OTHER FEES AND COSTS
There are potentially other fees and costs that may be incurred.
Purchase using a mortgage secured against the French property
This will give rise to an additional fee. This fee is charged by the notaire and is for the registration of the security against the property. It is calculated on a fixed scale and is in the region of 0.5 to 1% of the value of the mortgage. It is determined by function of the nature, type and amount of the mortgage and most importantly by the type of security that the lender takes against the property. The actual amount of this fee is therefore often only known at a very late stage when the mortgage is finalised, usually shortly before completion, although an estimate should be possible beforehand. This fee should always be borne in mind when determining whether to finance with a mortgage and when budgeting for payment of the final balance if there is a mortgage in place.
VAT or value added tax
VAT (TVA) is payable upon the sale of property to be or that is being constructed as well as upon the sale of property built within 5 years. The applicable VAT rate is 19.6%. Technically, the VAT is paid by the vendor but it always form part of the purchase price (again, this should be checked prior to making any commitment to a property).
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
mercredi 31 mars 2010
vendredi 26 mars 2010
COMPASS IMMOBILIER: Purchasing French Property - costs
COSTS
The cost of a purchase is a very important question to be addressed, especially when you are at the very beginning of the process and are still at the stage of asking ‘Do I want to purchase a property in France?’
The costs involved in a purchase of French real estate are higher for the purchaser than those incurred when buying in some other countries. In principle, the purchaser is responsible for the costs and fees of the purchase. The main costs and fees are listed below:
AGENT’S FEE
This is generally around 6% of the purchase price. Legally, properties must be advertised including the agent's fee - this should be made clear in the actual advertisement and is usually indicated by way of the annotation ‘FAI’. If you are not sure then you should always check, particularly before making any form of commitment. Technically in the paperwork the fee will either feature as a separate item payable by the purchaser or it will be included as part of the purchase price payable by the vendor. If it is a separate item payable by the purchaser, this is an advantage for the buyer due to the fact that the notaire’s fee is slightly lower because it is calculated on the net price. The mandate with the agent for the sale of the property will determine which will be the case and the fee due will be listed therein. You are entitled to view this document.
The fee is only ever payable upon completion of the purchase.
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
The cost of a purchase is a very important question to be addressed, especially when you are at the very beginning of the process and are still at the stage of asking ‘Do I want to purchase a property in France?’
The costs involved in a purchase of French real estate are higher for the purchaser than those incurred when buying in some other countries. In principle, the purchaser is responsible for the costs and fees of the purchase. The main costs and fees are listed below:
AGENT’S FEE
This is generally around 6% of the purchase price. Legally, properties must be advertised including the agent's fee - this should be made clear in the actual advertisement and is usually indicated by way of the annotation ‘FAI’. If you are not sure then you should always check, particularly before making any form of commitment. Technically in the paperwork the fee will either feature as a separate item payable by the purchaser or it will be included as part of the purchase price payable by the vendor. If it is a separate item payable by the purchaser, this is an advantage for the buyer due to the fact that the notaire’s fee is slightly lower because it is calculated on the net price. The mandate with the agent for the sale of the property will determine which will be the case and the fee due will be listed therein. You are entitled to view this document.
The fee is only ever payable upon completion of the purchase.
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
mardi 23 mars 2010
COMPASS IMMOBILIER: Purchasing French Property - completion
Stage 4:
Completion
In France, completion occurs by the signing of a deed (acte authentique). The signing of the acte authentique will be witnessed by the notaire. The acte should contain full information about the purchasing parties, the property, title to the property, declarations for the taxation authorities and the results of the various checks, searches and reports. It should also contain details of how the purchasers will own the property between them.
All parties should be present at the signing. If one party cannot be present then a power of attorney (procuration) will have to be drafted. The signing and witnessing of this document can be subject to particular rules and the exact requirements will depend upon the precise circumstances. For example, it may be necessary to sign the procuration in front of a lawyer in the home country and then have it legalised by the insertion of what is known as an ‘apostille’.
Usually possession of the property is taken immediately after the acte has been signed and witnessed. This may not be the case if the property is rented out (on this point, particular care should be taken as tenants have extensive rights in France about which a purchaser should be fully aware before taking them on) or if it is the purchase of a new development of which the construction is still ongoing.
