The law of the land

The le­gal­i­ties of the French prop­erty buy­ing process ex­plained

Living France - - Contents -

Pur­chas­ing a prop­erty in France re­mains an at­trac­tive op­tion for many of us. Whether as a hol­i­day home, an in­vest­ment or as some­where to live per­ma­nently, the dream of own­ing a place in France is still popular, de­spite the cur­rent po­lit­i­cal and eco­nomic cli­mate.

How­ever, if the am­bi­tion to buy a part of France re­mains the same, the un­der­stand­ing of the pur­chase process is still largely mis­un­der­stood. Many of our clients are well able to un­der­stand the typ­i­cal process of buy­ing and selling a house in the UK – they will have done this sev­eral times. Yet they will prob­a­bly only ever come to buy one home south of the English Chan­nel, so there is no sur­prise that the whole process of buy­ing a French prop­erty may not be as well un­der­stood.

In this ar­ti­cle I will set out a very brief over­view of the main is­sues that arise when buy­ing a prop­erty in France. In­evitably, though, ev­ery spe­cific set of cir­cum­stances is dif­fer­ent and so there is ev­ery in­ter­est in in­struct­ing an in­de­pen­dent firm of so­lic­i­tors with a spe­cial­ism in French law to ad­vise.

ROLE OF THE NO­TAIRE

One of the main dif­fer­ences be­tween English and French prop­erty trans­ac­tions is the role of the lawyer in­volved. In the UK, each party will in­struct its own solic­i­tor to ad­vise on the process; act­ing there­fore with their own client’s in­ter­ests as a para­mount con­cern.

In France that is not nec­es­sar­ily the case: a no­taire’s pri­mary role is to en­sure that a trans­ac­tion is reg­is­tered and that all rel­e­vant taxes are paid.

And while no­taires will in­deed be re­spon­si­ble for fi­nal­is­ing the process, they are not nec­es­sar­ily in­volved at the start – the first con­tract is of­ten pre­pared by the selling agent. Some buy­ers are con­cerned that the ini­tial con­tract might not be pre­pared by a no­taire, although there is noth­ing nec­es­sar­ily wrong in this.

The con­tract must ad­here to cer­tain re­quire­ments, such as the need to in­cor­po­rate all rel­e­vant pre-con­tract di­ag­nos­tic in­spec­tion re­ports; to iden­tify suit­ably the par­ties, the prop­erty and the price; and to be sub­mit­ted to a cool­ing-off pe­riod in favour of the buyer.

CON­TRAC­TUAL RE­QUIRE­MENTS DI­AG­NOS­TIC RE­PORTS

Of these var­i­ous points, the pre-con­tract di­ag­nos­tic in­spec­tions are of par­tic­u­lar note. Be­fore look­ing at these, it is im­por­tant to un­der­stand that these do not di­rectly repli­cate what one would ex­pect from a full, in­de­pen­dent struc­tural sur­vey. If you would have a sur­vey car­ried out when buy­ing a house in the UK, then why not do the same in France? While it may gen­er­ate an ex­tra ex­pense, you will be able to value the peace of mind it should of­fer.

De­pend­ing upon the lo­ca­tion, the type and the age of the prop­erty, dif­fer­ent in­spec­tions must be car­ried out, the re­sults be­ing in­cor­po­rated into the ini­tial pur­chase con­tract for in­for­ma­tion. Prop­er­ties built be­fore 1948 will be checked for the pres­ence of lead paint; if built be­fore 2008 they will be as­sessed for the pres­ence of as­bestos; in most ar­eas of the south, as well as Paris, there will be an in­spec­tion for the pres­ence of ter­mites. If the prop­erty is an apart­ment, the in­ter­nal hab­it­able sur­face area will be mea­sured, as this

should be a met­ric for the price.

A no­taire’s pri­mary role is to en­sure that a trans­ac­tion is reg­is­tered and that all rel­e­vant taxes are paid

Where elec­tri­cal and gas sys­tems are more than 15 years old, these will be checked.

An energy ef­fi­ciency re­port is pro­duced and the in­spec­tor will make an es­ti­mate of the likely an­nual energy con­sump­tion, sug­gest­ing ways in which im­prove­ments may be made. Such sug­ges­tions would also come with a likely costs/ben­e­fits com­par­i­son, on the ba­sis that some steps may be rel­a­tively cheap, some less so, and that rel­a­tive im­prove­ments may dif­fer. In ad­di­tion, energy ef­fi­ciency im­prove­ments grants may oc­ca­sion­ally be avail­able, which would also be noted by the di­ag­nos­tic in­spec­tor.

On top of these prop­erty-spe­cific di­ag­nos­tics, a re­port sum­maris­ing any noted nat­u­ral risks (for ex­am­ple flood­ing, for­est fire, avalanche, seis­mic ac­tiv­ity) known to af­fect the area is pro­duced. This re­lates to the gen­eral area, rather than to the prop­erty in par­tic­u­lar. While the en­tire river­side area of a vil­lage may well have been flooded in the past, for ex­am­ple, if the prop­erty to be bought is at the top of a hill over­look­ing the vil­lage it is un­likely to have been af­fected in the same way.

