On buying property in France

You have found your ideal Brittany home or holiday retreat, and you definitely want to buy it. A guide to the actual purchasing process, and points you should watch out for, are below.

This page gives an overview of the buying process in France, as a guide only. There are different forms of contract, other than the one outlined here, for example for those buying jointly via setting up a company (eg using a Société Civile Immobilière). We do not go into that here, and advise that you get professional legal and taxation advice if you taking that route to purchasing a property in Brittany. Below we describe the usual process for buying property in France.

Stage One - Setting out to buy

The process of property purchase in France is not quite the same as in the UK. If you are not familiar with it you may want to have a UK solicitor with knowledge of French conveyancing law look through the documents or agreements before you sign them.

When you decide to buy a property you may notice that the purchase price is given as an amount followed by "FAI". This means "frais d'agence inclus" - agency fees are included. In France in almost all cases, estate agency fees for the purchase are paid by the Purchaser and not the Vendor as they are in England.

As far as a survey of a property is concerned, it is less usual in France to have a surveyor carry one out and report back to you. However, you might want to ask either a surveyor or a reliable local builder to cast his eye over the property and let you know what structural work he considers might be required and an estimate of possible cost. If you are renovating make sure you get written cost estimates from builders or architects.

A great many rural French properties are not on mains drainage, having a septic tank (fosse septique) instead. New EEC regulations are being introduced and are being gradually implemented in the different counties (departements) in France. These require properties to either be connected to mains drainage, or to have adequate drainage systems that meet the new regulations by 2005. Installation of these systems can prove to be quite expensive. It is advisable to enquire at the local Town Hall (Mairie) about this and if necessary, they will be able to provide you with a list of specialist surveyors who ar authorised to carry out such surveys, and to advise on whether you need to install a new system, or if there are improvements you need to make to an existing one. You will also have to apply through the Town Hall for formal permission for installation.

If there are repairs, you may want to discuss who is to take responsibility for them with the estate agent and/or the vendor, and include them in the compromis de vent as clauses suspensives, so that they have to be done as a condition of sale.

Fees

Land registry tax and legal fees: are paid by the buyer. These add about 8% to the purchase cost of an old property, but less for new properties (3 - 5%). The Notaire's fees are fixed at 1%, but he or she may add a supplement for dealing with overseas buyers. If it is the Notaire who is selling the property s/he can also charge for negotiation, plus 5% on top, bringing the fees up to 12%. These costs cannot be included in a mortgage so the buyer needs to have funds available to cover them.

Boundary surveyor (geometrie): If land is involved, and the boundaries have had to be checked by a boundary surveyor, this will add to the costs.

Stage Two - The Preliminary Contract 'Compromis de Vente'

Once you have found a suitable property you will want to "close" the purchase with the Vendor and will therefore sign a preliminary contract (either a promesse de vente or a compromis de vente - your Notaire can advise you on the legal differences between these two preliminary contracts). This signature is often carried out at the selling agent's office.

Clauses suspensives

The compromis de vente may include clauses suspensives - these clauses cover any conditions that must be met for the sale to go through. If you are applying for a mortgage, this must be included here, as a let-out in case you do not obtain it. These clauses could also include any factors on which the sale is dependant, such as planning permission, the mortgage being obtained, any issues relating to asbestos, and repairs to be carried out by the vendor. The seller may decline to accept a clause suspensive. The final contract (Acte de Vente) will be signed around three months later when your solicitor (Notaire) has completed all enquiries relevant to your property purchase.

On signature of this preliminary contract you will be asked to pay a deposit of 10% of the purchase price. You should also have to hand copies of birth and marriage certificates and some identification such as your passport - a photocopy of the essential pages. Also evidence of financial means if you intend to borrow money for the purchase such as your last three salary slips. It must be borne in mind that this preliminary contract is binding, but that you do have seven days in which you can change your mind without having to give any reason. Backing out later may involve you in loss of deposit or even a court case and damages.

The Vendor must ensure that all information concerning the property is given to the Purchaser, for example the surface area of the property, if there are any rights of way over the property, if land is being purchased where the boundaries are and whether there are any restrictions on construction, whether it is subject to flooding or there has been any risk of pollution. Also if there are any charges over the property. It is compulsory in France that properties be inspected for the presence of asbestos as well as for lead and, in certain, areas, for termites.

Reports on the property that the vendor must provide:
For many of these, the survey must be carried out by a qualified, registered professional.
This list is a guide only, and details may not be fully accurate. Your Notaire will ensure that these reports are provided, but you may want to check on them. In some cases the vendor may be responsible for repairs, else work costs responsibility may be negotiated in the clauses suspensives of the initial contract.

