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THE PROCEDURE OF BUYING YOUR PROPERTY ON THE FRENCH RIVIERA
... You have discovered the house you are looking for, the pearl hidden in its oyster ...
You have admired the charming and prestigious properties shown to you in the Catalogue of Med-Estates.
Then… you have visited the modern villa, the ancient homestead built of secular walls, or that lovely flat amidst its garden in blossom, and a feeling of happiness and joy, thoughts of spending some time there, with the children and friends, overwhelms your mind ...
In this chapter, we are making an attempt to guide you through the process of acquiring this residence.
Objectively, we would inform you of precautions to take before committing yourself during the process of buying, and… as soon as you hold the keys.
We will try to give answers to administrative questions that may be raised, especially relevant if you are not a French national.
These informations are worded in general form and are just meant to guide you in your purchase and terms applied in France. Med-Estates is not responsible for any omission or unintentional mistake.
I. Before the sale :
What is an "avant-contrat" ?
Which "avant-contrat" ?
Who is authorized to write an "avant-contrat" ?
II. "Les conditions de suspension". The let out clauses.
III. The completion of the sale or purchase: the signing of the "Acte Authentique" (Final Deed).
How to transfer the money?
IV. The choice of a 'notary' (solicitor). Several notaries?
V. The expenses, more details.
What are these notary expenses exactly?
Who pays for these expenses?
When are these to be paid for?
Notes.
I. Before the Sale:
You have found the property you want to acquire and you accept the selling price.
You are conscious that the property is susceptible to be sold to somebody else. What can you do?
You inform your agent and/or the seller (if you have met him) and you sign an avant-contrat.(preliminary deed). This deed compels the seller to sell you the property and, before passing an acte authentique de vente(final deed, authentic deed of sale), this leaves you time to plan your finances and, for the "notaire," (notary), to assemble all necessary documents in order to finalize the sale (and to meet the let out clauses).
What is an "avant-contrat"?
Which "avant-contrat"?
Who is authorized to write an " avant-contrat " ?
There exist several "avant-contrats" (preliminary deeds). These may be a promesse de vente : an undertaking to sell, a un compromis de vente: a bilateral contract (synallagmatic), or, more rarely, a "promesse d'achat": a promise of purchase.
If you buy a property under construction, you will sign a special avant-contrat, called a 'contrat de reservation': a deed of reservation.
It is important to know which deed you are going to sign, as there is an important difference between the 'promesse de vente' and the 'compromis de vente'!
An 'avant-contrat' may be established by a notary, a lawyer or an "agent immobilier ": an estate agent. It is advised to check if the estate agent holds a Carte professionnelle.
The "promesse (unilaterale) de vente": the (one-sided) undertaking to sell, pledges only the seller; the purchaser himself having simply an option: having thus the right to buy or not for a certain period. The sale being possible on the day the option is taken. On the other hand, the buyer must pay an indemnity of immobilization, generally 10 % of the selling price. (These funds being blocked in a special account - called the "compte séquestre" - at the notary or estate agent). If the buyer does not close the sale, these 10 % remain the possession of the vendor, except if the "conditions suspensives", mentioned further under II. , included in the undertaking to sell, are not realized. The day the buyer decides to take up the option, he can either buy or not the property, on the condition that all the "conditions suspensives" have been realized. If the buyer closes the purchase, the deposit of 10% is simply deducted from the total amount of the sale.
The wording "promesse de vente" is generally used North of the Loire; for us in the South, we shall probably sign a un compromis de vente.
The "compromis de vente" on the other hand, is a contract by which seller and buyer both agree on the property and the price, and on the decision to respectively sell and buy. By law, the sale is concluded on signature of the contract.
This avant-contrat can be signed privately between the parties (acte sous seing privé), or before notary.
As in the case of the undertaking to sell ("Promesse de vente"), the buyer pays the deposit money of 10% of the purchase price, generally kept by the notary till the deed is authenticated. This amount will be deducted from the price when signing the final act. (In reality, the deduction is not 100% as one must take into account the solicitor's fees : frais de notaire.)
The "Promesse d'achat": the undertaking to buy is rather applied to commercial than domestic transfers. Its definition: a person undertakes to buy a certain property, in case the owner is a would-be seller.
[This undertaking to buy is thus the contrary to an undertaking to sell; In fact, the buyer is comitting himself; the same conditions apply for the deposit. If the owner will accept the undertaking to buy, both parties would then be committed.]
II. "Les conditions suspensives". The let out clauses.
It is important that the buyer (and the seller) pay attention to these clauses, found in the avant-contrat.
These could suspend the execution of the avant-contrat up to future and uncertain dates past the agreed time, thus rendering the avant-contrat null and void, and the parties would be liberated of their obligations.
