Buying a House in Gascony – legal processBy Howard • Apr 17th, 2009 • Category: Buying Gascony Property
In France, after an offer has been made and accepted on a property, a compromise de vente or sous-seing privé has to be drawn up by the notary. A deposit is paid to the notary and the contract is signed by both parties. The final sale takes place on an agreed date, generally around 3 months later, depending on the sale.
Five steps to buying a property in France
- Choosing a property and making an offer
- The compromis de vente or sous seing privé
- The seven-day cooling off period
- Intermediate, when the various checks and searches are carried out, mortgages are issued by banks, etc.
- The acte de vente
Choosing a property and making an offer
Once the buyer has chosen their property and the offer been made and accepted, the agent will contact the notary involved to arrange for the first contract to be drawn up. One or two notaries can be involved. However it is quite common for the same notary to be used.
Notaries are public officers in France, appointed by the Minister of Justice. As such they are invested with a delegation of public power. The use of a notary is required to conclude a marriage contract, conduct real estate sales (due to the Land Registry), make a will and find a property transfer after death, etc. The rules of ethics applicable to the notary mean they can act alone to represent two parties in a single act, such as the seller and the buyer of a property. However, either party may request their own notary, without increasing the cost of the operation: in fact, the notarial fee is essentially based on the act, so that if two notaries are involved in the implementation of a sale or a mortgage loan, the fee is the same as if there had been one notary and will simply be divided between them.
Compromis or sous-seing privé
The compromis de vente or sous-seing privé sets out the terms and conditions of the purchase and manages the schedule of the sale. Both parties become tied into the purchase of the property subject to various conditions – “clause suspensive” -that have to be met prior to completion, such as obtaining a mortgage, etc. Once the conditions are met then the sale will occur. If the conditions are not met, both parties become free of the engagement and the deposit is returned to the purchaser, minus a small administrative charge by the notary. If the conditions are met but one party decides not to go ahead, the other party can take legal action to force the other to respect his or her obligations – (clause pénale). If it is the purchaser who does not wish to proceed, generally they will lose the deposit and may be liable to pay additional compensation.
Possible clause suspensives
- nothing in the town planning that would adversely affect value of the property such as a motorway or railway through the land
- no rights of way over the property that have not been revealed to the purchaser
- no mortgage over the property that cannot be paid off from the purchase price
- the need to obtain a mortgage
- the need for outline planning permission for conversion or extension of the property
These conditions should be assiduously worded in order to offer as much protection as possible to both parties.
Seven-day cooling-off period
There is a seven-day cooling-off period at this first contract stage. This starts on the day following signature of the contract if this is carried out in the presence of the notary in France. If you are signing by power of attorney then the seven-day cooling off period starts the day after you sign for the recorded delivery containing the contract. At any point during the seven-day cooling off period you are able to withdraw from the purchase without providing a reason and your deposit must be returned within 21 days of the date of the withdrawal. The vendor does not benefit from a cooling-off period. The deposit can be up to 10% of the purchase price and should be paid direct to the notary.
In order to do draw up the Compromis or sous-seing privé the notary must first have in his possession the obligatory surveys, all of which are at the charge and responsibility of the seller and for the information of the buyer.
These surveys are: lead; termites; asbestos; thermal efficiency ; electricity & gas – for installations dating back more than 15 years and drainage if the property is not connected to the main system.
General surveys are not common in France. The property is purchased in the condition that it is in on the date of completion. If the buyer requires a survey then this should be carried before the end of the cooling-off period. With the agreement of the vendor, it is possible to include a survey as a condition suspensive but this needs to be worded carefully in order to ensure that the buyer is protected if the results are unsatisfactory. A general clause, subject to survey, would not be sufficient.
This follows the seven-day cooling off period. During this time the notary and his staff will carry out the various checks and searches and inform the necessary bodies of the potential sale. During this period mortgages are issued by banks, etc.
The buyers’ responsibility at this stage is to provide the notary with any outstanding paperwork, such as birth and marriage certificates. It is also the buyers’ responsibility to ensure the final balance is deposited in the notary’s account in time for the final acte de vente.
The sellers’ responsibility at this stage is to provide notary with any outstanding paperwork, such as guarantees for any work on the property by registered artisans, as well as any invoices they may have that can be used against their capital gain – where applicable.
Final stage, the Acte de Vente
This is the signing of the Acte Authenique or Acte de Vente. Funds need to be transferred to the notary’s account by the time of the signing and so it is advisable to arrange for this to occur allowing some leeway. The seller should visit the property before signature.
The Acte Authenique is carried out by the notary with all parties present – unless a power of attorney has previously been established. The Acte Authenique contains all of the information present in the compromis de vente as well as mention of all the notarial checks that have been carried out.
If the property is mortgaged then the mortgage will be paid off from the funds by the notary and the balance returned to the seller.
If the seller is purchasing with a mortgage, then this too is administered by the notary and will incur a further fee – calculated by the notary at the time of the compromis de vente.
Declarations will be made to the tax authorities by the notary. Possession generally takes place immediately following the signature of the Authentique. If there is any delay with the sellers moving, then there will be a clause in the Acte Authenique with a specified moving date and a daily penalty clause (clause d’astreinte) in order to ensure this date is adhered to.
Costs and Fees
Agency fees in France vary depending on the value of the property, but are generally around 6% and should be included within the advertised price – frais d’agence compris (FAI)
Notarial fee, these are around 6.5% of the purchase price but are not included in the advertised price. These are in addition to the advertised price.
Mortgage fees, these are calculated on a fixed scale and are around 0.5 – 1% of the mortgage value. The notary will advise you of the approximate figure during the signing of the compromis de vente
VAT or TVA, this is payable by the vendor on any property that is under construction or that is less than 5 years old.