Your Best Value in France
France – Buyers guide and purchase costs
There are a number of costs associated with purchasing a property in France. In France the purchase of a French property is a regulated legal process. The laws pertaining to the purchase of a French property, depend to some extent, on the type of property you buy. For example, a vineyard or farm is subject to different procedures and costs compared to an urban or town property. There are a number of stages involved in finding and securing your property in France, and a number of important legal implications and costs to consider.
The legal side for buying a French property falls into two parts, the preliminary contract “Compromis de Vente” or “Sous-Seing Privé” and the completion contract “Acte de Vente”.
Stage 1: Preliminary Contract “Compromis de Vente” or “Sous-Seing Privé”
Once a price has been agreed with the property vendor both parties will sign a preliminary contract, which is legally binding for both vendor and purchaser. The preliminary contract is called a “Sous-Seing Privé” if it is prepared by a French estate agent, or a called a “Compromis de Vente” if it is prepared by the French notaire. The purchaser typically pays a deposit of 5% to 10% of the property purchase price. This deposit remains held in a special account at the notaire's office until such time as completion takes place or the purchase is aborted. At this stage the property is taken off the market.
Once the “Compromis de Vente” or “Sous-Seing Privé” has been signed there follows a period of normally 6 - 8 weeks during which time the searches are carried out to ensure that the property is not subject to any imminent environmental changes and during which time the purchaser will be required to resolve the financing of the purchase, often with a French mortgage. These searches and the other contractual matters are carried out by the notaire. The notaire is not appointed to act for either party in the transaction but as a public official whose duty is to the State. The function of the notaire is to ensure that the transaction is carried out legally and accurately and in accordance with the proper processes and to give the transaction absolute validity that cannot be contested.
If the purchaser intends to take out a mortgage in France then it is necessary for this to be declared at the time of the agreement and a substantive clause in the Compromis de Vente protects the purchaser's interests in the event that a mortgage is not made available. In this event, the sale does not proceed and the deposit is returned. In the event of the discovery of a 'planned nuisance' through the searches, the buyer can withdraw and the deposit is returned. Should, however, the purchaser break the contract, the deposit is paid to the vendor as an indemnity - conversely, should the vendor break the contract, the deposit is returned to the purchaser.
Stage 2: Final Contract “Acte de Vente”
After all the necessary searches have been completed, (if necessary this period can be extended at the agreement of both parties), the final contract, the “Acte de Vente” is signed at the notaire's office and legal ownership of the property passes to the purchaser. The purchaser must pay the balance of the purchase price (purchase price minus the deposit) plus all fees to the notaire, who then pays the vendor. It should be noted that the balance must be in the notaire's possession before the “Acte de Vente” contract is signed. The “Acte de Vente” is the equivalent to the Deeds of the property. From the signing of the “Acte de Vente” contract the purchaser is responsible for the insurance of all the buildings on the property. It will also be necessary to provide to the notaire before completion a copy of your birth certificate translated into French and, if applicable, a copy of a Marriage Certificate also in French.
Property purchase costs in France
The purchaser of a French property is always liable to pay the provisional fees and sometimes liable to also pay the negotiation fees.
Provisional fees for the act of buying “provision pour frais d'acte d'achat”
The buyer is responsible for paying the legal fees (between 3% - 4%) and transfer taxes (4.86%) which amount to approximately 8% of the purchase price for the property in France. Plus there may be some surveyors costs that might have been incurred such as establishing boundaries, repositioning boundaries and preparing plans for the “Acte de Vente”. These fees are paid to the notaire on the day of signature of the “Acte de Vente” together with the balance of the purchase price. These fees in French are called the "Provision pour frais d'acte d'achat", which means provisional fees for the act of buying. These provisional fees are documented in the initial contract and include an estimate to the registration taxes which get paid to the government.
A few months after the property has been purchased and the sale of the French property has been lodged with the French government, the exact amount of registration tax due will be calculated by the French tax authorities. Depending on the initial estimate (if it was over estimated or under estimated) will depend on whether the purchaser will receive or pay a small sum of money.
If you take out a French mortgage a in order to complete the property purchase then a further cost will be charged by your notaire for registering the charge of the lender with the land registry.
Negotiation fees “honoraires des négociation”
The vendor usually pays the estate agency's commission fees, known in French as the “honoraires des négociation” (fees of negotiation). Under certain exceptional circumstances these negotiation fees are paid by the purchaser, but if this is the case this should be agreed in advance and included within the Mandat, the official instruction from the Vendor to the Agent, and made known to the purchaser at the outset. Typically, the buyer will pay these negotiation fees with lower value properties (i.e. less than €50,000). These provisional fees are documented in the initial contract and usually range from 3 to 10% of the purchase price.
Differences between buying new and old French properties
Due to the high demand for new French property, many purchasers buy properties "off plan" from French property developers. This means that the purchaser will buy new French properties from the plans, and select which property they want within a particular development. Typically, purchasers who buy a new property have to make regular installments during key stages of the property development (opposed to paying for the property when it is complete), and an initial deposit of 5% to 10%. The initial deposit and regular installments vary from one French property developer to the other. The notary fees associated with buying a new property in France is typically less (approximately 3% - 4%) than the notary fees associated with buying an old property in France (approximately 8%).
If you make regular stage payments to the French property developer you should ensure that you receive bank guaranties for each payment. These bank guaranties protect you in the unlikely event that the French property developer has financial difficulties before the property is transferred to your name.
To find out more about mortgages in France, and begin your fast-track application, please complete the Enquiry Form. You will receive contact from one of our consultants within 24 hours.