The buy a property in France is actually a very straightforward and well-regulated process. Once you find a property and agree a price through a purchase offer, the actual contract process will be handled by a notaire. The whole process can be divided into three main steps: the Offre d’Achat, the Compromise de Vente and the Acte de Vente.
1. OFFRE D’ACHAT – PURCHASE OFFER
Once the right property is found, a written purchase offer is made by the purchaser as a unilateral document to inform the seller of their willingness to perform a contract subject to conditions at a certain price. No deposit is requested at this stage.
2. COMPROMIS – PRELIMINARY AGREEMENT
The Compromis de Vente is the first of two legally binding documents which make up the French property purchasing process. This document will contain almost all of the information which is in the final Acte de Vente. Normally the buyer will pay a 10% deposit on signing the agreement, which is held by the notaire *.
Information contained within the Compromis de Vente will include:
– Full details on the ‘civic status’ of both the purchaser and the seller (full names, DOB, POB, marital status etc.)
– A description of the property, confirmation of the title deeds and confirmation of the plot references complete with surface area of the plots being sold (including buildings.)
– The agreed price, including estate agency fees, estimated notaire’s fees and the deposit amount
– Circumstances in which the deposit may be forfeited, obligations of the purchaser and declarations from the vendor
– Results of the DDT (Dossier Diagnostic Technique)
– A series of standard suspensive clauses, as well as any agreed additions
– A target completion date – this is not a confirmed completion date. It is subject to change in certain circumstances
– A list of any furniture or equipment included in the purchase, if applicable
* The notaire is a public official, required by law to act impartially. It’s a highly qualified figure in the French legal system, who provides security to the contracts they supervise and who is responsible for their professional acts. All the payments, related to the transaction, are made onto a notaire’s special bank account; the notaire transfers the funds to the seller right after the signing of the Acte de Vente. A buyer is entitled to appoint a second notaire, which will lead to no additional costs, as the two notaires will split the fee between them.
The ten day cooling off period is the last time you can withdraw from the purchase without paying a 10% penalty fee (your deposit). The ten days includes bank holidays and weekends and starts the day after the fully signed (by both yourself and the vendor) Compromis de Vente is presented at your address, or arrives in your inbox if being sent electronically.
3. ACTE DE VENTE – FINAL SIGNING
Usually around three – four months after the signing of the Compromis de Vente, the notaire will have undertaken all of the necessary work and You will have agreed a date for the final signing of the Acte de Vente.
Before this meeting You will need to ensure that the balance of funds to complete the purchase of your property is in the notaire’s bank account, this includes any funds which are being paid by a mortgage company. You will not be able to pay on the day with either a cheque or cash, due to money laundering laws.
You also need to ensure that you have insurance on the property before you take ownership on the day of signing.
Once the Acte de Vente has been signed and witnessed, the notaire registers the deed. The original title deed is kept by the notaire, with authorised copies being issued upon request.
The buyer of a Fench house pays the legal fees and registration taxes which amount to approximately 7.5%-8% of the purchase price (if buying an existing property) while it’s just 2% for the new projects.
Existing Property – The total conveyancing fees and taxes: 7,5% -8% of the purchase price, excluding estate agency fees.
New Property – You will pay around 2% in conveyancing fees and registration taxes, plus VAT at the rate of 20% on the purchase price (except for sales between private individuals), excluding estate agency fees.
Although these fees and taxes are often referred to as ‘notaire fees’ (frais de notaire), in fact the actual notaire fee itself is only about 1%. The rest comprises stamp duty registration taxes, legal fees and translation costs.
Real Estate Commission is normally already included into the official declared price of the property (which is normally 5% + VAT)
PROPERTY TAXES (ANNUALLY PAID)
Whether you live in France on a permanent basis, or own a holiday home, you will need to, first of all, insure the buying property and pay two main types of property tax in France:
– Tax fonciere: this tax is paid by the owner of any property. Tax foncier is significantly reduced for the first 2 years if buying a new property (under construction or recently built and sold by the builder)
– Tax d’habitation: this tax is paid by whoever lives in a habitable / furnished property on the first January of each year.