Buying a property in France
Here comes a short description of the buying process. With our help and through our real estate agency network we will help you finding the property you're looking for.
When we are familiar with your requirements we can suggest a number of properties to visit. If you find the house of your dreams immediately that's very good, however, the first selection normally aims to further define the specific requirements you might have.
Let's assume that you have found a house you like. That's when the price negotiation starts. In France, as anywhere else, the buyer wants to pay as little as possible and the vendor wants to sell at the highest price possible. When it comes to the negotiation of the price, the margin is relatively small, unlike what many people think.
When buyer and vendor are in agreement a preliminary purchase contract, (Compromis de Vente) is drawn up. It's a contract that basically works as a purchase contract, a commitment from buyer and vendor, where the buyer only pays a deposit, usually between 5 and 10% of the agreed price. Both parties' sign and the documents are sent to a solicitor, (Notaire). The buyer has according to French law a 10 days cooling off period during which it's possible to withdraw from the purchase.
The solicitor will then take a closer look at the details of the deal. This takes approximately 3 months and during this period the solicitor makes sure there aren't any outstanding rights on the property, that the local authorities don't have any specific development plans in mind which could mean expropriation, etc. The solicitor will also see to it that there isn't any mortgage on the property that hasn't come out into the open.
When the solicitor has done his work the final purchase contract is drawn up, the rest of the agreed sum is paid, and then you are owner of the property!
It's very important to keep in mind that if the potential buyer changes his/her mind and doesn't want to follow through with the purchase, the down payment is given to the vendor, unless an alternative arrangement was agreed and written in to the preliminary purchase contract (Compromis de Vente). The potential buyer might even be liable to pay the real estate agency commission. It's therefore very important to be sure of what you want as a buyer. The French laws are relentless in these cases.
However, should the solicitor find irregularities with the property, the buyer can step out of the buying process and will be reimbursed the first deposit.
Consequently, buying property in France takes time, but it also means that no bad surprises will come afterwards. All transactions are very thorough and most people find that very reassuring. For the work the solicitor accomplishes the buyer pays a fee, a so called (frais de notaire). It's calculated as a percentage of the purchase sum and can vary, depending on the price. Calculate with approximately 8-10%. In France it's the vendor who pays the real estate agency fees.
It's necessary to have the finances ready before you sign the preliminary contract, (Compromis de Vente). The fact about whether you will apply for a mortgage loan or not has to be stated in this particular contract. The French banks normally grant a loan up to 70% of the purchase sum, excluding the costs for the solicitor, (Notaire). However, like any bank, the local French banks will need proof of your financial assets before they will authorise a mortgage loan.
We have good contacts with some French banks, for example Pari Bas, and if you wish we can arrange a meeting with them.
The French banks work just like everywhere else and want to make sure that you have the funds to pay for the interest and the instalments. So whatever the background, it is always good to establish a contact with the bank early in the process.
French law requires that the property is insured, and that this insurance cover must be arranged before the final purchase contract is signed. The law states the minimum cover for fire and third party insurance. We can recommend some reliable insurance companies, for example SWISS Life.
Property tax and local taxes
Every owner of a property must pay a land tax (taxes foncières). It's payable by the owner of the property and this tax is due in mid-October every year.
However, when the final purchase contract is being signed the solicitor explains to the new owner that he/she is liable to pay this tax as from the date of the signature. This results in a settlement of accounts between vendor and buyer during the act of signing the final purchase contract.
A dwelling tax (taxe d’ habitation) is levied on the number of people who live in the house or in the apartment, whether they are owners or tenants. This tax is paid for the whole year by the person occupying the property on the 1st of January. Please note that this tax is non-refundable when selling a property.
At Franska Hus – FH Propriétés we closely assist our clients during this entire process until hand over of keys.