What is a Notaire
What is a notaire is a question we are often asked by people seeking to buy a property in France.
Notaries, like UK solicitors, are regulated by their own legal system and practise under laws specific to their jurisdictions. French notaires are Public Officials appointed by the Ministry of Justice and have their own system and practice that is distinctive from the profession of Avocat. There are more than 8,500 notaires divided all around the country that are able to practice either in a single practice or in a partnership.
Notaires do not prepare retainer letters when they accept client instructions as solicitors would normally do in the UK. Nevertheless, a notaire has a duty of care towards his client and cannot restrict this duty as a solicitor would be able to do in a retainer letter. The main difference between notaires and solicitors is that the notaire can act for both parties in a transaction because his duty of care obliges him to be impartial and never favour one party.
A notaire’s fees are also regulated by decree, which is contrary to solicitors who can agree a fee with their clients before taking any instruction. It is rare in practise that notaires will charge additional fees but it is permitted by decree: it would be subject to prior client approval.
A notaire is empowered to put the French state’s seal on his deeds. These deeds fall into the category of public documentation and are difficult to challenge. They automatically provide evidence of their origin and also of the facts and statements they record. They are also recognised as probative. The public status, or authenticity, of a Notarial French Act would be taken away only if it was declared false judicially following a procedure known in France as ‘inscription de faux’.
A notaire would be liable for any negligence in relation to the documentation he prepares or the advice (or lack of advice) given. The concept of inadequate professional service is not as advanced or regulated as it is in the UK, where, if a solicitor is slow and unable to organise his time in a diligent and professional manner, he might be viewed as professionally negligent and liable for damages. Notaires would not face similar rules.
In addition, a notaire is insured for the work he carries out but there is also a professional guarantee provided by all members of the profession who are all personally liable for the work of their colleagues.
When signing documentation or deeds, a notaire should check the identity, capacity and the entitlement of the individual who is providing the signature. Indeed, Notaires have to deal with the requirements relating to customers’ due diligence and proof of identity must be provided from documentation such as passports and utility bills. This system applies to solicitors when dealing with a client based in the UK or abroad. As far as notaires are concerned, it is best practise to request a copy of the client’s birth and marriage certificate from the Town Hall. However, this only applies for French Nationals and it is true that a copy of a passport will be required if that individual resides outside of France. Unlike in England, notaires read the deeds of sale at the time of the acte and their personal identification will be carried out in the presence of the clients.
Money Laundering
The main concern for notaires and solicitors is the dealing of funds and transfers through their clients’ accounts. Money Launderers will find it difficult to pass money through banks without providing a valid reason. Passing money through a solicitor’s client account and transferring it to a new, clean client account via cheque or electronic transfer is an effective money laundering transaction. It is for this reason that notaires and solicitors now take particular care with property transactions. By experience, it is probably more difficult to pass money through a notaire’s client account because of the length the transaction takes. Typically, it would be approximately two to three months before the transfer of ownership takes place and money launderers will seek fast transactions.
When a notaire or solicitor feels that there is suspicion or a possibility of money laundering in a transaction it is their duty to report it to their respective professional body. In England solicitors will inform the Serious Organised Crime Agency (SOCA) and in France it is the Traitement du Renseignement et Action contre les Circuits Financiers Clandestins (TRACFIN).
It is an offence for either a notaire or solicitor who knows about or is suspicious of any money laundering that has taken place not to disclose that information. Furthermore, he should ensure that the individual concerned understands the legal consequences and to what extent they will be bound by the relevant legal documentation.
Tax Planning
Practice shows that a lot of notaires dealing with foreigners do not advise on all the legal consequences and especially on cross-borders issues or international Tax Planning matters. It is also common to hear of a notaire suggesting a French legal solution, which will impact badly on the foreign situation. This applies for example to people setting up French holding property companies, or a French Will. With the introduction of the EU legislation governing settlement of estates from August 2015, notaires will be required to advise on cross-borders jurisdictions.