Preliminary sales agreement
Once an offer has been accepted by the seller, the initial sale and purchase agreement or compromis de vente is drawn up. This contract stipulates the agreed price and terms, subject to any conditions that the buyer wishes to include. We will ensure that any specific conditions you request are included in the sale agreement and that your rights are protected for your peace of mind. This agreement is often drawn up in the presence of a notary. The notary is the sales lawyer who is under legal obligation to provide you with comprehensive and detailed information on the nature of the agreement you are signing and who will gather all information and draw up all legal paperwork for the sale.
Ten day ‘cooling off’ period
The buyer is entitled to a 10 day cooling off period, following the signing of the sale and purchase agreement. This option to withdraw from the contract is only available to the buyer. Once the seller has signed they are legally bound by the contract. At the end of the 10 day cooling off period the contract becomes binding on both parties (subject to any conditions that may have been included in the contract). If you wish to withdraw from the sale prior to the expiry of the seven-day you can do so for any reason whatsoever.
The buyer is required to pay a deposit of 5 – 10% of the purchase price. The deposit does not have to be paid on the day the compromis de vente is signed; it can be paid during the seven day retraction period. The deposit is sent directly to the notary and is held until completion in a government regulated ‘escrow’ account. If all conditions in the contract are met, but the buyer does not proceed with the purchase, then the deposit is payable to the seller.
Conversely, if completion is subject to one or more conditions, which are not fulfilled, then the buyer is entitled to a full refund of the deposit. In the event of default by the seller then the buyer can take legal proceedings to oblige them to proceed with the sale and/or for damages.
The diagnostics are an array of property survey reports and a French legal requirement that form part of the transaction documentation which are paid for by the sellers. The diagnostics will report on asbestos, lead, termites, energy efficiency, natural or industrial risks, gas and electrical wiring.
Fees & Transaction Costs
In calculating the transaction costs of buying property in France, it is important to distinguish between fees and taxes, and between older and new property. In summary, the total fees and taxes payable for each is as follows:
Older Property: The total fees and taxes payable for the purchase of an existing older property are around 8% of the purchase price (excluding estate agency fees).
New Property: You will pay around 4% in fees and registration taxes, plus VAT at the rate of 19.6% on the purchase price except for sales between private individuals (excluding estate agency fees).
Although these total fees and taxes are often referred to as ‘notary fees’, in fact the actual notary fee itself is only about 1%. The rest comprises stamp duty, registration taxes, and disbursements. Notarial fees are regulated by the government and vary according to the sale price of the property. These fees are subject to VAT at the standard rate of 19.6%. If a mortgage is being obtained for the purchase then you should budget around 2% of the loan in fees and costs.
Notarial Fees & Charges
Are paid by the buyer.
Is an annual tax that will be paid in full for the year by whomever occupied the property as at the first of January.
Is an annual tax that will be prorated between the buyer and seller.
If your property is in a multi-dwelling building, then there will be monthly charges payable for communal maintenance, utilities, insurance etc. These are prepaid and will be prorated between the buyer and seller.
Is normally payable by the seller.
Are paid by the seller.