Property Buying Procedures In France
Property Buying Procedures In France
From the project of buying an apartment or a house to the signing of the deed of sale at the notary, several important steps punctuate the purchase of a property. The notary accompanies and advises the buyer and the seller throughout the sale process until the handing over of the keys. Here is the guide of property buying procedures in France.
Step 1: search for real estate
There is no rule when it comes to finding real estate, but there are many methods to find it. Either the future buyer carries out his research alone (websites, advertising magazines, sales between individuals, etc.), or he goes through a notary (auctions, specialized notarial advertising sites, etc.) or through a real estate agent.
In order to help individuals get to know the real estate market, notaries offer various tools and statistics on real estate prices, particularly in Ile-de-France (see interactive price maps on this site).
Step 2: the purchase offer
After several months of research, the Dupont couple found an apartment in an 18th century building located in the 9th arrondissement of Paris. They intend to finance their purchase of €430,000 by means of a loan of €300,000, their savings being used to pay the balance of the price, the commission of the agency, the security deposit and the costs of notarial deed.
The real estate agent asks them to make an offer to purchase from the seller. They want to know if it engages them?
Yes, the offer to purchase commits the person who signs it. It is frequently used in practice.
In this offer, Mr. and Mrs. Dupont propose to their seller to buy his apartment at a price (equal to or lower than that which he asks) and under determined conditions.
Potential buyers have an interest in limiting their offer in time. In this case, they cannot withdraw before the expiry of the date provided for in the document they signed.
If the seller does not accept their proposal within the set deadline, the Dupont spouses regain their freedom.
If, on the contrary, the offer is accepted, they are required to sign a preliminary contract (promise or compromise of sale).
Step 3: choosing the notary
After having accepted the offer of Mr. and Mrs. Dupont, the seller suggests that they contact his notary to set up an appointment to sign the sales agreement. Mr and Mrs Dupont are wondering if they can bring in their own notary.
Yes, the seller and the buyer can each appeal to their notary, who then share the remuneration. This is set by the state. It therefore does not cost the buyer more. This remuneration applies to the entire profession, it is the same for all notaries in France. Moreover, the choice of notary is completely free. In principle, the seller’s notary drafts the preliminary contract and the buyer’s notary the final sale.
Step 4: the preliminary contract
The notary invites the seller and the Dupont couple to a signing appointment. He asks them to bring a check corresponding to 10% of the purchase price and the costs of drafting the sales agreement. He asks the seller to have various diagnoses made on the property for this date.
The seller and the Dupont spouses wonder if this is the normal course of a sale?
• Concerning buyers
Yes, although the security deposit is not mandatory, the seller will be sure to ask for one, which is the case here. Its amount is not legally fixed, it is generally 10%.
The amount of the indemnity or the security deposit is paid to the notary by means of a transfer. It is kept by the notary throughout the duration of the promise of sale: the latter is the receiver.
This sum corresponds either to a deposit on the price, if the sale is carried out, or to compensation for the seller if the buyer does not want to sign the final deed of sale when all the conditions precedent have been lifted, in particular if the buyer has obtained his loan and has not retracted within the legal period.
Indeed, the Dupont spouses have the right to withdraw for a period of 10 days (this runs from the day after notification of the preliminary contract by registered letter with acknowledgment of receipt or by bailiff’s deed) . This deadline is of public order.
They do not have to justify any reason and can then fully recover their security deposit within a maximum of 21 days from the day after the date of withdrawal.
• About the seller
Yes, the seller has the obligation to have a technical diagnostic file drawn up, including in this specific case:
– the area measurement of the lot sold (Carrez law),
– the observation of the risk of exposure to lead,
– the state relating to asbestos in the private and common areas,
– the parasitic state (termites, etc.),
– the diagnosis of energy performance,
– the state of natural risks and technological,
– the condition of the gas and electricity installations if they are more than 15 years old,
– the sanitation certificate.
He must submit this file to the notary before the signing of the compromise in order to allow the Dupont spouses to be fully informed of the condition of the property.
When selling a co-ownership lot, other information is provided by the seller: the co-ownership regulations, the building maintenance book, the amount of co-ownership charges, etc.
Other forms of pre-contract
The unilateral promise to sell: the 10-day withdrawal period (see compromise above) applies to this contract. In this type of promise, the seller agrees to sell his property to a buyer who has a period (called “option”) fixed in the contract, to decide.
After this period, the latter loses the compensation paid if he gives up buying, unless one of the conditions precedent is not fulfilled or if he withdraws.
The reservation contract: it precedes the purchase of a new property off plan. It contains a certain number of mandatory information: the delivery time, the estimated price, the number of parts… Its signature triggers a withdrawal period of 10 days. The amount of the security deposit is set by law: 5% of the price if the sale takes place within the year of the reservation contract or 2% if it takes place a maximum of 2 years later. The restitution conditions are identical to those described for a compromise.
