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Understanding French house buying terms and processes

Posted by Chez de Chez on October 13, 2014
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There’s lots of great advice on the internet these days regarding buying and selling your French home but it can be a bit of a minefield to navigate.  What we’ve tried to do here is give you the translation for some of the key words but also what they actually mean and how they might affect you.

Before the Sale

Carte Professionnelle – All French estate agents must hold this certificate.

Bon de Visite – You will be asked to sign one of these prior to visiting any property with an agency.  As agencies in France don’t really have exclusivity on a property this protects them. Therefore, once an agency shows a client a property the client would not then be able to either buy directly from the owner or through another agency.

Sale agreement documents

there are two types of contract that can be used:

  • Promesse de Vente – little used and this contract can only take place through a notaire
  • Compromis de Vente – is between the parties and often organised by the estate agent. This is the preferred option even by Notiares these days as there is a clear reciprocal obligation.

What you do need to be aware of with either of these contracts is that there could be clauses included in the small print (and there’s a lot of small print!).  These are called ‘conditions suspensives’ and they may contain conditions that are weighted to give either advantages or an exit clause to either the buyer or the seller.

Therefore you should go through the contract and preferably get it checked out by a legal representative prior to signing; to be sure there are no nasty surprises on completion day.  A small additional fee at this stage could save you thousands in the long run.

Also be aware that because these contracts are signed a few months in advance of the sale, they’re often referred to as avant-contract.  Do not be mis-led into thinking this is just some form of preliminary contract.  Whilst this is not the deed of sale, it’s still a legally binding sales contract and once signed it can be very costly to back out of.

That said, when signing either the Promesse or Compromis de Vente there is now a ten-day cooling off period, so you do have a bit of breathing space.  However, after the ten days has lapsed, unless you have other specific clauses included (such as one where the sale is subject to your mortgage request being accepted) then to back out could cost you up to 10% of the agreed purchase price!

Whilst it’s very normal for a clause locking in the purchaser, there’s not always a reciprocal one for the seller.  It’s therefore advisable as the buyer to make sure the clause cuts both ways, otherwise the contract becomes very one-sided.

What are the differences between these two contracts?

The Promesse de vente or it’s correct title ‘promesse unilaterale de vente’ (a unilateral offer to sell) is an offer made by the seller to the buyer for an agreed price and for a specific period.  This type of contract is often used by property professionals looking to purchase land or property where they may need planning permission as an example.

The Compromis de Vente, or it’s correct title of promesse synallagmatique de vente, is more widely used and understood as a sale and purchase contract and the obligation on both sides is far more clear.  With this type of contract the owner agrees to sell to the purchaser and the purchaser agrees to buy from the owner.  Again there may be conditions that either party can ask to be included in the contract, so be sure you’re covered and of what the other party has stipulated.

As the buyer you would at this point be expected to pay up to 10% of the purchase price as a deposit (acompte).  The 10% deposit is held by the notaire and is not released until completion.

Notaire

These are similar to a solicitor in the UK but the main difference being that they are employed by the French government.  This means that they in theory make sure a sale is above-board and all the taxes and fees are paid.

However, as we found to our cost, all notaires are not equal in the same way all solicitors are not equal in the UK. Some are far more efficient and knowledgeable than others.  We’d received fantastic service from Notiares, up to the sale of our villa.  So we were lulled into a false sense of security which ended up costing us €13,000 in taxes (that we discovered on the completion day!). Had we used a more efficient notaire, or taken legal advice, this would probably not have been the case.  Therefore, whilst the intent is always legal, mistakes can be made, or bad advice given. So we would strongly recommend you to seek legal advice from a company specialising in French property law.

Sale completion and documents

The Acte de vente is the deed of sale and is usually signed by both the buyer and seller in the notaires office on the completion day.

Once the deed has been read through page by page by the Notaire and either signed by everyone, stating you have read and agree with what is written, you are then given a receipt for the transferred money along with the attestation de propriété.  This is the certificate that proves you are now the owner of the property.  At this point the previous owner will hand you a huge bunch of keys (it’s always a huge bunch!) and you are now the official owner of your home on France.

I’m not quite sure why but I actually like this process (well I always did until we sold our villa!), it feels a slightly ceremonious and far more real than just getting a phone call from an estate agent saying the sale has completed, as is the case in the UK.  But maybe that’s just me and by all means organise a power of attorney if you can’t or would prefer not to be present at this stage.

The Notaire then sends the acte authentique (final deeds) off to the local land registry and some 6 months later an authorised copy will be posted on to you.

Here are some more useful words you’ll want to be aware of:

Acquéreur – Purchaser

Autorisation de prélèvement automatique  – direct debit authorisation

Abonnement – standing charges

Bail – lease to a tenant

Banquet de consignation – the bank that holds the deposit funds on behalf of the notaire.

Bilan – survey

Bon état  – good condition.  Although this is subjective!!

Cadastre – local town planning register

Caution – security deposit – guarantee

Cession – transfer of ownership rights

Clause particulière – special condition

Clause pénale– penalty clause governing performance of an agreement

Clause suspensive  – conditional clause required for the completion of the sale

Commission comprise (CC)  – Estate agents commission included

Commission non compris – estate agents commission not included

Communauté – joint estate of husband and wife

Comptant – cash purchase

Conseiller fiscal – tax advisor

Date de livraison prévue – expected date of completion

Décennale  – 10 year warranty

Dépôt de garantie – deposit paid

Droits d’enregistrement – stamp duty paid by the purchaser

Enregistrement – registration of the title of ownership

FNAIM – national association of estate agents

Fonds de roulement – funds paid by apartment owners to cover unexpected costs.

Frais de notaire – additional sum to be paid to the notaire on top of the purchase price

Impôt sur les plus-values ( Capital gains tax) is payable on the profit made on the sale of a second home in France, up to 15 years after purchase.  This is not as black and white as it sounds and as an example you may only have one property but still under French law be liable to CGT if you sold a previous home in the preceding 5 years and the local tax office believe you did so for investment gain.  We came unstuck here, even though our reasons for selling both houses 4 years apart was absolutely genuine, so again we’d strongly recommend legal advice if you think you could be a border line case.

Lu et approuvé – read and approved.  A phrase you will write many times on the contract to confirm you have read and agree with everything on that page.  This is why it’s so critical to be sure you know what you’re signing.

Paiment comptant – cash payment

Plus-value – capital gain on the sale of the property

Resiliation – cancellation of the contract

Toutes taxes comprise (TTC) – incuding sales tax

Taxe sur la valeur ajoutée (TVA)  – VAT

Tantiéme – areas of joint ownership (for example with other apartment owners).  Most apartments unlike the UK are freehold with the owners sharing ownership of the whole building.

Taxe d’habitation and Taxe fonciére – local taxes similar to the UK council tax.  Please see our article on French Property running costs for further information about these taxes.

Also be aware that with Taxe fonciére it’s technically the person who owns the property on the 1st of January each year who’s liable to pay this.  However, there’s a general consensus that this is paid by both the buyer and seller on a pro rata basis.

Testament  – a will

Tontine – Joint ownership

Don’t let all these terms put you off

Whilst the French system for buying and selling properties in France is different to the UK, it’s also highly regulated and both buyers and sellers are very well protected.

If you’d like further advice on the buying and selling of your French home we’re here to help so feel free to pick up the phone or drop us a line.

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