It may be im­por­tant, there­fore, to con­sider the terms of the con­tract to es­tab­lish if this in­cludes an ex­press dec­la­ra­tion by the seller that any spe­cific prob­lems af­fect­ing the area have not af­fected the prop­erty it­self.

CON­DI­TIONAL CLAUSES

Most buy­ers are aware that a French pur­chase con­tract will be sub­ject to var­i­ous con­di­tions ( con­di­tions sus­pen­sives) that need to be sat­is­fied be­fore the sale can com­plete. Typ­i­cal con­di­tions will in­clude con­fir­ma­tion that the seller has good ti­tle, that there are no charges or re­stric­tions reg­is­tered against the prop­erty that would not be cleared on com­ple­tion, and con­fir­ma­tion that a buyer would re­ceive a mort­gage of­fer if re­quired.

How­ever, the con­di­tion sus­pen­sive that there will be no ad­min­is­tra­tive re­stric­tions reg­is­tered at the lo­cal au­thor­ity does not equate to the Lo­cal Au­thor­ity Search that would be pro­duced on a prop­erty pur­chase in the UK. It is much nar­rower. Thus if a buyer has con­cerns about plan­ning mat­ters, such as whether a neigh­bour may be able to de­velop their land, then these should be raised sep­a­rately. Sim­i­larly, if the buyer needs to ob­tain plan­ning per­mis­sion for works to be car­ried out on site, then this should be ne­go­ti­ated in ad­vance of sign­ing the con­tract.

Once the con­tract is signed, the buyer is of­fered a 10-day pe­riod in which they can with­draw, should they so choose. This right is ex­er­cised only rarely by buy­ers, but it does of­fer an im­por­tant ‘get out’ if cir­cum­stances change.

COM­PLE­TION

Pre­sum­ing the var­i­ous con­di­tions are sat­is­fied, and the buyer has not with­drawn from the pur­chase, the no­taire will pre­pare a draft of the fi­nal com­ple­tion deed. This is likely to be some two months af­ter the first con­tract is signed. At that time, the par­ties will be in­vited to at­tend a com­ple­tion meet­ing at the no­taire’s of­fice.

The buyer will send the bal­ance of the pur­chase price to the no­taire, tak­ing into ac­count any de­posit al­ready paid. The buyer will pay the no­taire’s fees, which will in­clude stamp duty and other reg­is­ter charges. In gen­eral the fees are about 7%-8% of the price; there is a re­duc­tion for new-build prop­erty; an ex­tra charge if a mort­gage is re­quired.

The no­taire will read through the deed with the par­ties, which may oc­ca­sion­ally give rise to the need for a trans­la­tor to be present. We would ex­pect to ob­tain a copy of the draft in ad­vance of the com­ple­tion meet­ing, to en­sure it is all in or­der.

It is gen­er­ally worth­while at­tend­ing the com­ple­tion meet­ing, although where that is not pos­si­ble, the par­ties can be rep­re­sented by a power of at­tor­ney. This would al­low a third party – pos­si­bly one of the no­taire’s staff – to sign the pur­chase deed on their be­half. On oc­ca­sion, a power of at­tor­ney can be used to sign the first con­tract as well.

It is ev­i­dent that a power of at­tor­ney can con­fer sub­stan­tial pow­ers on an­other party, and there­fore as a pro­tec­tion the doc­u­ment should be com­pleted in ac­cor­dance with strict for­mal­i­ties. It should be scru­ti­nised along with the draft sale deed, to en­sure it is in or­der.

OTHER CON­SID­ER­A­TIONS

In­evitably, this brief sum­mary can only re­ally touch on the most com­mon points aris­ing in re­la­tion to a pur­chase in France, and many other as­pects may be rel­e­vant. If the prop­erty is cur­rently un­der con­struc­tion, an en­tirely dif­fer­ent form of con­tract, with many other guar­an­tees and obli­ga­tions, might be pro­duced.

Buy­ers should also give de­tailed con­sid­er­a­tion to in­her­i­tance tax and le­gal mat­ters as well – just be­cause the EU Suc­ces­sion Reg­u­la­tion is now in force, po­ten­tially giv­ing buy­ers more scope for their in­her­i­tance plan­ning, it does not fol­low that de­tailed ad­vice on this topic is no longer suit­able. Other tax­a­tion is­sues are im­por­tant too. Will wealth tax ap­ply, for ex­am­ple? Will any busi­ness or other ac­tiv­ity gen­er­ate any li­a­bil­ity to in­come tax (and, if so, in which ju­ris­dic­tion)?

On first glance, the whole process of buy­ing a house in France looks quite clear. There are lots of sim­i­lar­i­ties with the stan­dard con­veyanc­ing process in the UK, af­ter all. How­ever there are a num­ber of po­ten­tial com­pli­ca­tions, even where lan­guage is not a bar­rier, and com­mis­sion­ing in­de­pen­dent spe­cial­ist so­lic­i­tors to over­see the process should prove worth­while.

“Buy­ers should also give de­tailed con­sid­er­a­tion to in­her­i­tance tax and le­gal mat­ters” Matthew Cameron is a part­ner and head of the French Le­gal Ser­vices de­part­ment at Ash­tons Le­gal ash­ton­sle­gal.co.uk

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