Investing in a property or second home in France is gaining popularity, but it is often a challenge and there are various potential pitfalls to think about. The principal pitfall being one of LANGUAGE and UNDERSTANDING. It would make sense to obtain the assistance of a bi-lingual selling agent who is a respectable specialist from the outset, somebody who’s familiar with the quirks of French law in order to minimise your risk through all stages of the buying process.
So where do you begin?
After deciding upon a property in France you want to make an offer on, the estate agent will normally ask you to sign a “Promesse de Vente” or “Compromis de Vente”. In French legislation, the “Promesse de Vente” is an undertaking from the vendor to sell to the purchaser and the “Compromis de Vente” is a contract between the buyer and seller (I.E. an agreement to sell on behalf of the seller and an agreement to buy on behalf of the buyer). In both cases there is a 10% deposit required and a date for completion of the sale is set (which is normally 60 days). Following the signing of the “Promesse de Vente” and the “Compromis de Vente”, there is a 7 day cooling off period for the purchaser, during which time the purchaser may withdraw from the agreement and recuperate any deposit paid, without having the need to justify cause. After this time, the seller is bound by contract to sell to the purchaser and the purchaser won’t be able to withdraw except under specified circumstances.
When buying property in France its well worth noting that “Promesse de Vente” and “Compromis de Vente” do not incorporate property surveys, so these must be undertaken before making an offer.
For this reason, when buying property in France, the buyer is completely protected from Gazumping, an issue which can be infuriating for home buyers in England.
The conditional clauses contained in both agreements generally act in favour of the buyer, whereby they can withdraw from the purchase if planning permissions or other factors are considered obstacles. Additionally if the buyer has a loan refused they may also withdraw from the sale with a full refund of deposit.
In France conveyancing is carried out by Notaires who oversee the signing of the agreements and additionally hold the deposit payments. For this reason, it makes sense to appoint your own personal Notaire as there is no extra cost involved as notarial fees are laid down by the Government.
During the 60 days preceding completion your Notaire will carry out all the required searches and acquire a certificate from the Bureau des Hypotheques (the French equivalent of the land registry) which establish whether there are any outstanding liabilities or debt against the property. Such as in the event the sale proceeds are not adequate to clear the mortgage, the sale will be stopped as well as the purchaser’s deposit refunded.
In France, Estate agent costs are normally included in the asking price of a property and are consequently paid by the seller. They’re typically 5% for houses or apartments.
The buyer pays legal costs and Notaire fees plus stamp duty and registration fees. The fees are laid down by Government legislation. Typically legal costs can be around 6% of the sale price and getting a mortgage with a French bank will mean registering with the Bureau des Hypotheques and will cost approximately 1% of the mortgage value.