I have just read yet another story about a British potential buyer of a French property who claims "she was rushed into signing the compromis de vente" (pre-sale contract) and that the seven day "cooling off" period has now expired and she finds she does not have sufficient funds to go ahead with the purchase....
Fortunately the majority of buyers do not end up in this type of situation but when it does happen, it raises a number of points which I continue to emphasise to potential buyers and are worth repeating here.
1. Have your funds in place
Preferably before you even set out on a house hunting trip discuss with your bank or mortgage provider what sort of loan might be offered in the event of a property purchase, and preferably secure a signed letter of confirmation that the loan will be available in principle. This is essential, as it will define what level of price you have available for purchase (plus transaction costs, repairs or renovation, removal costs etc) and avoid fruitless visits to properties that are beyond your budget.
2. Know what you are looking for
You may already have settled on an area, even a town or village, where you would like to buy a property. Armed with this knowledge and a clear idea of your budget, you can target your initial searches more precisely, either on your own and/or using local estate agents.
3. When you find what you are looking for
Although there is less competition now that the French market has slowed down compared with previous years, desirable properties still tend to sell fast, and you may find yourself competing with other potential buyers (with funds available!) - and you do not want to miss out. So having your funds in place or an offer of a mortgage puts you in an better position to negotiate and proceed to the next stage of securing the deal.
4. Securing the deal
The French property buying process offers a number of legal protections to both buyers and sellers, and basically proceeds in stages, as follows:
- a written offer by the buyer at or below the asking price, best time limited ("this offer is valid until such and such a time and date") which you or your agent want to get counter-signed by the vendor, confirming his agreement. Do not sign an offer unless you are serious as French case law has held that they are binding contracts (hence the time limit suggested) and above all do not sign more than one offer at a time, as you may find yourself committed to buying several properties.........
- the "compromis de vente" or pre-contract. This is prepared by an estate agent (using standard models) or by a French Notaire and sets out the details of the property, identities of seller and prospective buyers, price, any special conditions (subject to survey etc) and - importantly whether the buyer is paying cash or seeking a mortgage. It is essential that you understand exactly what you are signing, as different conditions aplly (see below) whether you are paying cash or seeking a loan or mortgage. If in dubt, do not sign anything you do not fully understand.
5. Cooling-off and time to secure your mortgage
If you are paying cash for your French property, you have seven days "cooling off" after receipt of the compromis de vente by registered post at your home address. During this time you can change your mind, promptly notify all the parties concerned and withdraw from the deal without penalty.
If you are seeking a bank loan or mortgage - and hopefully followed the advice in 1. above - you have approximately 30 to 45 days in which to firm up your offer, and proceed to the next stage of purchase. During this extended period, you are expected to show "due diligence" in securing your finances - you cannot sit back and do nothing but must keep the other parties informed of our progress. you may even need to seek a time extension and would need convincing proof of your efforts. If you are genuinely unable to secure funds and cannot proceed, you can withdraw from the transaction within the time period stipulated, without penalty.
6. Completion and the "acte de vente"
Assuming you have secured your purchase funds and any other conditions in the comprommis have been fulfilled (such as a survey etc) then normally within about three months of your original offer, you will find yourself before the Notaire ready to sign the final sales act and receive the keys. Your funds will have been transfered by your bank to the Noatire's special secure account (less any deposit you may have paid earlier) and all parties sign and complete (either in person or through a proxy, usually one of the Notaire's clerks).
The property is now yours to enjoy!
Fortunately the majority of buyers do not end up in this type of situation but when it does happen, it raises a number of points which I continue to emphasise to potential buyers and are worth repeating here.
1. Have your funds in place
Preferably before you even set out on a house hunting trip discuss with your bank or mortgage provider what sort of loan might be offered in the event of a property purchase, and preferably secure a signed letter of confirmation that the loan will be available in principle. This is essential, as it will define what level of price you have available for purchase (plus transaction costs, repairs or renovation, removal costs etc) and avoid fruitless visits to properties that are beyond your budget.
2. Know what you are looking for
You may already have settled on an area, even a town or village, where you would like to buy a property. Armed with this knowledge and a clear idea of your budget, you can target your initial searches more precisely, either on your own and/or using local estate agents.
3. When you find what you are looking for
Although there is less competition now that the French market has slowed down compared with previous years, desirable properties still tend to sell fast, and you may find yourself competing with other potential buyers (with funds available!) - and you do not want to miss out. So having your funds in place or an offer of a mortgage puts you in an better position to negotiate and proceed to the next stage of securing the deal.
4. Securing the deal
The French property buying process offers a number of legal protections to both buyers and sellers, and basically proceeds in stages, as follows:
- a written offer by the buyer at or below the asking price, best time limited ("this offer is valid until such and such a time and date") which you or your agent want to get counter-signed by the vendor, confirming his agreement. Do not sign an offer unless you are serious as French case law has held that they are binding contracts (hence the time limit suggested) and above all do not sign more than one offer at a time, as you may find yourself committed to buying several properties.........
- the "compromis de vente" or pre-contract. This is prepared by an estate agent (using standard models) or by a French Notaire and sets out the details of the property, identities of seller and prospective buyers, price, any special conditions (subject to survey etc) and - importantly whether the buyer is paying cash or seeking a mortgage. It is essential that you understand exactly what you are signing, as different conditions aplly (see below) whether you are paying cash or seeking a loan or mortgage. If in dubt, do not sign anything you do not fully understand.
5. Cooling-off and time to secure your mortgage
If you are paying cash for your French property, you have seven days "cooling off" after receipt of the compromis de vente by registered post at your home address. During this time you can change your mind, promptly notify all the parties concerned and withdraw from the deal without penalty.
If you are seeking a bank loan or mortgage - and hopefully followed the advice in 1. above - you have approximately 30 to 45 days in which to firm up your offer, and proceed to the next stage of purchase. During this extended period, you are expected to show "due diligence" in securing your finances - you cannot sit back and do nothing but must keep the other parties informed of our progress. you may even need to seek a time extension and would need convincing proof of your efforts. If you are genuinely unable to secure funds and cannot proceed, you can withdraw from the transaction within the time period stipulated, without penalty.
6. Completion and the "acte de vente"
Assuming you have secured your purchase funds and any other conditions in the comprommis have been fulfilled (such as a survey etc) then normally within about three months of your original offer, you will find yourself before the Notaire ready to sign the final sales act and receive the keys. Your funds will have been transfered by your bank to the Noatire's special secure account (less any deposit you may have paid earlier) and all parties sign and complete (either in person or through a proxy, usually one of the Notaire's clerks).
The property is now yours to enjoy!