The French Buying Process IMPORTANT INFORMATION
THE LUXURY PROPERTY SEARCH SPECIALISTS
www.home-hunts.com LET US DO THE HARD WORK FOR YOU
WELCOME Dear Client, Congratulations on your decision to look at buying property in France and thank you for allowing
to guide you through the French property buying process.
so that we could assist clients to buy their dream property in France.
We are a fully registered and legal French estate agent but we work for you, the client. Part of our service is to search the entire marketplace on your behalf whilst offering you unbiased advice and useful information on all aspects of the French property buying process. is always evolving to enable us to offer the highest possible level of service to our clients. Our team of international consultants is constantly growing and we ensure that we all work to the same values and principles, paying particular attention to your needs. We realise that every client is different and it is important to us that we make the buying process run as smoothly as possible for you. We have put this document together to help you better understand the French property buying process. Your
consultant is available to help you every step of the way and our head office
is contactable by email or telephone 24 hours a day. We wish you every success in the purchase of your property and look forward to working with you Welcome to the
Tim Swannie Director
55 RUE ST. FERRĂ‰OL
Francois-Xavier de Vial Director
PHONE 0033 8188.8.131.52 - FAX 0033 483.07.53.98 EMAIL firstname.lastname@example.org - WEB www.home-hunts.com
The professionals involved - Who are they?
Working out your price range
Finding your ideal property
Purchasing your property
Property taxes and related issues
IMPORTANT NOTE : France is a large country and although rules and regulations are largely the same throughout the country, they tend to be open to local interpretation. We cannot recommend strongly enough that you check any facts and figures with an official and reliable source before making major decisions. Although the authors, researchers and have taken all reasonable care in preparing this document, we make no warranty about the accuracy and completeness of its content. Any reliance on any information in this guide shall be at the reader's own risk
THE PROFESSIONALS INVOLVED WHO ARE THEY?
THE ESTATE AGENT
Estate agents (agents immobiliers) are usually local to an area and therefore will only have properties for sale within that area. The agent earns commission from the sale of the property and will try to obtain the best possible price for the property, but will know what price the vendor will accept. They should also be able to give you an estimation of all the other fees and the property charges you will be responsible for when you become the owner.
The notaire is a public official and given the title of Maitre. The notaire is highly qualified in the French legal system and is able to advise about property, family and succession, and corporate laws. The state confers powers on the notaire to legalise property purchase transactions which cannot be enforced by any other means. The notaire is deemed to a Public Official and provides security to the contracts he supervises and is liable for his professional acts. A notaire is responsible for the conveyance, preparing the various documents and confirming the seller's title to the property, checking that there are no other mortgages on the property etc. The notaire also has indemnity assurance, which provides a financial guarantee to the client.
PROPERTY SEARCHERS Property searchers such as will search for a property for you that is within your price bracket and matches your requirements. Many offer a personal service, taking you to view the properties they have short-listed for you. Some will charge a fee, others will take a percentage commission from the agent immobiler instead. provide a tailor-made property search at no cost to you because we are paid an introducerâ€™s fee by the estate agent. The price of the property we show you or what you see on our website is the price that is in the estate agentâ€™s window and you do not pay a penny more for our service.
The purchaser is free to choose their own notaire, but can use the same notaire as the vendor. As notaire fees are fixed, using two different notaires will not increase the total fees; the fees are split between the two notaires. We are able to recommend multi-lingual notaires.
ARCHITECTS / SURVEYORS
A mortgage broker works with various French banks and mortgage providers and will understand how they react to certain cases and circumstances. They will act as your intermediary with the lender. Newly introduced legislation in 2005 has meant that mortgage brokers, or mortgage advisers, must have their own professional indemnity insurance and be registered with each bank and mortgage provider they represent.
An architect or surveyor should be considered if you are thinking of purchasing an older property or one that you want to renovate. They will have experience with planning and obtaining necessary permissions and certificates, and be able to give an estimation of the cost. They should also know of reputable builders who are registered as such and who have their own insurances to cover their work which is essential if you are using mortgage funds for renovation or improvement works.
