The Buying Process
Contracts and notaries
As with so many things in France, the process of buying property is both similar to, and radically different from, what you may be familiar with in the UK. As in England and Wales, it consists of two stages: first, exchange of contract, when the buyer commits to the purchase; secondly, the transfer itself, when the property is transferred by the seller to the buyer. At the first stage a deposit of ten per cent of the purchase price is paid by the buyer, the balance becoming due on completion.
But there the similarities end. The most important difference between the English and French systems is that, whereas in the UK buyer and seller are usually each represented by a solicitor, in France the whole process is overseen and organised by a notaire or notary.
The role of the notary
The notary is a public official, charging fixed fees and responsible for arranging registration of changes in ownership and charges on property and for the collection of all relevant taxes on the purchase.
The notary is not the equivalent of a solicitor and will not provide the same level of advice. Nor will he be considered as the "representative" of either the buyer or the seller. It is often considered appropriate to have a notary for the seller and a separate notary for the buyer, and since the fixed fees are then split between the two notaries there is no additional charge if this route is chosen. However, it does not result in the same approach as that in the UK. The French notary will usually consider a purchase as a matter of process to be got through, within a legal framework providing general protection for both buyer and purchaser.
Some UK buyers who encounter the French system employ a UK solicitor to advise them. Although this can be useful, there will also be occasions when the UK solicitor is not sufficiently familiar with the French culture or system to advise adequately. The result may be to increase purchasing costs without a commensurate increase in benefit.
The role of the estate agent
In France it is not unusual for the estate agent to prepare the contract, which is known as a "compromis", and to supervise the negotiation and drafting. The contract is usually entered into quickly, and the deposit paid, creating a binding commitment. If there are matters to be resolved before the moment of transfer, such as a satisfactory survey, they are listed under "suspensive conditions". If the condition is not fulfilled within a given period, the contract will be cancelled. The advantage of this procedure is that the prolonged uncertainty to which sellers are subject in the UK is subject to clearly defined limits, the buyer being basically committed.
In many cases deposits are paid to the estate agent, who will hold the money in a special account. Our own view is that buyers and sellers may feel safer if the deposit is paid to the notary, under contractual conditions. The notary will also hold the money in a special account, and if the contract proceeds the money will be paid over to the seller.
The legal process leading to the transfer document – the "acte de vente"
With the combination of legal process and la France profonde, don't expect things to move rapidly! What happens is as follows:
1 As soon as a price has been agreed, together with any relevant terms, the seller will instruct local "experts" to provide the French equivalent of a seller's pack. This involves reports on (a) termites and infestation; (b) the presence of lead and asbestos on the property; (c) any gas installations forming part of the property; (d) the electrical equipment; (e) energy performance and (f) the incidence of natural and/or technological risks in the area. If the seller has not already done so, he will also have to contact the local authority department responsible for inspection of septic tanks, if the property is not on a mains drainage system, in order to obtain a certificate stating that the "private drainage system" complies with current norm.
2 Seller and buyer will give all personal details, including copies of their passports, to the estate agent or the notary, who will begin to prepare the contract - the compromis de vente. (In our agency, if the buyers or sellers are English, we prepare a bilingual version of the contract.) The contract will have attached to it a copy of the compliance certificate relating to the septic tank, copies of the surveys comprising the seller's pack, and, where appropriate, details of any furniture or similar items included in the sale.
3 Once the contract has been prepared with the seller's pack attached, the parties proceed to signature. This can either be done in France, which obviously simplifies matters, or at the home of the parties concerned. There is a time relevance to this, however, in that, following signature by all parties, the contract has to be formally communicated to the buyer, by registered mail sent to the buyer's home. Receipt by the buyer triggers off a cooling-off period of seven days, during which the buyer is able to withdraw without penalty. It is during this period that the 10% deposit is required to be paid.
The logistics of this process mean that it can in practice take several weeks from agreement in principle on the price and other terms to the end of the cooling-off period.
There may also be a delay in the event of the buyer needing to seek finance for the purchase. Here there are two possibilities. Either the contract can be signed with a condition precedent as to finance being obtained - which leaves matters uncertain for the vendor - or the contract signature can be delayed until the finance has been arranged - which obviously means that the buyer is at risk in that the vendor is free in the interim to sell elsewhere. If finance is obtained, French law requires a cooling-off period in relation to any mortgage offer of 21 days, before any transfer can take place.
At the time of signing the contract - and in any event before the cooling-off period has expired - the buyer pays a deposit of ten per cent.
4 Once contracts have been signed and exchanged, and the deposit paid, and the cooling-off period ended, the notary will take over, and undertake relevant local searches. He will prepare the transfer document. Completion takes place at the notary's office, and the buyers and sellers will usually be present. If not present, they will have to have given powers of attorney to the notary to execute the documents on their behalf. This second process usually takes about two months.
Local taxes
In France there are two local taxes applicable to private property - the "taxe foncière" and the "taxe d'habitation". They are both levied by reference to the calendar year, and demands are sent out in the late summer or early autumn of the year concerned. When buying property, there are special provisions relating to the local taxes, in that the "taxe d'habitation" becomes payable in full by the person who was in occupation on 1st January of theyear concerned, while the "taxe foncière" is apportioned between the buyer and the seller according to the period of ownership. Thus if completion of a sale were to take place on 30 June in a particular year, the taxe foncière would be divided equally between buyer and seller. However, matters are a little complicated by the time at which demands are sent out, and by the fact that the demand will always be sent out to the seller as the person in occupation at the beginning of the year. In practice what therefore happens is that there is an apportionment as at completion, and the buyer refunds to the seller the amount that is attributable to the buyer for that year. If the amount of the tax is not know for the particular year - i.e. because completion occurs before the demands have been sent out for that year - the apportionment is usually worked out on the basis of the figure for the previous year. It is best if the buyer refunds the amount to the seller at completion to avoid difficulties later.