The key stages of real estate acquisition in France
The acquisition of real estate is a process that usually takes an average of three months from the moment you made an offer that was accepted by the seller, the duration can be a little shorter or a little longer whether you take out a credit or not. There are many stages and you need to think about some of the questions you will encounter during the process beforehand. As French regulations may not work the way they do in your country of residence, it is best to get as much information as possible from the outset to avoid surprises.
Define your project (and budget). The majority of questions need to be asked ahead of time A professional in the trade will help you to clarify your ideas and guide you beforehand. What kind of property are you looking for? Are you looking for financing? Do you know the tax impacts regarding your project? Be obviously 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 villa that interests you but you must also think about its financing, including its budget. A prior agreement from a bank is a real plus to start and ensure the final success of the project.
Finally, learn about French taxation, this will allow 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 apartment you have always dreamed and for which you are ready to make an offer to buy. Nevertheless, make sure you have obtained all the elements, such as :
- Precise surface area of the property
- Real estate diagnostics (Carrez law, Energy Performance Diagnostics, asbestos, lead, termites, state of natural hazards, gas, electricity, non-collective sanitation, dry rot)
- Building maintenance book to check condition of common areas
- Summary of condominium charges and what they include
- Works voted or planned to vote at the last meetings of co-owners
- Amount of local taxes (housing tax and property tax)
These elements are important and must be taken into consideration, they can strengthen your choice or, on the contrary, make you change your mind.
Make an offer to purchase. It is sufficient simply to mention the name of the natural or legal person issuing the offer, its address and the property for which the offer is being made. The amount of the offer should be added, if it is subject to one or more suspensive conditions (obtaining a loan, co-ownership agreement for specific works, etc.) and the deadline for validity of the offer.
Also, it is important to emphasize that if an offer is accepted and countersigned by a seller, it commits him definitively to sign a contract of sale. Similarly, if an offer to purchase is made at the sale price without special conditions, the seller has an obligation to accept it.
On the buyer side, you may retract at any time pending the signing of the agreement to sell or the compromise…
Signing of the compromise sale (or agreement to sell). A few weeks after accepting the offer and after choosing a notary to represent you in your acquisition process, you must sign a sales agreement or a compromise sale. This important and preliminary step to the final act of sale is a bilateral commitment between the seller and the buyer. The notaries of the two parties, who have contacted each other prior to this signature to prepare the documents, shall enter all the mandatory elements and the conditions agreed for the acquisition, including the conditions precedent.
At the time of this signature of compromise sale, the sum of 5% to 10% of the amount of the sale price should be paid to the notary escrow account.
This amount will then be deducted from the notary fees to be paid at the time of the final signature (final act); if the notary fees are of the order of 7.5% and you have paid 5% you will still have to pay 2.5% On the contrary, if you have paid 10%, the notary will return the sum of 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 suspensive conditions that you entered in the offer has been 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 his withdrawal period has passed and no suspensive condition allows him to exit 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 it to retract, the most common being the one related to obtaining funding.
Getting the funding. After signing the compromise sale, you have two months to finalize your financing process for your project. This duration may appear long but time is actually limited! The best advice to give you is obviously to anticipate this approach 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 agreement to sell is an essential element to present the file to the credit committee You can read our article on obtaining a non-resident credit and the related steps.
The steps are numerous, you must obtain a credit agreement, open a current account, open an account for the pledge (optional), perform medical tests for the death insurance, edit the loan offers and return them within the legal deadline. Don’t waste any time!
Preparatory work for the bill of sale. While you are completing your financing process, the notary you have chosen prepares the bill of sale in collaboration with the seller’s notary, thus the signature takes place at best on D-Day. The formalities and tasks to be performed by the notary are numerous and the durations are sometimes incompressible:
- Preparatory work for the bill of sale.
- Application for Building Permit and Damage Insurance for Work Performed
- Declaration of intention to alienate (DIA) to purge the right of pre-emption of the town hall which is priority and may decide to purchase the goods under the conditions formulated in the compromise. (Maximum period of two months)
- Verification of the mortgage status of the property
- Request to the condominium trustee of a pre-dated condition to verify the work in progress and whether the selling owner is up to date in the payment of his expenses.
- Verification of the civil status of parties
- Check compliance of diagnostics and if they are up to date
- Request a city planning certificate.
The signature of the bill of sale. This is the final appointment of your project at the end of which you can get the keys to the apartment. To do this, during a signing appointment with the seller and the notary(s), they read the bill of sale. In advance, your notary will have sent you the deed in the form of a project, and he will have sent you the statement of the sums to be paid in advance to finalize the transaction taking into account the payment made when the compromise was signed. He will also have approached the notarial office of the bank which will have granted the financing to obtain the funds.
After signing the document, you are now the new owner, you are given the keys and the ownership title.
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