The key stages in buying a property are:
- Making a written offer
- Signing a Compromis de Vente
- Paying a 10% deposit
- The 10-day “cooling off” period
- Obtaining a mortgage
- Signing the final deeds
- Transfer of utilities
Making a written offer
This carries no legal commitment on the part of the buyer. However it will block off the property for you and take it off the market so you should do this as quickly as possible. It is a rule that the first written offer is treated first, even above a higher one made straight after. The agent will then email or fax this to the seller who will counter-sign it and send it back, or come back with a counter-offer. If making a low offer, do not forget to put an expiry date. We recommend a couple of days if the seller is local, a few days longer if the estate agent tells you the seller lives far away and is difficult to get hold of. Once a price has been agreed then we move onto the Compromis de Vente. At this point the sale becomes legally binding for the seller, and the buyer starts engaging responsibilities.
Signing a Compromis de Vente
The Compromis de Vente is the key legal contract around which all sales revolve. This document is identical whether buying a small studio in the Old Town or a multi-million euro penthouse on the beach front. Though estate agencies will produce their own branded versions, the content is identical to one you can pick up in any stationary store. The legal validity is identical whether done by an estate agency, a Notaire, or simply between two private individuals.
Once the Compromis de Vente is signed by the buyer they have 10 days to decide whether they wish to go through with the sale. Once signed by the seller he is immediately bound to the sale. He cannot change his mind or change the price.
The key things you need to decide on before signing are: how you will finance the purchase (mortgage or cash), and which Notaire you wish to use. When you sign a Compromis de Vente, we will go through it line by line before you sign so there will be no hidden surprises.
When you sign the Compromis de Vente, you will also receive a copy of all the certificates for the required tests (for example the results of the tests done for any lead, asbestos, termites, etc) as well as a copy of the last three years of Annual General Meeting (AGM) minutes. The latter will detail any potential upcoming costs, for example if it has been agreed to do repairs to the roof or lift maintenance.
Paying a 10% deposit
There is no legal requirement for it to be 10% but it is the commonly accepted value. It is usually rounded down to the nearest convenient figure, for instance if the price agreed for the property is €262,500 then the estate agent will probably put €25,000 as the deposit. If using a different Notaire to the seller, make sure the deposit is paid to your Notaire. The money is held by the Notaire in a government-bonded escrow account, and will be deducted from the final sum you need to pay. If raising the 10% at short notice is a problem then the seller may well accept a 5% deposit. The penalty remains 10% but the physical cash handed over is 5%. The penalty works both ways, so if he fails to go through with the sale then he owes you the same figure.
Traditionally the buyer should turn up with a bankers cheque and hand it over to the agency at the same time as signing the Compromis de Vente. Sellers are more easy going these days and a bank transfer when you get home should suffice. The Notaires we use are experienced in an international clientele and so any time before the end of the cooling off period will be acceptable. When you do the transfer, email or fax a copy of the receipt directly to the Notaire. This way the Notaire can mark it down as paid, even if it takes several days for the money to work its way through the banking system. With the new anti-money laundering systems in place these days even the most banal transfer can have inexplicable and frustrating delays.
The 10-day “cooling off” period
By law you have a ten day “cooling off” period in which you can change your mind and cancel the sale without penalty. You do not need a reason or have to provide an explanation for cancelling. If you have already paid your deposit then your Notaire will simply transfer it back to you. The ten days begin the day after you sign for the registered delivery letter containing a copy of the Compromis de Vente signed by both parties along with a notification of your cooling off rights titled “Loi SRU”. To cancel, simply send a registered delivery letter to the estate agent or the Notaire telling him you no longer wish to go through with the sale.
Warning: if you are signing at the same time as the seller, or if the seller has signed first and you are counter-signing (which is unusual), then it is possible the Notaire will ask you to sign the “Loi SRU” directly as “remis en main propre”. In this instance, the ten day cooling off period starts the day after you sign.
Warning: these are 10 calendar days, including weekends and bank holidays. If the 10th day falls on a Sunday or holiday and the post office is not working, it is your responsibility to get it into the post before then.
Obtaining a mortgage
By default you have the right to apply for a French mortgage, and if you fail to get one then your deposit is returned and the sale falls through. When you sign the Compromis de Vente you will have to fill in the mortgage details, ie amount to be borrowed, number of years repayment, expected interest rate, and banks you intend to apply to. You commit to start applying for the mortgage within two weeks and obtaining the offer in around a month. If the bank is causing delays beyond the deadline do not panic, the Notaire is able to check this is the case with the bank and as arbitrator will not impose any penalty on you.
It is important you start applying in a timely manner because once you finally get a formal mortgage offer then legally you must wait 11 days before you are allowed to sign it and post it back accepting the mortgage.
For the escape clause to apply and your deposit to be returned, you must have genuine application refusals from the bank. It cannot be a letter from your friendly bank manager saying he does not think you are suitable for a mortgage.
Unlike the ten day cooling off period, which is a right you cannot waive, you can put in the Compromis de Vente that you do not require a mortgage. This involves hand-copying a rather long paragraph assenting to waive this right. Why would you want to do this? Because given a choice of two similar offers, the seller will prefer to accept the one without the dependency on a mortgage. The reason for this is that after ten days he knows the sale has gone through and can safely purchase a new place to live. Otherwise a buyer and/or bank could mess the seller around for one or two months before the whole thing falls through with the seller back to square one and a lot of wasted time. If the seller is desperate to sell then not requiring a mortgage can in fact be a powerful negotiating tool and get you a hefty discount on the price.
Signing the final deeds
Prior to the signing, the Notaire will send you a complete breakdown of costs and a balance that needs to be paid. This must clear into the Notaire’s account by the day of the signing. You must be present, or have signed over power of attorney to your Notaire, for the day the deeds are signed. All copies of the keys will be handed over as soon as the papers are signed. If you are not present you can nominate your estate agent to look after them until you next return. On this day the apartment must be empty: both of anyone living there and any furniture both parties have not agreed should be left there. Any included cellar must also be empty. If there is still a tenant then the Notaire can impose hefty fines on the seller. If it is not cleaned out then the Notaire will withhold a sum of money from the seller to ensure it does get cleaned correctly.
Transfer of utilities
The estate agent will take care of all the transfer of utilities for you, including taking meter readings, but the good news is that when you move in you will still have water, heating and light. In France when an owner cancels their contract the electricity is not turned off and you have a considerable grace period in which to send your new bank details. Legally you are not liable for any previous tenants unpaid bills.
Any unanswered questions? Please do not hesitate to contact us and we will be happy help.