Gas installation report on properties over 15 years old.

Asbestos: From 1 September 2002 there is a requirement for a pre-sale asbestos search (diagnostique amiente) to be carried out on properties built before 1997, and the Purchaser should be furnished with the results of this before signing the compromis de vente. If, as sometimes happens, the inspection is not carried out until after signing, you might want to include a clause suspensive as a let-out from the contract if asbestos is found.

Lead report (CRAP) in high-lead risk areas, on pre-1948 properties, but not for lead piping. The departmental prefect must be sent a copy.

Termites - depending on the termite risk in the department.

Septic tanks must conform to the EU regulations - ask for a certificate of conformity. The deadline for conformity has been postponed, but eventually will arrive.

Natural Hazards report (risques naturels ou technologiques).
Currently required in areas with a risk prevention plan, or where there is risk of seismic activity, but to be extended. This comes from the local authorities. This report would cover any flood risk, nearby hazards such as stored chemicals, nuclear plants. Plus a separate report from the seller if they have ever made an insurance claim for natural causes damage (eg floods).

Energy Efficiency Report (DPE)
Only for information (raising the consciousness about environmental impacts!).
This covers, on a scale of 1 to 6, the likely heating costs (insulation level), and secondly on a scale of A to G, the property's likely impact on climate change via greenhouse gases production

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Stage Three - Signing the Acte de Vente

Once your Notaire has put together all necessary documentation and obtained all information from the relevant administrative bodies, he will prepare the Acte de Vente for all parties to sign and suggest an appointment for signature. Normally all parties to the contract, including any party for example who may be relinquishing a right of way over the property being sold, attend this final signing. However it may be that you will not be able to attend this signature in person and so the Notaire will obtain a "procuration" (like a power of attorney) so that the purchase can be completed. He will also provide you with a provisional account. On signature you will be required to pay the balance of the purchase monies and it is advisable to ensure that the monies are sent to the Notaire in good time by direct transfer to the Notaire's bank. This will enable him to pay the Vendor without having to wait for a cheque to be cashed. If you are making a transfer from another country to France, it is advisable to check on how much this will cost and whether any transfer charges will be deducted from the sum sent. You do not want to find that the amount you have sent for your purchase ends up being less than the balance of funds required due to deduction of any receiving Bank or Bank agent charges.

Stage Four - New Owner

As the new owner, you will now have immediate responsibilities including insuring your property against fire and other risks, and paying your part of any service charges such as water, electricity and gas.

As far as the French equivalent of our council tax (impôts locaux) is concerned, there are two parts to this. One is the taxe d'habitation and the other is taxe foncière. It is usually taken that the person owning the property on the 1st January in the year of purchase pays the taxes for that year. You will be sent an invoice for these separately usually in around September or October.

All that now remains to be done is for the Notaire to register the change of ownership of the property and also, if the purchase is the subject of a mortgage or loan, this will be registered. Property ownership is recorded on a register (cadastre) which can be inspected at the Mairie. These steps usually take between two and six months following which your Notaire will let you have your ownership deed together with a final account. It may well be that you will also receive a cheque reimbursing you for any balance left from your initial deposit.

Maisons Bretonnes offers Property Services for Brittany home owners, which include assistance with the paperwork associated with getting your new home ownership sorted out, as well as project management, repairs and maintenance and garden care.

Other important points

UK taxes on renting out or selling your property while you live the UK

You will be liable for tax in France, and if you live in the UK, for UK tax as well. However, the French tax on rental profit can be claimed against the UK tax. The same principle applies to capital gains tax, but this is more complicated and in some situations not all of the French cgt paid is eligible for offsetting against the UK cgt. The UK Inland Revenue has leaflets and a more detailed pdf file explaining how to deal with both rental income tax and capital gains tax from overseas property. These are the two initial links:

Information on tax on overseas lettings and capital gains

Foreign tax credit relief: capital gains - Leaflet IR261

Inheritance law

In France it is the children who are the main consideration in inheritance law. If you have children, or are planning to, but want to ensure that in the event of your death the French property goes to your husband or wife, or someone else, you should draw up a will that covers your property in France. The Notaire will be able to do this.

Disclaimer

The above information is a guideline only. It should not in any way be treated as a substitute for legal advice and it is therefore recommended and required that legal representation be sought from your Notaire. If you are not familiar with the process of purchasing property in France, it is also recommended that you have either a UK solicitor with the relevant experience, or a French attorney, look over the documents before you sign contracts.