If the taking of possession is delayed for a reason such as to allow time for clearance of the property, it is possible to include a clause in the deed specifying a deadline for the handover of possession, with a sum withheld from the vendor until this is complied with and a daily penalty if the deadline is exceeded (known as a clause d’astreinte).
Payment of the purchase price and all the fees (minus any deposit that has already been paid) will be required in cleared funds before completion can occur. You should thus ensure that the payment is made in a timely fashion in a means acceptable to the notaire (often a direct bank transfer is the safest form of making the payment). Attention should be paid to the fact that delays can occur when transferring money to a notaire due to anti-money laundering regulations and you should preferably allow in the region of up to 5 working days to be certain that there is sufficient time for the funds to clear.
It is highly advisable to view the property prior to the completion to ensure that the vendor has respected his obligation to clear the property of furniture (unless it has been agreed otherwise), has not made any alterations to the property that were not agreed upon and generally to check that the property has not been damaged since the initial viewing. Also, you can ensure that any items that it was agreed should remain are still in the property. This is one way of safeguarding yourself against being the victim of one of the horror stories that many of us have heard about as immediate action can be taken in the event that the vendor has breached his or her obligations (for example by using a clause d’astreinte).
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
Completion
In France, completion occurs by the signing of a deed (acte authentique). The signing of the acte authentique will be witnessed by the notaire. The acte should contain full information about the purchasing parties, the property, title to the property, declarations for the taxation authorities and the results of the various checks, searches and reports. It should also contain details of how the purchasers will own the property between them.
All parties should be present at the signing. If one party cannot be present then a power of attorney (procuration) will have to be drafted. The signing and witnessing of this document can be subject to particular rules and the exact requirements will depend upon the precise circumstances. For example, it may be necessary to sign the procuration in front of a lawyer in the home country and then have it legalised by the insertion of what is known as an ‘apostille’.
Usually possession of the property is taken immediately after the acte has been signed and witnessed. This may not be the case if the property is rented out (on this point, particular care should be taken as tenants have extensive rights in France about which a purchaser should be fully aware before taking them on) or if it is the purchase of a new development of which the construction is still ongoing.
If the taking of possession is delayed for a reason such as to allow time for clearance of the property, it is possible to include a clause in the deed specifying a deadline for the handover of possession, with a sum withheld from the vendor until this is complied with and a daily penalty if the deadline is exceeded (known as a clause d’astreinte).
Payment of the purchase price and all the fees (minus any deposit that has already been paid) will be required in cleared funds before completion can occur. You should thus ensure that the payment is made in a timely fashion in a means acceptable to the notaire (often a direct bank transfer is the safest form of making the payment). Attention should be paid to the fact that delays can occur when transferring money to a notaire due to anti-money laundering regulations and you should preferably allow in the region of up to 5 working days to be certain that there is sufficient time for the funds to clear.
It is highly advisable to view the property prior to the completion to ensure that the vendor has respected his obligation to clear the property of furniture (unless it has been agreed otherwise), has not made any alterations to the property that were not agreed upon and generally to check that the property has not been damaged since the initial viewing. Also, you can ensure that any items that it was agreed should remain are still in the property. This is one way of safeguarding yourself against being the victim of one of the horror stories that many of us have heard about as immediate action can be taken in the event that the vendor has breached his or her obligations (for example by using a clause d’astreinte).
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
vendredi 19 mars 2010
COMPASS IMMOBILIER: Purchasing French Property - intermediary period
Stage 3:
The intermediary period
This is the period when the notaire will undertake his or her work in relation to the conveyancing process. This period only commences once the first contract has been finalised. The notaire is responsible for contacting the various administrative bodies to notify them of the sale, obtaining the necessary paperwork, commissioning the checks and searches etc.
The notaire will normally require copies of the following documents from you:
• birth certificate
• marriage and any divorce certificate(s)
• passport
• any other certificates that may be relevant e.g. death certificate of a late spouse.
Some notaires will require a translation of the original documents.
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
The intermediary period
This is the period when the notaire will undertake his or her work in relation to the conveyancing process. This period only commences once the first contract has been finalised. The notaire is responsible for contacting the various administrative bodies to notify them of the sale, obtaining the necessary paperwork, commissioning the checks and searches etc.
