How to buy property in France
How to buy property in France
Advocat Thierry CLERC, EUROJURIS France
Avocat since 1969 in Paris, and later in Rouen's Bar. Specialised in commercial law and private international law. The law office Clerc Di Costanzo & Associates is primarily concerned with business law (commercial, international, employment, mergers and acquisitions, tax law, intellectual property) but also with public law and insurance law.
Specific fields of expertise are as follows :
Medical milieu, clinics and hospitals,
Protection of company know-how (trademarks, patents, competition, Internet),
Organisation of events ; sports and gatherings of tall ships,
How to buy property in France,
How to set up a company Different means are available depending on whether the property is bought for private or professional use, whether the property is old or new, an historical monument, a time share purchase, joint ownership ...
This presentation concerns residential buildings.
1. How to find the property ?
Contact a real estate agent or a "notaire" who will either ask you to sign an exclusive or non-exclusive search mandate, or who has already been instructed by the seller.
The negotiation fees will be between 5% and 10% of the value of the property. Their amount can be discussed, all the more so if the seller has already instructed the real estate agent to search for a buyer on his behalf.
You can, of course, search yourself by looking at the property advertisements in newspapers or find out from acquaintances.
2. Before signing a contract - be careful !
Under French law, once you agree on the object (the real estate) and on the price, the sale is deemed to be concluded.
Don't sign anything if you don't agree on everything.
Ask for the opinion of an architect to check the condition of the real estate. This will cost you between FF 3,000 and FF 10,000 depending on the size of the property. However this can avoid a multitude of problems and therefore unexpected costs in the future.
Don't forget to ask for all the details that you wish for, because after the signature you can't change anything : presence of occupants, employees, information on town planning, works to be carried out.
Plan to include a maximum number of suspensive terms in the preparatory contract.
3. Which is the contract to sign ?
There are generally 2 types of contract.
First of all, a preparatory contract : an option to sell, an option to purchase or a bilateral contract (“compromis de vente”), three different agreements each one of which is binding.
Be very careful !
Ask for a project before signing.
Ask for advice from a notaire and/or an avocat.
Don't hesitate to include extra suspensive terms in addition to the mandatory ones relating to town planning, financing or mortgages on the estate being sold.
For this preparatory contract you will be required to pay between 5% and 10% of the price, as a down payment, which will be returned if the suspensive terms are not fulfilled and which will be lost if you no longer wish to buy.
About two or three months later you will sign the final contract, for completion of the conveyance, in front of a notaire. You ought to be accompanied by your own notaire even if this is not an obligation. He will provide you with useful advice.
The fees for the agreement will be the same but shared between the notaire of the buyer and the notaire of the seller.
Don't forget your passport !
In the meantime, the suspensive terms will have been removed and the financing obtained.
You will have received a draft sales agreement and the final cost statement of the operation taking into account :
the negotiation fees (between 5% and 10% of the selling price),
the fees of your notaire and/or avocat according to the tasks requested of them by yourself,
the fees concerning the drafting of the final agreement (roughly 1% of the price),
expenses and taxes (roughly 5% of the price).
4. The loan
The loan can be negotiated for all or part of the price according to the guarantees offered, in general, for a duration of 15 years with an interest rate between 6% and 7% (for the year 2000).
Generally, banks request a mortgage on the estate.
5. Who can purchase ?
A natural person, several with a joint tenancy clause, a civil real estate company (SCI – société civile immobilière).
SCI has advantages (the shares are movable assets, which are easier to transfer when there are several owners, management rules) and disadvantages (running the company, accounting, meetings...).
6. Reselling
In case of profit, capital gains tax is payable in France up to 30% (year 2000) depending of the duration of the ownership. If you are selling your home, you can benefit from tax relief.
7. Inheritance
French law applies to immovable assets located in France with a reduction of FF 300,000 per child.
The rates are between 20 up to 45 % of the property value.
Consideration must be given to this issue before the signature of the deeds of conveyancing. You may be advised to make gifts or draw up a will.
8. Living in France and tax issues
If you live in France, you may be taxed over all your income (in accordance with the provisions of the tax treaty between France and Norway) if you are considered as domiciled in France, or if your main interests are located in France, or if you stay there more than 183 days a year.
The maximum band rate is of 54% for 2000.
Furthermore, wealth tax is applicable if your assets exceed FF 4,7 MF.
The running costs of a property in France also include the following expenses :
Insurance for the property and furniture : between FF 3,000 and 10,000 a year or more if the furniture and the property have a value of more than FF 3 MF;
Property tax between FF 5,000 and 20,000 a year;
Occupancy tax for about the same amount.
If you have bought a flat in a building held in co-ownership (copropriété), you will bear all common charges covering the property management company’s fees, works, lift, maintenance, etc.).
http://www.eurojuris.no/
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