Understanding the Legal Process
Sale and purchase of French real estate is governed by French law whoever is buying or selling the property. Understanding the legal process may help you understand why it takes the time that it does.
The Notaire
The Notaire is a public official, addressed as Maître and his office is called his Etude.
A notaire is responsible for the whole legal process: conveyancing, preparing the various documents and confirming the seller’s title to the property. He or she must check that there are no other mortgages on the property, etc.
The notaire’s main responsibility is to see that the French record of property ownership is correct and all taxes are paid, rather than to be concerned about the individual’s personal circumstances.
There is no conflict of interest if both parties use the same notaire; if they use separate notaires, the fee is identical but divided between the notaires involved.
The Compromis de Vente
The Compromis de Vente is the first part of the legal process and it is normally drawn up by a notaire or an estate agent.
The Compromis de Vente is a legal contract that you should read very carefully before signing.
Check that all the details and conditions are correct, such as:
- Details of the vendor(s) and purchaser(s): make sure that your names and addresses, which may be unfamiliar to a French person, have been spelt correctly.
- A full description of the property, including the “parcelle” numbers.
- The surface area of the property and land.
- Details of any fixtures and fittings included in the sale: “meubles” do not attract stamp duty and are commonly included in holiday flats.
- Clauses suspensives, such as a clause stating that the agreement to purchase is subject to gaining mortgage finance. Other clauses can be inserted, such as the seller having to carry out necessary repairs.
- Details of the mortgage and the date you should have the mortgage offer OR confirmation that you will need no French Mortgage.
- Confirmation that the legally required Dossier Diagnostic Technique inspections have taken place.
- Property price and agent’s fees.
- Details of the notaire(s) and estate agent(s).
- Target completion date – usually three to four months later but the actual date is at the discretion of the notaire.
- The penalties that will be incurred by either party if completion doesn’t take place.
Once the Compromis de Vente has been signed, French law gives the purchaser a 7-day cooling off period (loi Niertz). For this reason, each buyer must be sent an individual copy of the Compromis de Vente by recorded delivery.
Even if the Compromis de Vente contains a clause suspensive to allow for Mortgage Finance to be arranged, time is of the essence and if you do not make reasonable efforts to obtain mortgage finance in time, you could forfeit the deposit. Some agents are reluctant to take a “clause suspensive” buyer seriously as a surprisingly high percentage of deals in France fall through when the buyer can’t raise the funds and exercises their right to withdraw. For this reason, it is much safer to obtain a prior approval in principle from a lender. It may also help you get a better price as with a pre-arranged mortgage you are almost a cash buyer.
If you sign a Compromis de Vente affirming that you will not be relying on mortgage funds to complete the purchase, you may find that you will not be permitted to change your mind later. On the other hand, it is possible to discard a French property mortgage decision in principle and pay cash.
A short time before the notaire is ready to complete the transfer, you will be sent a draft of the Acte de Vente (projet de l’acte) , which is the final deed of sale. It will contain much of the same information as in the original Compromis de Vente, but again needs to be checked thoroughly. The Acte de Vente will also state the date that you may take possession of the property. If you have not already done so, you will be asked to produce your birth certificate and passport, together with marriage certificate or divorce decree, if applicable, to confirm your civil status.
If you think you will be unable to attend the signing of the Acte de Vente you should give a mandat to authorise someone to act on your behalf (procuration): the Notaire usually offers this as a free service.
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 and the legal process is complete. The original title deed is kept by the notaire, but the Notaire’s Etude is able to make authorised copies.
Consumer Protection from Loi Scrivener
Consumer Protection from Loi Scrivener 1979 offers consumer protection for anyone using a French mortgage to finance their purchase of a French property.
The law regulates the content of the loan offer, so for example, the name of the lender and borrower has to be shown, together with the rate of interest being charged. The bank offer is valid for 30 days; the bank cannot withdraw the offer or change the terms during this period.
The loan offer also includes the délai de réflexion, a compulsory 10-day minimum “cooling off” period. There can be confusion over how long 10 days really is. In fact, it’s dix jours franc, meaning ten clear days. Loan offer documentation is sent by courrier, to be signed for on receipt. Day 1 of the cooling off period is the next day, whether it’s a working day or not. Waiting ten days to accept something you’ve been waiting for can be frustrating, but is compulsory under French law. If you receive the French mortgage loan offer on a Saturday, you should wait until a week Wednesday before accepting and posting it back. And if you received the offer on a Wednesday, you couldn’t send it back until the second Monday after.
No funds can be released to anyone, including a Notaire, until the offer has been formally accepted.
Notaires Fees
Commonly referred to as Notaires Fees, there are a number of taxes and charges that the notaire collects which are commonly termed the “frais d’acquisition”. As well as the notaire’s own charges, which are subject to TVA, the notaire collects taxes on behalf of the French state and incurs charges both locally and at the registrar of mortgages.
For new build, the notaire’s total charges will be about 3%-4% of the purchase price.
For an existing property they will be around 7%-9%. Eventually you will receive a detailed account of the frais d’acquisition, together with a refund or a request for the shortfall.