The preliminary contract is a “real” contract which specifies all the terms necessary for the signing of the final deed of sale: the price and the way in which it is paid, the delivery or possession deadlines, the conditions suspensive (concerning the loan, town planning documents, etc.). It is a very important document because all these clauses will be included, without modification, in the deed of sale.
Whether you are buying or selling an apartment or a house, find below the list of all the documents to be given to your notary at the time of the sale.
Read also: Property Buying Procedures In Spain
Step 5: the loan offer
The notary informed Mr. and Mrs. Dupont that the signing of the final deed of sale will only take place in 3 months. He explains to them that during this period, they must approach their bank to obtain a loan. The latter fear being permanently committed when they are not sure of obtaining a loan.
Any preliminary contract signed with a non-professional purchaser contains a condition precedent for obtaining one or more loan(s).
If the Dupont spouses do not obtain their credit, they have the choice of continuing the sale if they have another source of financing or of giving it up. In the latter case, they recover their security deposit unless they act in bad faith, for example, if they request a loan amount that exceeds the sale price or does not comply with the forecasts in the preliminary contract (amount, duration, rate, etc.). Please note: if the buyer does not intend to request a loan, he must affix a precise handwritten note to this effect, unless the compromise or the promise of sale has been received by authentic deed.
Acceptance of the loan offer
The purchaser has a minimum period of 30 days to obtain a loan in accordance with the conditions provided for in the preliminary contract.
Once the loan offer has been issued by the bank, the borrower cannot accept it before the expiry of a period of 10 days from receipt. The sale itself cannot therefore be signed before this term.
The notary, for his part, checks a certain amount of information in order to ensure the legal certainty of the transaction: whether the seller is the owner of the property he is selling, the previous title deeds, the situation of the property with regard to the rules town planning, easements, mortgage situation of the property…
Sometimes, the property is located in an area where the municipality can exercise an urban right of first refusal; which means that it is a priority to acquire it in order to carry out a project of general interest. The deed of sale can only be signed once the period of two months has passed after receipt by the town hall of the declaration of intention to alienate sent by the notary.
All these steps justify the lapse of time separating the preliminary contract from the final sale.
Step 6: signing the deed of sale
Mr. and Mrs. Dupont have obtained their loan. The notary contacts them to inform them that the file is complete and to offer them a signing appointment. He asks them to bring a cashier’s check for the balance of the sale price and a provision for costs (see selling costs below).
How does this step take place? On the day scheduled for the signing, the Dupont spouses go to the study. Also present are the seller, his notary and the real estate agent, if the negotiation was carried out by him.
PLEASE NOTE: It may be recommended to visit the property just before signing the sale, in particular to read the meters. The notary reads the deed to them.
Sellers and buyers do not hesitate to ask questions to be sure to understand the scope of their commitment.
In principle, the seller gives them the keys and the buyers give the bank check to the notary.
The VEFA and the payment of the price
During a purchase on plan, called VEFA vente en l’état futur d’achèvement (sale in the future state of completion), a first payment is made at the signing of the act if the foundations are completed. The release of the funds then takes place according to the progress of the work and the type of guarantee provided by the promoter to ensure the delivery of the property:
– in the event of an extrinsic guarantee (a bank, etc.): 35% on completion of the foundations, 70% on waterproofing, 95% on completion and the balance of 5% on delivery;
– in the event of an intrinsic guarantee: 20% on completion of the foundations, 45% on waterproofing, 85% on completion and the balance on delivery.
Step 7: awarding the price
The seller is surprised that the full sale price is not immediately given to him.
The remittance of the sale price to the seller first assumes payment of the price by the buyer.
The notary explains to the seller that he must in particular repay the current mortgage on the property, carry out the act of release of the mortgage registration taken by the bank and pay any co-ownership charges.
In addition, the notary checks that no mortgage registration has been taken on the property between the time he requested all the information and the publication of the sale. The time required for this exchange of information justifies the notary keeping the price. Indeed, in the event of the presence of mortgage registration on the part of the seller, it should be lifted and the sums in question reimbursed to the creditor.
The balance is then sent to him by mail or bank transfer.
Then, the notary gives the seller and the buyers a certificate of sale. He indicates to Mr. and Mrs. Dupont that they will receive their title deed and the final statement of the costs related to the sale, after the completion of the formalities of publication with the conservation of mortgages.
Step 8: delivery of the property
When can Mr. and Mrs. Dupont occupy the property they have purchased?
If the property is sold free, the seller’s main obligation is to deliver the property to the purchaser. He must give him the keys and a property freed from all occupants and all furniture (unless otherwise agreed).
Delivery corresponds to the entry into possession of the property by the purchaser, most often on the date of signature of the deed of sale.
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