The notaire will normally require copies of the following documents from you:
• birth certificate
• marriage and any divorce certificate(s)
• passport
• any other certificates that may be relevant e.g. death certificate of a late spouse.
Some notaires will require a translation of the original documents.
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
vendredi 12 mars 2010
COMPASS IMMOBILIER: Purchasing French Property - first contract (part 2)
In relation to the asbestos, termite and lead reports, the general practice now is that these are drawn up and produced at the time of the first contract. Whether the reports are compulsory will depend upon the age of the property and, for termites, where it is situated geographically. In addition, there is now an energy performance report which is obligatory for most residential properties, as well as a natural and technological risks report and checks of any gas or electrical installations that date back more than 15 years. The cost of these reports is at the vendor's charge.
You will purchase the property in the condition that it is in upon the date of completion. The vendor, unless he or she is a professional in the real estate field, only owes you a guarantee for defects in certain narrow circumstances. It is very much a case of ‘caveat emptor’ or ‘buyer beware’.
In this context, it should be noted that surveys are not common practice in France, although they are gradually becoming more widely used. Should you require a survey then it is possible for one to be undertaken, though the person responsible for drafting the survey should of course be carefully chosen. The survey is almost always at the purchaser's charge. It is also advised that a survey should be completed prior to the cooling off period (referred to immediately below) to enable you to have the choice of not proceeding if you are not satisfied with the outcome. If the vendor agrees, it is possible to include a condition suspensive relating to the obtaining of the survey but this needs to be carefully worded to ensure that you are protected if the results are unsatisfactory. A general ‘subject to survey’ condition would not be sufficient.
You will benefit from a seven day cooling-off period at the first contract stage. The exact way this works will depend upon each case but usually the signed contract will be sent to you by recorded delivery letter. If you decide to withdraw during the cooling-off period, you do not have to provide a reason and any deposit paid must be returned within 21 days of the date of the withdrawal. The vendor does not benefit from a cooling-off period.
The deposit is also payable at this time. The deposit can be up to 10% of the purchase price and should be transferred directly to the notaire’s account or to the escrow account of an agent if there is such a facility. It will then be held until completion occurs and will be put towards the purchase price. It will not earn interest. The best means of paying the deposit is often by transfer to the notaire’s/agent’s bank account as there can be difficulties with cheques that are not drawn on a French bank account (even Euro cheques). Never pay cash as it can be impossible to prove payment and in the hands of an unscrupulous person it can disappear very quickly if a refund is claimed!
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
You will purchase the property in the condition that it is in upon the date of completion. The vendor, unless he or she is a professional in the real estate field, only owes you a guarantee for defects in certain narrow circumstances. It is very much a case of ‘caveat emptor’ or ‘buyer beware’.
In this context, it should be noted that surveys are not common practice in France, although they are gradually becoming more widely used. Should you require a survey then it is possible for one to be undertaken, though the person responsible for drafting the survey should of course be carefully chosen. The survey is almost always at the purchaser's charge. It is also advised that a survey should be completed prior to the cooling off period (referred to immediately below) to enable you to have the choice of not proceeding if you are not satisfied with the outcome. If the vendor agrees, it is possible to include a condition suspensive relating to the obtaining of the survey but this needs to be carefully worded to ensure that you are protected if the results are unsatisfactory. A general ‘subject to survey’ condition would not be sufficient.
You will benefit from a seven day cooling-off period at the first contract stage. The exact way this works will depend upon each case but usually the signed contract will be sent to you by recorded delivery letter. If you decide to withdraw during the cooling-off period, you do not have to provide a reason and any deposit paid must be returned within 21 days of the date of the withdrawal. The vendor does not benefit from a cooling-off period.
The deposit is also payable at this time. The deposit can be up to 10% of the purchase price and should be transferred directly to the notaire’s account or to the escrow account of an agent if there is such a facility. It will then be held until completion occurs and will be put towards the purchase price. It will not earn interest. The best means of paying the deposit is often by transfer to the notaire’s/agent’s bank account as there can be difficulties with cheques that are not drawn on a French bank account (even Euro cheques). Never pay cash as it can be impossible to prove payment and in the hands of an unscrupulous person it can disappear very quickly if a refund is claimed!
