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Buying

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The French buying process is quite different to that in the UK but once you have all the elements in hand, you will find it is quite straightforward. It is our aim to make it an efficient, quick and pleasant experience for you.

Therefore, we feel that it is important to familiarise yourself with the differences before embarking on the purchase of a French property.

Here are a few pointers to help you but if you would like more information, please contact us on +44 (0) 20 7989 7777 or by email at france@halkinriviera.co.uk.
Please click on the links below:

 


Before buying a property in France


French Property Contracts


Cooling-off Period


Completing French Property Transactions


French Mortgages


Other Legal and Financial Aspects


Purchase Vehicles: SCI, Bail Commercial



 

BUYING A PROPERTY IN FRANCE

When buying a property in France, note that all contract documentation will be in French and that French text has force of law.

If you require any advice concerning the nature and obligation of those contracts and also further information regarding the purchasing process itself, we would advise that you speak to an experienced solicitor familiar with the French property market and French law.

We always recommend that our clients get in touch with a mortgage advisor prior to their visit so they can discuss their options. This has the advantage of providing a clear indication of what is affordable. In addition, if a mortgage has been agreed in principle, it can be quite attractive to sellers.

Our team will be pleased to help with all such matters and can recommend notaries, surveyors, mortgage providers, financial advisors and tax experts.

                                                                                                                                                 

French Property Contracts


Once you have decided on a property, the first step will be to secure it. In order to do so you will have to sign a pre-contract or reservation agreement. There are two types of contract: the ‘Compromis de Vente’ and the ‘Contrat de Réservation’.


1) ‘Compromis de Vente’
The ‘Compromis de Vente’ is the initial contract between the seller and the purchaser. It forms the basis of the agreement which will eventually be formalised in the ‘Acte de Vente’ drafted by the Notaire. It is therefore important to consider its terms very carefully. The ‘Compromis’ is sometimes prepared by the estate agent who will have completed a standard form, which does not always contain the correct information. Great care must be taken before signing it and in any event, legal advice must be sought before doing so.

The ‘Compromis’ will in particular contain a number of conditions precedent which must be spelt out clearly in order to avoid any uncertainty. This type of condition or ‘conditions suspensives’ is extremely useful in protecting the interests of the buyer. One of the most common ‘condition suspensive’ is where a loan or mortgage is necessary for the purchase. You can stipulate the amount, duration and interest rate of the loan you require. If you are unable to obtain the loan, with the appropriate condition suspensive you may withdraw from the contract.

The ‘Compromis’ is arguably the most important document and it must be read and understood fully before proceeding any further. This document can be signed in England as there is no obligation to sign it in France.

2) ‘Contrat de Réservation’
The ‘Contrat de Réservation’ is used when the transaction refers to the sale of an off-plan property.

                                                                                                                                                

Cooling-off Period

At the same time, you will have to pay a deposit to the French Notaire appointed by the seller (you can appoint your own notaire; the two would work together and split their fees). The vendor will require a receipt that this money has been transferred.

Once the ‘Compromis de Vente’ or the ‘Contrat de Réservation’ has been signed by the seller and the purchaser, either the Notaire or the agent (depending on who drafted the contract) will send the purchaser a copy of the signed ‘Compromis’ by registered post.

The purchaser then has a period of 7 days during which he can change his mind and not proceed with the transaction by advising either the Notaire or the agent of his decision also by registered post. This ‘cooling off’ period starts from the day next following receipt of the Notaire's or agent's registered letter (and not, contrary to popular belief, from the date when the purchaser signs the ‘Compromis’).



                                                                                                                                                                              

Completing French Property Transactions

Acte de vente:
Approximately two or three months after the signing of the reservation agreement, the Notaire will draft the ‘Acte de Vente’, which is the transfer deed and incorporates the terms of the ‘Compromis de Vente’ or the ‘Contrat de Réservation’. Completion of the ‘Acte de Vente’ normally takes place at the notary's office. Should one party to the transaction not be able to attend completion, a power of attorney will need to be put in place enabling some other named person (often one of the Notaire's clerks) to sign on behalf of that party. Once the completion monies have been received by the notary, and both the seller and the purchaser have signed the ‘Acte de Vente’, the transaction is complete.

