The key stages of real estate acquisition in France
Buying a property is a process that usually takes an average of three months from the time you have made an offer that has been accepted by the seller. The duration can be a little shorter or a little longer whether you take out credit or not. There are many steps and you need to think about some of the questions you will encounter during the process. The French regulations may not work the same way as in your country of residence, so it is better to get as much information as possible beforehand to avoid surprises.
Define your project (and your budget). Most of the questions should be asked in advance of your steps. A professional in the trade will help you to clarify your ideas and guide you beforehand. What type of property are you looking for? Are you looking for funding? Do you know the tax impacts of your approach? Be as precise as possible in the characteristics of the property you wish to acquire, address, surface, but not only!
Indeed, it is important to know the criteria of the apartment or the villa which interests you but it is also necessary to think of its financing, in particular its budget. A prior agreement from a bank is a real plus to get started and ensure the final success of the project. And finally, find out about the French tax system, which will help you to better determine the contours of your project, especially if you want to make a rental investment!
The choice of the property before making an offer to purchase. Here we are, you have found the property you are looking for and for which you are ready to make an offer to buy. Make sure you have all the elements, such as :
Specific area of the property
Real estate diagnoses (Carrez law, DPE, asbestos, lead, termites, state of natural risks, gas, electricity, non-collective sanitation, merula)
The building maintenance booklet to check the condition of the common areas
Summary of condominium fees and what they include
Works voted or planned to be voted during the last co-owners’ meetings
Amount of local taxes (housing tax and property tax)
These elements are important and should be taken into consideration, they can confirm your choice or, on the contrary, make you change your mind.
Formulate a purchase offer. It is sufficient to mention the name of the individual or legal entity issuing the offer, its address and to mention the property for which the offer is made. It is advisable to add the amount of the offer, if the latter is subject to one or more conditions precedent (obtaining a loan, co-ownership agreement for specific work, etc.) and the deadline for the validity of the offer.
It is important to note that if an offer is accepted and countersigned by a seller, it definitely commits the seller to signing a sales contract. Similarly, if an offer to purchase is made at the sale price without any particular conditions, the seller is obliged to accept it.
On the buyer’s side, you can withdraw at any time while waiting for the signature of the promise to sell or the compromise…
Signature of the preliminary sales agreement (or promise of sale). A few weeks after the acceptance of the offer and after having chosen a notary who will represent you in your acquisition process, you must sign a compromis de vente or a promesse de vente. This important preliminary step to the final deed of sale is a bilateral commitment between the seller and the buyer. The notaries of both parties, who will have contacted each other prior to this signature to prepare the documents, will record all the mandatory elements and conditions agreed upon for the acquisition, including the suspensive conditions. It is advisable at the time of the signing of the compromise to pay into the notary’s escrow account the sum of 5% to 10% of the amount of the sale price.
This amount will then be deducted from the notary fees to be paid at the final signature (final act); if the notary fees are around 7.5% and you have paid 5%, you will have to pay 2.5%. On the contrary, if you have paid 10%, the notary will return the 2.5%. It is the notary who determines the percentage to be paid at the time of the compromise, for non-resident buyers it is generally 10%.
If the sale is cancelled because one of the conditions precedent that you had written in the offer is fulfilled (refusal of the credit for example), this sum is refunded to you. Also, the buyer benefits from a 10-day withdrawal period during which he can cancel the sale without having to justify himself. Finally, if the buyer cancels the sale once the withdrawal period has passed and no suspensive condition allows him to withdraw from the sale, the amount is paid to the seller as compensation. You may note that it is impossible for the seller to cancel the sale, but the buyer is allowed to do so under two conditions:
During the 10 days of the legal withdrawal period after the signing of the compromise.
If a suspensive condition allows him to retract, the most frequent being the one linked to obtaining financing.
Obtaining financing. After signing the promise to sell, you have two months to finalize the financing of your project. This may seem like a long time, but time is of the essence! The best advice is obviously to anticipate this step with a bank or a broker in order to obtain an agreement in principle as mentioned in the first step.
From now on, the bank can finalize your credit file because the copy of the promise to sell is an essential element to present the file to the credit committee. You can read our article on obtaining credit for non-residents and the steps involved.
The steps are numerous, you must obtain a credit agreement, open a current account, open an account for the collateral (optional), perform the medical tests for the borrower’s insurance, edit the loan offers and send them back within the legal deadline. Don’t waste time!
Preparatory work for the deed of sale. While you are carrying out the steps necessary to obtain the final financing, the notary you have chosen prepares the deed of sale in collaboration with the seller’s notary, so that the signing of the deed of sale takes place as smoothly as possible on D-day. The formalities and tasks to be accomplished by the notary are numerous and the duration is sometimes incompressible:
Legal verification of the seller’s title
Application for a building permit and damage insurance for the work carried out
Declaration of intention to sell (DIA) to purge the right of pre-emption of the town hall which has priority and can decide to buy the goods under the conditions formulated in the compromise. (Maximum delay of two months)
Verification of the mortgage situation of the property
Request a pre-dated statement from the co-ownership manager to verify the work in progress and whether the seller is up to date in the payment of his charges.
Verification of the civil status of the parties
Verification of the conformity of the diagnostics and if they are up to date
Request for an urbanism certificate at the town hall.
The signing of the deed of sale. This is the final meeting of your project at the end of which you will be able to get the keys of the apartment. To do this, during a signing meeting with the seller and the notary(ies), the latter read the deed of sale. Beforehand, your notary will have sent you the deed in draft form, and he will have sent you a breakdown of the sums to be paid upstream to finalize the transaction, taking into account the payment made at the time of signing the compromise. He will also have approached the notary’s office of the bank that granted the financing to obtain the funds.
After signing the document, you are now the new owner, you will be given the keys and the title deed in the form of an electronic certificate of sale and then in an original form a few weeks later.