With all the banks and lenders having different lending criteria and products, your mortgage broker should save you a considerable amount of time in finding a lender that is suitable to your personal requirements. They should also be able to advise on the various different mortgage products, supply you with quotations direct from the lenders, their mortgage applications and life assurance forms together with guidance for which documents you will need to provide to support your mortgage application. A good broker will liaise directly with the lender, foresee and prevent some of the problems that can occur and guide you through the French mortgage procedure.
are able to also recommend a list of Surveyors and Architects.
TAX PLANNING SPECIALISTS It is often advisable to speak with a tax specialist when considering a property overseas. All countries have different tax laws, France is NO exception. Speaking to a professional tax planner will ensure that the correct decisions are made relating to capital gains tax, wealth tax issues and so on. Please speak to a consultant if you would like any recommendations.
Mortgage brokers receive their commission direct from the bank or lender they introduce business to. Most of those who are registered in France will not charge you fees for their services, but you are advised to check beforehand. can recommend a range of French mortgage brokers, ask for more details.
WORKING OUT YOUR PRICE RANGE If you need a mortgage to buy your property, you should establish your price range and ensure you have enough funds available for the deposit and fees. Also your income must be sufficient to cover the cost of your mortgage and can recommend a number of French mortgage brokers. You should now be seeking professional advice, about the basic lending criteria and the various options and mortgage products available to you. There are several options: Go direct to the French banks and mortgage providers - some have English speaking staff, others do not - which may cause you difficulties. They all have their own lending criteria - how much they will lend you, the term of the mortgage, what products they offer and how much they charge for their fees. Use the services of an established mortgage broker, who will advise you about how much you can borrow and the mortgage products which will best suit your circumstances. Your mortgage broker will save you a considerable amount of time and will know which lenders to approach on your behalf. They will provide you with quotations from the lenders who are most
suitable for you. Throughout the mortgage process your mortgage broker will liaise between you and the lender - very useful if your language skills are not that good. Mortgage brokers who are registered in France receive their commission directly from the lender and generally do not charge you a fee â€“ but as mentioned previously it is always advisable to check beforehand. There are very strict rules which are imposed by the Banque de France on all the French banks and mortgage providers. These rules govern the amount a person can spend each month on a mortgage. Contact for up to date information - we are here to help.
FINDING YOUR IDEAL PROPERTY Much information is readily available from magazines and internet websites advertising properties for sale in France; it is very easy to get an idea of what type of property is available and at what cost before you actually start your search. You have already made the right step by contacting us, we are here to help you but most decisions need to be made by you. Ask for a questionnaire if you have not already filled one out, it will help you to focus on what you really want. Think carefully about the location and type of property. Take into consideration whether you plan for it to be your main residence, second home, holiday home to be let out on occasion, or a property to be let as an investment for the future. Make a list of the important elements. The purchase price, the overall size and number of rooms, is a cave (cellar) or garage essential? Would you prefer a garden, terrace or balcony? These considerations will keep you and on the right track to find your ideal property. The type of property and its condition is also an important consideration. There are certain types of properties that will not be acceptable for mortgage finance and the property should be classed as "habitable" meaning structurally sound. The property
should also have the basic utilities of electricity, mains water and sewerage system, all conforming to the current regulations. It will be very difficult, if not impossible, to raise mortgage finance on buildings constructed of wood, stone cabanons, derelict barns and properties with agricultural land. Some lenders will not accept properties that have been registered for commercial use such as gĂŽtes and chambres d'hĂ´tes (self-catering holiday accommodation and Bed & Breakfast businesses). Buying to renovate or build a new property demands careful pre-planning. Certain French building regulations are very different from other countries and permission has to be granted from the local Mairie (Town Hall). Detailed applications must be completed for the Certificate d`Urbanisme (certificate of town planning/urban development) and other documents, which state what developments are permitted on the property and itsâ€™ land. You will need the advice of an expert - an architect or surveyor. If you are relying on mortgage finance for renovation works, then the works will have to be completed by tradesmen who are registered in France. Registered tradesmen have the correct insurances covering their work - it is the essential guarantee for the bank or lender.
