three structures are probably the most common but there are other options, such as buying via a company, which may suit the purchasers’ tax-planning needs.
Before signing a binding contract, purchasers must assess whether or not they will have the finance in place to buy the property. Those who need a mortgage will lodge an application with their bank. Once the bank has agreed to provide the finance, the purchasers receive an offer that is bound by legislation under which they benefit from a cooling-off period of 10 days before accepting the offer. It is the notaire’s responsibility to request the funds from the bank when completion takes place.
The purchase price and notaire’s fees are paid into the notaire’s bank account on completion. Whether the funds are transferred from the UK or France, the notaire has to check their origin to comply with money laundering legislation.
The transfer deed is signed at the notaire’s office. The notaire drafts the contract and reads it to both parties to ensure they understand the terms, and to reply to any of their queries. The original deed is kept by the notaire and a certified copy is posted to the purchasers after being registered at the Land Registry. Before completion, the notaire sends a breakdown of costs to the purchasers and ensures that they have received all the formalities.
10 POST COMPLETION
After completion, the purchasers transfer utilities into their names and insure the property. Local taxes will automatically be transferred to their names during the registration process at the Land Registry. The purchasers reimburse a pro-rata amount of the taxe fonci�re to the vendors from completion until 31 December, but taxe d’habitation is paid entirely by the vendors with no reimbursement.
Christophe Dutertre, French Legal Team
Tel: 02392 530379