The Key Differences Between French and English Property Purchase
What are The Key Differences Between French and English Property Purchase
The key differences between French and English property purchase explains what to expect when purchasing a property in France.
If you have ever watched Masterchef in France and in England you might have found it surprising to see how different these two shows are. Despite the disparity, the aim of the two shows is to find the next Paul Ducasse or Gordon Ramsay, no matter how differently they would prepare a dish.
English and French law are also different as both notaires and solicitors work with a different body of law, customs and practice. The differences lead to three frequent questions regularly being asked by French property buyers.
Why has the notaire not transferred to my account the proceeds of sale the same day as completion?
The process of selling a property in France has different legal and tax implications and, for a notaire, the word “completion” has a very specific meaning in the context of a French property transaction.
In England, completion is the moment at which both parties execute the sale/purchase transaction. The buyer’s solicitor sends the money electronically to the seller’s solicitor and money can be transferred to the vendor’s account the same day by his solicitor.
In France completion of a property takes place at the Notaire’s office in the presence of the parties or their representatives by power of attorney. Completion can take place at a different place but it is exceptional. Before signing the deed of sale, the notaire has an obligation to check that the price and provision of fees have been cleared at his bank, in the purchaser’s client account. The notaire signs the contract and it will be registered in a book before being passed to the office accountant to deal with taxation. It is common for deeds to be dealt with by the accountant the day after the acte and the money is then transferred over to the vendor’s client account. Before releasing the funds to the vendors the Notaire will have to make sure that all debts have been identified and any fees to discharge guarantees, payment of creditors and Capital Gains Tax provisioned for. Then the proceeds can be sent to the vendor’s account by cheque or bank transfer. This is for this reason that notaires never automatically release the funds to the vendors the same day but a few days after completion. It is normal practice for the Notaire to retain the funds until he is sure that he can safely send them.
In the case of the sale of an apartment, the Notaire may also keep the funds for up to two weeks. The reason is that the managing company, once it has been notified of the transaction, has a period of two weeks to return to the notaire a form called the Certificat de l’article 20 confirming that the vendor does not owe any further charges. Without this document, the notaire has the legal right to keep the funds.
However, it does sometimes happen that a seller who is present on completion at the notaire’s office asks if he can leave the office with a cheque for the balance of the proceeds. It is not rare to see a notaire asking his accountant to draw a cheque on completion notably when the vendors are in a chain and must complete another purchase the same day.
Do I have to ask two witnesses to sign my French Will?
In England, there is a type of Will where the testator only signs on the last page and asks two witnesses to sign it at the same time in his presence.
French Civil Code provides two different types of Will for a testator.
The testator can ask a notaire to assist him and prepare a Will that will take the form of a deed where the notaire dictates the instructions of the testator in the presence of two witnesses or the testator will handwrite his wishes on a piece of paper and give it to the notaire.
The second type of Will can be executed in one of two ways. The most common way is the holograph Will, which is the easiest way to write a Will, at any time, anywhere. The only requirement is that the document must be handwritten by the testator (not typed), signed and dated by him.
Precedents have already declared as valid holograph Wills written at the back of a magazine, or on a piece of tissue as long it complies with Civil Code.
The main difference with English Law is that there is no need for the testator to ask two witnesses to certify the testator’s signature.
It is important to remember that a presumed heir could try and challenge a holograph Will for two valid reasons:
- On the grounds of the state of mind of the testator at the time of writing the Will.
- On the grounds that the testator was under pressure to name a specific beneficiary.
It is also important to remember that wherever you are, a Will will be valid if it complies with the Hague convention. If you are English and are more comfortable with a written or typed Will which has been signed by two witnesses you can proceed in this way, even in another country, and the Will will remain valid.
If you want to comply with the Law of your country of residency or where you own a property it is recommended to seek advice from a Lawyer, but in all cases remember that all real assets domiciled in France will be subject to French inheritance law.
Why, in France, can’t I leave my property to whomever I want?
English Common Law has the advantage of allowing you to bequeath your estate to whomever you want without any restriction.
Novices to French Law think that they can also dispose of their estate to their spouse, partner or friends and exclude their children from the settlement of the estate. Unfortunately, this is not the case when you deal with French property.
There are two reasons for that:
- Under English law the laws of succession applying to the real estate (or ‘immovable assets’) will be the law of the place where the property is situated (lex situs). If you own a property in France, French law will dictate the way it should be transferred to your heirs
- The Napoleonic Code (Code Civil) sets out a mandatory reserve to specific categories of relatives, mainly the children and surviving spouse in special circumstances. For instance couple who own a property in France and have children from a previous relationship may not be able to apply UK Law to their French Estate and face a dilemma if ‘unwanted’ children are deemed to inherit a share of their French estate.
Fortunately it is still possible to overcome French civil law by putting in place a structure of ownership that will either transfer a property to the surviving partner/spouse when acquiring the property or makes the property governed by the laws of succession applying to movable property, ie the law of “domicile” (Mobilia sequuntur personami).
As an alternative setting up an SCI company structure to hold the asset(s) could be a solution providing that the shareholders remain UK resident/domiciled.