Expats Radio speaks to Suzanne Pearce from Suzanne in France Estate Agency about how to buy a property in France now.
Suzanne tells us: Now is a great time to invest money in property in France. If all goes well the entire process for purchasing a property in France usually takes 3 months. This can be faster if you are not buying with a mortgage.
In many areas of France if you are buying a property with land of 1,000m2 (1/4 acre) or more the Notaire has to inform the SAFER (French Farmers Organisation). This notification process usually takes 2 months however, if you make a payment of 143.52€ to the Notaire this can be speeded up and dealt with in 2 – 3 weeks. If the SAFER have a farmer who is interested in the land they have priority over other purchasers (even French) and they can pre-empt the sale. In practice this does not happen very often as the farmer would have to buy the property and land at the same price you have agreed and often they don’t want a house – it is just the land that interests them. From the Vendors point of view it may create a small delay and some stress but they would still achieve a sale on their house at the agreed amount.
The Notaire usually works for both vendor and purchaser and acts as a tax collector for the state. This would be considered a conflict of interest in the UK but it does save time on paperwork in France. A lot depends on the Notaire his or her self – some are more thorough than others and some are considerably quicker than others. Look for recommendations. The vendor and purchaser can use a different Notaire – it does not cost any more as the 2 Notaires would have to split their fee.
Money laundering rules are tightening up in France. Money is usually transferred to the Notaire via a specialist currency exchange company or a bank. Do not expect to turn up with a carrier bag full of cash! If you are buying from a British vendor then it is possible to carry out the financial part of the transaction in sterling in the UK. The parties would need to engage a UK Solicitor specialising in French law to work alongside the French Notaire (at least to ensure that the money is in the right place before completion – certainly NEVER pay the money directly to the vendor) and the purchaser would still need to send enough euros to cover the Estate Agent and Notaire’s fees. In practice this very rarely happens.
All the buying and selling contracts in France are in French and French law applies. Most contracts are based on a standard but problems can arise if you do not fully understand what you are signing. Most Notaires will insist that you pay for a Translator. Make sure you know and trust the Translator or have had them recommended. They should as a minimum have Professional Indemnity Insurance.
There should be some “clauses suspensives” in the Compromis de Vente (the equivalent of exchange of contracts in the UK). Non fulfillment of any/all of these clauses could result in the Compromis becoming null and void and the purchaser being allowed to retract without forfeiting his deposit and without financial penalties. If obtaining planning permission on an adjoining or separate barn is crucial to your plans make sure that the obtention of an outline planning permission is written into the Compromis as a clause suspensive so that if, for any reason, it is not granted, you are not forced in to buying a property that is not suitable for you. Similarly if you are intending to apply for a mortgage, either in France or in the UK, to fund your purchase, make sure it is written in as a clause suspensive.
With mortgages you declare at the time of agreeing to purchase and then when you are signing the Compromis that you will need a mortgage. You will be asked to sign, on your honour, that you know of no reason why you shouldn’t be able to obtain a mortgage on the property. My advice is to go and see your lender and ask for a Mortgage Agreement in Principle before you even start looking at houses. This will speed up the process later. Lending criteria is more strict in France. Strict timings are written into the Compromis relating to the mortgage. You need to submit your mortgage application within 15 days of signing the Compromis. You then have up to 2 months to obtain your written mortgage offer. You must provide a copy to your Notaire and/or Estate Agent within 3 days of receiving it from the Bank. If your application is refused you must prove, within the 2 month period, that you have tried approaching alternative lenders to secure a mortgage.
All purchasers have a statutory 7 day cooling-off period after signing the Compromis de Vente. However, the vendor is committed as soon as he/she has signed. If a purchaser is applying for a mortgage they then have an additional period of time.
Other normal clause suspensives are that the Notaire doesn’t find that the vendor has mortgaged the property or there is a charge on it, and the other is based on the equivalent of the local search. If either of these show anything detrimental then the buyer is not required to continue with their purchase and they would receive their deposit back.