The "conditions suspensives" mostly encountered are :
- The obtaining of a mortgage for the purchase;
- A non-execution of the preemption right by the commune;
- The obtaining of a building permission.
III. The completion of the sale or purchase: the signing of the "Acte Authentique"(Final Deed).
After signing the "avant-contrat" and after the let out clauses have been met, you should complete the purchase by signing the 'acte authentique' at the notary's office.
In general, this takes place 2 to 3 months after the signature of the avant-contrat. This delay is necessary for the notary, who has the monopoly, for preparing the Final Deed, obtaining all relevant searches about the property, and verifying the mortgage of the buyer.
Both the vendor and the purchaser are required to attend the notary's office, to sign the final deed. However, they can give power of attorney to a person who acts on their behalf.
One of the most important things to provide for on completion day, is that the necessary funds for your purchase are transferred to the account of the notary. If the money is not there on that day, the notary will not be authorized to have the deed signed and the sale/purchase is not realized. This is thus of primary importance: you need to organize well in advance for the funds to be transferred.
Being in possession of the funds, the notary will be able to deal with the signing of the final deed. He will read through the "acte authentique" and both the vendor and purchaser will have to initial each page and sign the last page after writing (in French): "Bon pour accord". This means that you have understood the terms of the document and that you accept it. The notary should then give you a receipt for the funds transferred to the notary's account (compte séquestre), with a certificate of ownership ("attestation de acquisition/ de propriété"), which certifies that you have acquired the property conveyed. You will also be given the keys of your new house.
How to transfer the funds ?
There are two possibilities:
- You can proceed by means of a SWIFT transfer: you have obtained the name and address of the depositary bank of the notary (banque de consignation), and you order your banker to execute this transfer. (You should check on the delay required for such a transfer).
- Another possibility is by means of a bankers' draft, which gives the guarantee that the money will be secured by the draft. This option is essential when a French mortgage is involved.
IV. The choice of the notary. Several notaries?
The choice of a notary is entirely up to the purchaser. As a buyer, you have the right to instruct another notary than the vendor's notary, without the implication that this would enhance the expenses. (In this case, these expenses, called les frais de notaire will be shared between both notaries.)
However, be prepared that, proceeding with two notaries, could lead to a longer delay, because of the necessary correspondence exchanged between the notaries, taking place before the deeds are signed.
V. The expenses, more details. (1)
Here's a résumé of the expenses, to be added to the purchase price of the real estate.
[Remember to deduct from the final down payment: the 10% deposit, paid at the time of signing the avant-contrat; this deposit is thus not counted as an expense!]
We mainly encounter the droits d'enregistrement,: the registration fees, linked to the costs of acquiring the property. These are expenses and taxes of a very different nature, collected by the notary, who pays them afterwards to the State and the local authorities.
What are these notary expenses exactly?
- The 'salary' of the notary, as fixed on a national scale, based on the price of the transaction.
- The duties and taxes based on the acquisition :
Among others: the registration fees, the real estate publication fees (or VAT, according to the property being ancient or new), the salary of the registrar of mortgages, stamp duties, etc ...
- Various outlays, i.e. the total of expenses occurred in executing the searches: the extract at the Land Registry, the mortgage deed, the géomètre : the land surveyor ...
An important distinction must be made concerning the level of expenses between a new(2) or ancient construction.
New dwellings attract VAT, a tax of real estate publicity fixed at 0,6150%, against 4,89% for old buildings. This difference does not apply to the émoluments (notary's fees), nor the débours (ordinary expenses).
Finally, one must count on a global rate of expenses, on top of the purchase price, of 3 to 4% for new properties, and 7 to 8% for old ones.
All these expenses are to be justified by the notary.
Who pays for these expenses?
For a sale (and excepting an agreement to the contrary), these expenses are for the account of the purchaser.
When are these to be paid for?
The day of the signing of the final deed (acte authentique), the notary will ask you for a provision, covering the total of these expenses, or slightly more.
Then, a few months later, the notary will send you a detailed account of the total of the expenses, incurred for the acquisition. Often, a cheque, representing the difference between the amount of the provision and the real cost of the operation, accompanies this statement.
Notes :
- Generally, the commission of the estate agent is included in the sale price. However, we advise you to check this point, especially in case you negotiate the purchase price.
- If you have recourse to a loan to finance your purchase, you will have to face a number of expenses directly related to this credit: the cost of guarantee, required by the bank; the cost of insurances to protect you in case of difficulties ...
(1) Valid at time of printing: °2001
(2) Considered as new: dwellings under construction or finished under five years, that have never been sold to anybody else than to a real estate broker (marchand de biens).
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