How does it work for an expat to purchase a house?
A lot of expats come and see me, and expect that the process of buying a house will be different for them than French nationals. In fact, it’s exactly the same process.
Once an offer has been accepted on a house, the vendors will have to carry out the usual surveys so that the notaire can draw a preliminary contract, including in it, the conclusions of the surveys as well.
Typically, this may take one week from the time the offer has been accepted to receiving the preliminary contracts. I find that this stage is often done by email, as my expat clients are not always in the country at this time. Once the buyer receives the draft contract and a proxy form, the buyer will then have to get a solicitor to witness their signatures, and then return the contract.
Once the contract has been signed by both parties, there is a 10 day cooling off period, where you can change your mind without any penalties.
The next stage is to transfer a deposit to the notaire’s escrow account, in general 10 % of the purchase price.
What we do at our agency is offer a free service to make sure the clients get a translation in English of the preliminary contracts the proxy. This can be very reassuring if the client is not fluent in French.
What can a buyer expect for the overall costs of purchase?
With our agency, our fees are paid by the vendors, but this isn’t always the case with other agencies, so it’s good to establish this right away.
On top of the purchase price, the buyer will have to pay the notaire’s fees (mainly government taxes). The rate depends on the price of the property so I will give you 3 examples:
– 150.000 euros – Rate 7.92 %
– 300.000 euros – Rate 7.40 %
– 600.000 euros – Rate 7.14 %
You will notice that the cheaper the purchase price, the higher the rate. The reason is that there are some fix costs … so the fees if you bought a ruin for 1000 euros (wouldn’t that be a nice price!), would be 105.70 %
What kind of surveys are carried out?
The surveys depend on the age of the house. For a recent bungalow for example, there will be a termite survey to carry out, and the ERNT (Position Risks – Etat des risques naturels et technologiques). This will let you know if the house is in a flooding area or not.
For an old property there are more things to check out, so there will be surveys for lead, asbestos, termites, ERNT, DPE (consumption energy survey), electricity & gas (if applicable).
The cost for the surveys is picked up by the vendors. For the termite/ERNT surveys, it should be around 150 euros, and for the more complex surveys, it is normally between 400 and 600 euros.
The surveys are given to the buyers as an explanation, but there is absolutely no obligation on any side (vendors or buyers) to carry any works. For example, you can’t expect a statement of conformity for electrics if the electrics are more than 6 or 7 years old. Many of my clients are surprised that there is no obligation to conform, and indeed, it’s often impossible due to layouts of old properties. For example 7 years ago the rules were that a power point had to be at least 60cm away from a sink. Today it’s 70cm. The survey may say ‘it doesn’t conform’, but that doesn’t necessarily mean that it’s really bad news. What is important is safety, don’t worry about conforming with the latest updates, we can put you in touch with an electrician if needed.
What is the timeframe between an accepted offer and when you get the keys?
In addition to the timings raised in the first question above, the delay between the preliminary contract and the final signing is often 3 months. The searches which the notaire carries out, take a minimum of 2 months, so you can count on 2 months being the shortest possible time, with 3 months being more typical. Buyers get the keys on the day of the signing.
Can you help to explain the contract and the process a bit more?
There are 2 contracts. The first one, the “preliminary contract”, is signed at the time of the accepted offer. It can be subject to mortgage conditions if the buyers need one for the purchase, and subject to legal searches. The notaire will start the searches only when the preliminary contract has been signed. Should the notaire discover anything wrong, such as a long term build project next to the house, or any outstanding debts etc…, in fact anything which would decrease the value of the house or would affect the peaceful use of the house in the future, then the notaire will send a registered letter to the buyer explaining the problems. The buyer will then have the option to continue with the purchase, or pull out and get the deposit back.
About 3 months after signing the preliminary contract the final deed contract will be signed at the notaire’s office. At this time it means everything is fine, and the buyers will get the keys at this meeting.
Completion, utilities, house insurance, how does this work and can you help?
Our agency helps with all this. We will transfer the utilities on behalf of our clients, help them with the house insurance so that all is in place for the final signing date. We will ask a few questions of our clients to make sure that the insurance is appropriate, and we also recommend that they open a French bank account so that we can put in place direct debits. This can be much cheaper and easier than having to transfer payments from abroad.
At the time of the preliminary contracts or indeed at any stage, we can also introduce a builder to our clients to get a free quote for potential building works. We only recommend builders offering a 10 year guarantee on the works, and who have an English speaking service if you need that.
You need to bear in mind that if you don’t use a French builder, your invoices will not be deductible from capital gain should you sell again in the future…. something that many clients do forget. I recommend that you don’t pay in cash for any works, because saving money now will only mean you pay more later in capital gains tax.
There’s a history of ‘brown envelopes’ that you might have heard of, whereby a price is agreed that is lower than the vendor wants, and the balance is paid in cash ‘under the table’. In all honesty, we don’t see this system anymore, particularly with international buyers, because these days it’s much harder to transfer cash without having to precisely justify what it’s for. It’s too risky for both buyers and vendors, and we as an Agency can lose our professional status by being a party to that.
So with our agency, sorry but no brown envelopes are accepted, everything is legal and in the contracts!
You can speak to Freddy on 04 67 36 34 28 or 06 09 58 54 26, or mail him at email@example.com.
Thanks to Steve Meltzer for the photographs of the region. Photo 1 is the canal du midi, and photo 2 is a car event in La Baume. Steve Meltzer is an American photojournalist who now lives in Tourbes.