From Offer to Completion
For many of us purchasing a property abroad is the fulfilment of a lifelong dream. The buying stage can be the most exciting part as this is where it all becomes real. You've done all your homework, you've trawled through the internet, scanned pages and pages of particulars and visited numerous potential property candidates before finally locating your ideal property!
During the buying process you will be required to sign official documentation and hand over the required cash to make the property legally yours. Buying property abroad can sometimes become a complicated process and you should note that in many countries, the process varies significantly from that of the UK. It is strongly advised that, before committing, you arm yourself with all the relevant purchasing information and complete all necessary financial and structural checks relating to your property. Before signing any official documentation you should make sure you fully understand the legal complexities involved in your purchase and, if possible, make sure you have a solicitor who is fluent in both English and French, so they can explain to you exactly what you are signing.
It is also worthwhile ensuring that your solicitor checks the debts against the house that is for sale as, in some countires, once the house sale has been registered you could become liable for the debts.
French Property Buying Process
So, you've found the perfect property in France and now want to invest? Unsure of your next steps? The following process outlines the general buying process for your French property. You must:
- sign an initial contract called the 'Compromise de vente'
- pay the deposit for the property
- complete the sale
The Compromis de Vente
The ‘compromis de vente' is signed by both parties and indicates the formal agreement to the sale of the property. Typically the document includes:
- details of the purchase price
- a brief description of the property
- terms and conditions
- conditions suspensives (a break clause specific to the French process), where applicable
- the completion deadline
Although this is the preliminary contract, you should note that it is legally binding. Before signing, it is important to make sure:
- you understand and agree with everything in the contract
- the contract covers the full agreement of the house purchase
- Any important conditions you have specified with the vendor are included within
- you have sufficient funds available to pay the notaire the deposit for the house!
The compromis de vente is the most common form of contract used when buying a property. Occasionally, sellers may elect to use the 'promesse de vente'. A promesse de vente contract offers you, as the buyer, slightly more flexibility as you then have an additional ‘option period' to complete the purchase of the property or you can withdraw your offer altogether, forfeiting your deposit.
In French property law, once your offer is formally accepted there are strict contractual regulations that mean you are legally bound to the property purchase. This eliminates the procedure of 'gazumping' and counter bidding which is common to the English property market. In France there is also a moral expectation that a buyer would not pull out of the deal once they have made their offer. If, after agreeing the sale price for the property, you have some questions about the sale you should make sure the signing of the compromis is subject to conditional clauses, known as ‘clauses suspensives'. Your questions may relate to the condition of the property, you may wish to find out whether you could obtain planning permission and/or you may simply wish to have a survey done. A clause suspensive will allow for the contract to be cancelled and your deposit refunded if any issues mentioned in the clause are uncovered during further investigations.
Before signing, check with your notaire what paperwork you are required to bring. In drawing up the compromis, the notaire may require you to provide official documentation such as your passport and marriage or divorce papers. It may also be useful to have relevant paperwork for a loan (mortgage) you may be using to purchase the property.
During the purchase process, the notaire is required to notify the Société d’Aménagement Foncier et d’Establissement Rural (SAFER). In certain circumstances, SAFER may intervene and reject the sale if they feel it is necessary to protect the land you are buying. In this instance, any deposit you have paid will be fully refunded. This type of incident is rare and generally only occurs where the property and land purchased are over 1 hectare (2.47 acres).
A non refundable deposit will be paid upon signing of the 'completion of sale' agreement. If you are not classified as a resident in France and are therefore not taxed in France, you will be required to put down a minimum of 20 per cent of the purchase price as your deposit. A lower deposit of 10 per cent is generally accepted for French residents. Included in both a compromis or promesse de vente sale contract is a seven day 'cooling-off' period; during which time the buyer may withdraw from the contract without significant financial penalty. However, if after the seven day clause you decide to pull out of the deal, your deposit is non refundable. Moreover, the deposit is held by the estate agent or Notaire until the final sale completion date.
Completion of Sale
After the signing of your compromis de vente, the notaire will begin the legal process for the sale of the property. Completion of the sale can take between two and three months as the notaire has to carry out various searches similar to those done by UK solicitors. The notaire is responsible for checking existing property ownership, any outstanding debts on the property and other such matters.
The final contract is known as the 'acte authentique de vente' (deed of sale). After signing the acte de vente possession of the property formally passes to the buyer. Before the official signing of the acte de vente, it is important you have transferred the full balance of the purchase price, plus any notary fees and taxes, to the notaire’s bank account. As with the deposit, the notaire will hold the funds until the acte de vente has been signed and completed. Where the balance of your property is being paid for by the bank (ie. using a mortgage), you need to ensure that your bank has paid the outstanding funds directly to the notaire in sufficient time to clear before the signing date. The sale will not be completed unless the money has cleared the notaire's bank account. Sadly money laundering laws mean that you can’t turn up with a briefcase full of dosh!
Once the deed of sale has been signed, the notaire will provide an ‘attestation d’achat’ or ‘attestation de propriété’ that proves ownership has been passed to you, until formal registration is complete. An exemplified copy of the purchase deed will follow some time later.
Do you have any tips or experience you want to share on buying properties? Let us know.