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
mardi 9 mars 2010
COMPASS IMMOBILIER: Purchasing French Property - first contract (part 1)
Stage 2:
The first contract
Those who have purchased property in certain countries will be all too aware of the fact that after an offer, several weeks can elapse before any binding agreement is entered into and then one party can pull out just before exchange of contracts with no recourse possible, thus leading to a loss of money and time. The French system seeks to avoid this possibility and it is this aspect which is fundamentally different from real estate purchases in some other countries.
In France, after an offer is made on a property and accepted, a compromis or sous-seing privé is drawn up. There are other forms of contract such as the promise to sell or purchase ('promesse de vente' or 'promesse d’achat') which function in a different manner and are most often encountered in the Paris region.
This contract can come very shortly after an offer, very occasionally even on the same day. It is extremely important because it lays down the terms and conditions of the purchase and governs the timetable, the checks to be made etc. Both parties will be tied into the purchase of the property subject to conditions that have to be met prior to completion taking place (conditions suspensives). If the conditions are met then the sale will occur. If they are not met, both parties will be free of any engagement and the deposit paid will be returned to the purchaser. If the conditions are met but one party decides not to go ahead, what occurs will normally be governed by the clause in the compromis in this respect (clause pénale) and one party can take legal action to force the other to respect his or her obligations. Generally if it is the purchaser who does not wish to proceed, he or she will lose the deposit and may be liable to pay additional compensation.
The following are types of conditions suspensives of a contract:
• that there is nothing in the town planning documentation that adversely affects the property or is likely to diminish its value e.g. a plan to build a TGV route across the garden;
• that there are no easements over the property that have not been revealed to the purchaser;
• that there is no mortgage over the property that cannot be paid off from the purchase price;
• that the purchaser obtains a mortgage;
• that outline planning permission is obtained for conversion or extension of the property.
There are also a number of other conditions that may be required depending upon the individual circumstances. Care should always be taken to ensure that these conditions are validly worded and offer as much protection as possible to the parties.
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
The first contract
Those who have purchased property in certain countries will be all too aware of the fact that after an offer, several weeks can elapse before any binding agreement is entered into and then one party can pull out just before exchange of contracts with no recourse possible, thus leading to a loss of money and time. The French system seeks to avoid this possibility and it is this aspect which is fundamentally different from real estate purchases in some other countries.
In France, after an offer is made on a property and accepted, a compromis or sous-seing privé is drawn up. There are other forms of contract such as the promise to sell or purchase ('promesse de vente' or 'promesse d’achat') which function in a different manner and are most often encountered in the Paris region.
This contract can come very shortly after an offer, very occasionally even on the same day. It is extremely important because it lays down the terms and conditions of the purchase and governs the timetable, the checks to be made etc. Both parties will be tied into the purchase of the property subject to conditions that have to be met prior to completion taking place (conditions suspensives). If the conditions are met then the sale will occur. If they are not met, both parties will be free of any engagement and the deposit paid will be returned to the purchaser. If the conditions are met but one party decides not to go ahead, what occurs will normally be governed by the clause in the compromis in this respect (clause pénale) and one party can take legal action to force the other to respect his or her obligations. Generally if it is the purchaser who does not wish to proceed, he or she will lose the deposit and may be liable to pay additional compensation.
The following are types of conditions suspensives of a contract:
• that there is nothing in the town planning documentation that adversely affects the property or is likely to diminish its value e.g. a plan to build a TGV route across the garden;
• that there are no easements over the property that have not been revealed to the purchaser;
• that there is no mortgage over the property that cannot be paid off from the purchase price;
• that the purchaser obtains a mortgage;
• that outline planning permission is obtained for conversion or extension of the property.
There are also a number of other conditions that may be required depending upon the individual circumstances. Care should always be taken to ensure that these conditions are validly worded and offer as much protection as possible to the parties.
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
vendredi 5 mars 2010
COMPASS IMMOBILIER: Purchasing French Property - viewing property
PROCEDURE
Stage 1:
Viewing the property
This will occur with either a representative of the estate agency or the vendor him or herself in the case of a direct purchase. You will normally be required to sign a ‘bon de visite’ at the time of the viewing if you have visited the property via the intermediary of an agent. This document attests to the fact that you viewed the property on that date and is essentially for the purposes of proving this fact if necessary.