Notarising and legalising French documents:
The sale or purchase of French property may be completed by power of attorney if the seller or purchaser cannot attend completion at the notary's office in France. The power of attorney will usually have to be signed before a Notary Public before being sent to the Foreign Office where the ‘apostille’ (an official seal) will be affixed on the document by way of legalisation.

                                                                                                                                                                              


French Mortgages


In order to speed up your house buying process, it is advisable wherever possible to get a mortgage agreed in principle before any final decision on your new property is made. This has the advantage of providing you with a clear indication of what is affordable and the fact that you have a mortgage agreed in principle is also attractive to sellers. If you have not yet spoken to a mortgage advisor or found a mortgage deal that suits your needs, please contact us so we can refer you to a Financial Advisor. For assistance in working out your mortgage, we have set up a mortgage calculator for your convenience.

                                                                                                                                                                              


Other Legal and Financial Aspects

French Inheritance Law

French inheritance law is very different from UK inheritance law as the former protects the deceased's children through its forced heirship rules. Basically, this means that children automatically inherit a share in their deceased parent's immovable property (eg house) in France. This also means that the French property will not pass to the surviving spouse absolutely as it may under English law.
The French succession rules will apply irrespective of the domicile, nationality or residence of the deceased owner of a house in France. The concept of joint ownership is alien to French law and it is therefore advisable to seek legal advice as to how best to deal with this matter – a number of options are indeed available.


French Inheritance Tax
Since 22 August 2007, no French inheritance tax is payable between spouses.

 

Indivision
This applies when a number of persons (2 or more) are purchasing the property together either in equal or unequal shares (eg 50/50, 40/60). If the purchase is made ‘en indivision’, French inheritance rules will apply upon death, with the deceased's share in the property passing either in full, or in part, to his or her children.

 

Tontine
Under a ‘tontine’, on the death of one spouse, the property passes to the surviving spouse absolutely. This requires inserting a special clause in the ‘Acte de Vente’. However, this option is only recommended for purchasers with very specific requirements. Both the advantages and disadvantages of the ‘tontine’ must be considered very carefully before proceeding with it.

 

Communauté Universelle
By adopting the French matrimonial regime of ‘communauté universelle’ in respect of the French immovable assets, the surviving spouse receives property absolutely with the ability of disposing of it as he or she pleases. There are advantages and disadvantages to this arrangement and expert legal advice must be sought before proceeding.

 

French & English Wills
Depending on how you structure your purchase, we recommend that you make an English Will dealing with your UK assets and also a French Will dealing specifically with your property in France. Great care must be taken in order to avoid inadvertent revocation of either Will and legal advice should be sought.

 

French Wealth Tax (‘Impôt de Solidarité sur la Fortune’)
This tax affects not only individuals who are domiciled in France but also individuals who are domiciled outside France and have property in France.

It is payable annually if the value of your net French assets exceeds €770,000, such value being the market value of those assets on 1 January of each year. The rates of tax vary between 0.55% and 1.8% and substantial penalties are imposed by the French government if you fail to declare the value of your assets.

 

French Capital Gains Tax (‘Plus Value’)
Please contact us for further information

                                                                                                                                                                            

 

Purchase Vehicles: SCI, Bail Commercial

Forming a Société Civile Immobilière(SCI)
It is possible to purchase French property through the vehicle of an SCI, which is a type of French company. This means that the property is held by the SCI, the shares of which are owned by individuals (the members of the company). French succession laws do not apply to the devolution of those shares because they are movable assets and therefore pass on death in accordance with the law of the owner's domicile. If the owner was English, his orher shares can then be transferred under the terms of the English Will to the beneficiaries of their choice.

Bail Commercial (applies solely to leaseback property)
With the purchase of a leaseback property, the purchaser of the property leases it back to a management company who will run the complex of which the property forms part as a business for tourism. Great care must be taken before signing the commercial lease as this type of investment has implications that need to be fully understood by property investors. Leaseback properties offer interesting benefits:
- Guaranteed income
- 19.6% VAT Rebate
- No Management, Maintenance or running costs during lease period
- Personal usage options available
- Freehold properties
- Lease between 9 and 11 years
- Furnished properties
- Located in the best locations

 

 

AIPP
Spencer James
Halkin Estates
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