PURCHASING YOUR PROPERTY Once we have found a property that is suitable and your offer has been accepted by the seller, you will be required to sign a sales contract, the Compromis de vente (sometimes called the Promesse de vente).
COMPROMIS DE VENTE The notaire or agent can draft the Compromis de Vente (Sales Contract), which will be written in French, but may have an English translation. Whoever is named as the purchaser(s) and if you are intending to use mortgage funds, the same name(s) must appear on your mortgage application. The Compromis de Vente is a legal contract; you should read it carefully and consult your notaire before signing it to check that all the details and conditions are correct. For example: •
Details and identities of the seller and yourself (the purchaser)
A full description of the property
The surface area of the property and land
The purchase price, the breakdown of fees and who will pay each fee
Details of the notaire and sales agent
Details of any fixtures and fittings included in the sale
Results of reports on asbestos, lead and termites
Details of your mortgage, the date of when you should have your mortgage offer and the date of completion
Any let-out clauses (clauses suspensives) and the penalties that will be incurred by you or the vendor if completion does not take place
For you, the purchaser, the clauses suspensives protect the deposit you gave to the notaire or agent as part of your agreement to purchase the property. The most usual is a clause stating that your agreement to purchase is subject to you obtaining mortgage finance. Other clauses can be inserted, such as the vendor having to carry out necessary repairs or subject to the dimensions of the property corresponding to what is detailed in the Compromis de Vente, and this is where expert legal advice is useful in the negotiation of these clauses. On the day of signing the Compromis de Vente you will be required to pay your deposit to the notaire or the agent. Once you have signed the Compromis de Vente, the clock starts ticking. There is now a set date by when you should complete on the purchase. You are given a 7 day cooling off
period (7 days in which to change your mind) this is the best time to instruct for a structural survey or inspection. Even though you may have a clause suspensive in the Compromis de Vente stating your agreement to buy is subject to mortgage finance, if you do not make reasonable efforts to obtain mortgage finance in time, then you could lose your deposit.
COMPLETION DAY Once the mortgage offer is received and the notaire has carried out the legal aspects of the sale we can arrange a time and date for completion to take place. It is your responsibility to instruct the notaire to request the mortgage funds from the lender â€“ can deal with your broker to help you make sure that this happens. Once you know the date you will be completing on your property purchase you will need to make sure your French bank account is open. Funds must be transferred into it in enough time for the completion date and the buildings insurance must be on risk from the date of completion. You will need to provide details of the insurance policy. can liaise with your mortgage broker if required.
fluent. It will state the date that you may move into the property. You will be asked to produce your birth certificate(s) and passport(s) together with marriage certificate/divorce decree if applicable. If you think you may be unable to attend the meeting to sign the Acte de Vente (final deed of sale) you can give a trusted person or friend a power of attorney (a mandat) which authorises them to act on your behalf. The Acte de Vente is signed by you, the seller and one notaire. If both you and the seller have different notaires, only one needs to witness the Acte de Vente. Once the Acte de Vente has been signed and witnessed, the notaire has to pay all the taxes, settle all the accounts of the purchase/sale and register the deeds and mortgage. A few months later you will receive a certificate informing you that the title has been registered. The original title deed is kept by the notaire, but he is able to make authorised copies
The final deed of sale which is signed on completion is known as the Acte de Vente (projet d'acte). It will contain much of the same information as in the original Compromis de Vente, but check it through carefully, usually a translater will be requested for you if your French is not
PROPERTY TAXES & RELATED ISSUES Taxation is a very specialised area. If you would like some in depth tax advice and information, speak to your consultant who can put you in contact with our tax partners. There are two taxes on all residential property. These are collected by the State for the local authorities. These taxes are assessed at individual rates according to location and can vary substantially. It is advisable to ask your estate agent for these details when you are looking at properties to buy.
TAX FONCIERE ( LAND TAX ) As the owner of a property on the first day of January, you are liable for paying this tax which is due for payment by October/November. Penalties or fines are added for late payment. It is possible to arrange a monthly payment scheme at the outset.