When viewing, you may wish to take the opportunity to discuss various matters relating to the property and you may consider it prudent to take notes and photographs. Issues to discuss would include:
• drainage system;
• rights of way or other easements that may affect the property or that the property may benefit from;
• whether particular contents will be included in the purchase price or whether you can buy them separately;
• whether the property is sold with vacant possession. You should pay particular attention should you see that part of the property has livestock on it as rural tenancies (bail rural) can automatically transmit to new owners.
Copyright All Rights Reserved Victoria Headdo, Compass Immobilier
Stage 1:
Viewing the property
This will occur with either a representative of the estate agency or the vendor him or herself in the case of a direct purchase. You will normally be required to sign a ‘bon de visite’ at the time of the viewing if you have visited the property via the intermediary of an agent. This document attests to the fact that you viewed the property on that date and is essentially for the purposes of proving this fact if necessary.
When viewing, you may wish to take the opportunity to discuss various matters relating to the property and you may consider it prudent to take notes and photographs. Issues to discuss would include:
• drainage system;
• rights of way or other easements that may affect the property or that the property may benefit from;
• whether particular contents will be included in the purchase price or whether you can buy them separately;
• whether the property is sold with vacant possession. You should pay particular attention should you see that part of the property has livestock on it as rural tenancies (bail rural) can automatically transmit to new owners.
Copyright All Rights Reserved Victoria Headdo, Compass Immobilier
lundi 1 mars 2010
COMPASS IMMOBILIER: Purchasing French Property - Persons Involved - The Notaire
The notaire
The notaire is the lawyer responsible for handling the conveyancing process. Notaires can trace their routes back to the Egyptian scribes and it is their responsibility to draw up the deed signed upon completion (acte authentique). The registration of this deed is the formality required for legal recognition of the transfer of ownership and only a notaire based in France has the requisite power to do this. They will commission the various checks and searches relating to the property and will often draw up the first contract (usually a 'compromis' or 'sous-seing privé'). Their other principal responsibility is the collection of the taxes payable upon the sale of real estate which mainly consist of registration taxes (droits de mutation), capital gains tax (impôt sur la plus-value) and sometimes of VAT (TVA or 'taxe sur la valeur ajoutée') on behalf of the State’s tax authorities. Some notaires also sell houses so their office may be involved as an agent.
Those from countries based on Anglo-Saxon law will be used to each party having their own lawyer or advisor to represent them. In the French system, the notaire often represents both parties as he is seen as a neutral third party assisting the parties to conclude the purchase rather than defending the interests of either purchaser or vendor. This can seem very alien to those from more adversarial legal systems. It is possible for vendor and purchaser to have their own separate notaires and this may be advisable in certain cases. It will not cause an increase in costs as they will share the fee. The sharing of the fee can cause problems in its own right as one notaire often ends up doing more work for less money!
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
The notaire is the lawyer responsible for handling the conveyancing process. Notaires can trace their routes back to the Egyptian scribes and it is their responsibility to draw up the deed signed upon completion (acte authentique). The registration of this deed is the formality required for legal recognition of the transfer of ownership and only a notaire based in France has the requisite power to do this. They will commission the various checks and searches relating to the property and will often draw up the first contract (usually a 'compromis' or 'sous-seing privé'). Their other principal responsibility is the collection of the taxes payable upon the sale of real estate which mainly consist of registration taxes (droits de mutation), capital gains tax (impôt sur la plus-value) and sometimes of VAT (TVA or 'taxe sur la valeur ajoutée') on behalf of the State’s tax authorities. Some notaires also sell houses so their office may be involved as an agent.
Those from countries based on Anglo-Saxon law will be used to each party having their own lawyer or advisor to represent them. In the French system, the notaire often represents both parties as he is seen as a neutral third party assisting the parties to conclude the purchase rather than defending the interests of either purchaser or vendor. This can seem very alien to those from more adversarial legal systems. It is possible for vendor and purchaser to have their own separate notaires and this may be advisable in certain cases. It will not cause an increase in costs as they will share the fee. The sharing of the fee can cause problems in its own right as one notaire often ends up doing more work for less money!
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
Inscription à :
Articles (Atom)