Be careful with new wind farm projects, the new nuclear power line route, etc. Be clear about how close to the property would be a problem to you – check it out yourself with the local Mairie, your Estate Agent and the Notaire. The Estate Agent and Notaire may not consider that a new pylon route 1km away is a problem – they may only declare it if it is within 400 meters of the house, but if it is likely to spoil the view from your rural idyll then it may be of concern to you.
In France you do not have to have a property survey, even if you are buying with a mortgage. In the UK you would have a survey. Very often a French buyer will take their roofer or stonemason with them if they have any concerns on a property and ask for a quote at the same time. There are British Surveyors in France who will do similar surveys to those you would have in the UK. It is an added expense but can save you money in the long term.
There are obligatory diagnostic tests which have to be carried out at the vendors expense to provide information for prospective purchasers. These include -
• The Energy Performance Test (DPE) – which has to be carried out when the property goes on to the market (if there is any form of heating).
The other diagnostic tests can be carried out once a buyer has been found – • Asbestos
• Lead in paintwork • Electricalinstallation • Gasinstallation • Septic tank installation (has to be less than 6 months old at point of sale)
You can’t guarantee that you will be able to obtain a mortgage in France if you are moving over here. Banks in France will not consider how many properties you own, they will base their lending on your net monthly income. Only 1/3 of your net monthly income can be used to pay back your mortgage and any other debts you pay monthly, ie. HP, car loan, etc. Pension income can be taken into consideration for a mortgage in some cases. There are mortgage advisers in the UK who can advise whether it would be best for you to borrow in the UK or France.
The 7 day cooling-off period starts from the time the purchasers receive their copy of the Compromis de Vente, signed by all parties, at their home address by recorded delivery. All purchasers will receive their own copy. If you are going to pull out of the purchase you must have a letter back to the Estate Agent or Notaire by recorded delivery by the 7th day. The Compromis de Vente needs to be signed by all purchasers unless they have signed a Power of Attorney (Procuration) to allow the Notaire or someone else to sign on their behalf.
Foreign buyers do not need to come back over to France to sign as the Compromis can be sent to the UK or other country of residence for signature. However, this can cause delays and unless you take advice from a UK Solicitor specialising in French law, or have the document translated, you are likely to sign something you don’t really understand.
At the end of the 7 day cooling-off period the Notaire will ask you to send your 10% deposit over to their clients’ account. This is based on 10% of the property purchase price (without fees) and can be reduced to 5%, a token amount or no deposit at all if all parties are in agreement. It is not absolutely essential to pay a deposit.
Inheritance laws are different in France and the UK. If your family situation is complicated by a divorce or having children with a previous partner then you need to take specialist advice on how best to purchase your French property. Don’t leave it until you get to the Notaire’s office to sign on completion day to raise questions on how best to buy. Some things need to be written into the contract to save further complications. Take advice. Inheritance laws are set to change soon after the European Parliament passed a regulation in March 2012 allowing residents of EU states to write a will stating that they wish the law of the state of their nationality to apply to their estate. By doing so, Expats living in France will be able to bypass French inheritance rules and opt for the inheritance laws of their native country instead. This is specialist advice and if things have not been set up properly, or have not been set up as you thought, it can be a nightmare to unravel – and at time that you are at your most vulnerable, so please do take care.
Completion day is a little different than in the UK and can be quite ceremonial. Ideally both vendors and purchasers will be at the Notaire’s office with a translator. The Notaire will make sure that the money has arrived and read through the Acte de Vente. Everyone will sign the Acte and then keys will be handed over to the new owners. I recommend that purchasers should re-visit the house just before signature to ensure that any items that are supposed to be included are there, and on a practical level to read the meters and find out where the stopcocks are, etc.
For more information please do not hesitate to contact me.
Suzanne
www.twitter.com/suzanneinfrance
http://www.suzanneinfrance.com/
www.facebook.com/suzanneinfrance & www.facebook.com/normandyinsite
If you have questions, you can also contact Suzanne or Expatsradio.com at: info@expatsradio.com
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