Saturday, October 10, 2009

French property buying - a safe and secure process

Reading a story in the property section of today's Daily Telegraph offers a timely reminder of the uncertainties surrounding the British property buying process compared with that in France.

The report tells of a couple in the process of selling their West London apartment and buying another, and due to complete - and move - at the weekend. A last minute problem in the resultant 'chain' meant that everything was suddenly on hold, just days before the removal vans were booked to arrive, and even a temporary parking space agreed with the local council.

Fortunately, such a situation could rarely, if ever, occur in France. When a buyer agrees to buy and the vendor agrees to sell, the first thing the parties do is agree on the offer price of a property and then enter into a pre-contract of sale (known as the 'compromis de vente') which sets out the terms and conditions under which the transaction will be carried out. The document will include an agreed date for completion before a French Notaire.

At this point, the buyer has seven days of 'reflexion' or 'cooling off' (more if he is seeking a mortgage) during which he can pull out of the deal. If he does not avail himself of this option, he is firmly committed to the deal and pays over a 10% deposit as security, to be held by the Notaire or the estate agent handling the sale. The vendor has no right of retraction.

Conditional clauses may be written into the 'compromis de vente' with the agreement of both parties. They can typically include the buyer securing a mortgage (nearly six weeks are allowed for him to find and accept an offer), a satisfactory building survey, or the obtaining of planning permission in the case, for example, where the new owner wants to carry out extensive renovations.

If all the conditional clauses are met, the buyer has no grounds for withdrawing from the deal and will as a minimum forfeit any deposit paid if he decides not to go ahead. If he is seeking a mortgage, he must show due diligence in his efforts: he cannot sit back and do nothing and then withdraw within the specially extended six week period.

Completion - signature of the final sales act - will normally take place within six to eight weeks of signing the 'compromis' - plus additional time allowed to satisfy any conditional clauses noted above. The balance of the purchase price must be lodged in the Notaire's special client account several days before the parties attend his office to sign the final act of sale.

Buyers are advised to visit the property with the agent, just before completion and signing of the final sales act, to check that the property has been vacated (unless other arrangements have been mutually agreed) and that it is in the condition in which they found it when agreeing to buy - for example, that no fixtures and fittings have been removed that were agreed to be included in the purchase price.

If all is well, all parties will sign the final sales act. The buyer is handed the keys and becomes the new owner, and the vendors can walk away with a cheque for the proceeds, once the Notaire - in his role as tax gatherer - has settled any outstanding payments such as a mortgage or any capital gains tax that may be owed to the French State.

The timescale between signing the pre-sale contract and the date of completion can be considerably shortened where, for example there are no conditional clauses in the pre-contract, and both parties are prompt in furnishing the documents required by the Notaire to prepare the final sales document.