TAXE D`HABITATION ( LOCAL TAXES ) Only due on a habitable building. The occupant of the property on the first day of January is liable for paying this tax. Even if
you only use the property on occasional visits, if it is furnished and supplied with water and electricity you are liable for this tax. The amount of this tax will vary from one place to another and according to the size of the property. (If you rent your property to someone else and they are living there on the first day of January for the year, they are liable for paying this tax.)
CHARGES DE COPROPRIETĂ‰ ( COMMUNAL CHARGES ) For those owning property such as an apartment within a complex there are maintenance and service charges to pay. You should consider these charges carefully before signing the Compromis. The charges will vary according to the size and quality of the complex, whether there are lifts, pool, gardens, tennis courts and other facilities.
LOIS DE SUCCESSION FRANĂ‡AISES (INHERITANCE LAWS) French succession law applies to properties in France, even if the owners are not French nationals. Under French succession law you are not able to leave your assets to anyone you please. Blood relatives come first, whilst
your partner is treated very differently. You should take advice from your notaire before signing the final deed of sale. It is difficult to make changes once the acte de vente has been registered and can cause serious consequences.
SCI – SOCIETE CIVILE IMMOBILIERE An SCI is a property company. Although it can be used to minimise succession tax by gifting shares to your children during your lifetime, they are usually used by a group of unrelated people to purchase a property as co-owners. An SCI is meant to be nontrading, therefore it is not the right solution if you are planning to run gîtes or chambres d'hôtes. From a UK tax perspective, a director of an SCI, and having free use of a property in France for holidays, then you can become liable for income tax on the assessed benefits in kind. Taking professional advice is essential. Contact your consultant if you require more information on any of the above issues.
CAPITAL GAINS TAX Capital gains tax only applies if you are selling a secondary residence. There is no capital gains tax incurred if you sell your main home. Calculating any tax due on the re-sale of a property is complicated and professional advice should be sought.
WEALTH TAX Individuals who are resident in France on 1st January and non-residents who have assets in France are taxed on the basis of their assets as at 1st January each year. Wealth tax only effects those with assets over a certain figure and is calculated in bands above that figure. IF YOU HAVE ANY QUESTIONS AT ALL WITH REGARDS TO YOUR UPCOMING PURCHASE YOUR CONSULTANT WILL BE MORE THAN HAPPY TO HELP
Life Assurance It is a requirement that all mortgages in France are covered by life assurance. Many of the French lenders insist that you use their policies and that it covers all the terms of your mortgage. Some lenders have different policies and insist that full disability cover is included as well as life cover. Life assurance policies are medically underwritten and with a good medical record the premiums will be at standard rates. If the medical history is not good, then the premiums may be rated higher.
are buyersâ€™ agents, you tell us what you are looking for and we will search the entire market until we find it for you, without obligation. The team are available to help you every step of the way with your forthcoming property purchase. We specialise in finding luxury properties for our international clients. To ensure that we succeed, our process is always the same: Listening
You tell us what you are looking for and we listen â€“ At this stage we need as much information from you as possible so we can focus our search.
We search the whole market on your behalf. We will send you all properties in your preferred area which fit your requirements and together we can make a shortlist of properties to visit. We work with ALL of the best estate agents, developers and owners and we offer an unbiased opinion of each property.
We arrange a convenient time for you to visit any of the shortlisted properties and accompany you on the visit. We can also help you to arrange flights, hotels and accommodation for your property visit.
Negotiating If there is a property that you are interested in we can carry out the negotiation on your behalf to secure you the best price possible. We have an excellent working relationship with all our agents, which means we are able to find out as much information as possible about your selected property. Buying
Once a price has been agreed we will help you through the entire buying process. We will accompany you to the signing of any contracts, help with translations and also offer financial, legal and tax advice. After completion, if your property needs renovation work we are able to put you in touch with a wide range of specialists, builders, surveyors and architects.
LET US DO THE HARD WORK FOR YOU
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Published on Feb 25, 2009