How to buy a Property in France as a foreigner ? STEP-BY-STEP
The real estate contracts come from the Civil Code written in 1804 by Napoleon. The characteristic of French real estate is the property which cannot be reappraisal.
All purchases have to be done with through the notary, who holds an escrow account and represents the government. Notary carries out all the legal process related to the purchase and ownership.
Documents required to reserve the property
- Passport copies of the buyer(s)
- Civil statues information form duly completed
- Birth certificate
- Marriage certificate (if applicable)
The reservation contract
Once you have decided on a property and have mutually-agreed upon price, you as a buyer and the developer will sign document known as a reservation contract (in 3 copies). This is the legally binding document which confirms that the developer must sell the property to the buyer. In addition to the reservation contract, following documents are also signed by both parties in 3 copies:
- Accurate floor plan of the apartment or the house
- Technical description
- Provisional payment plan
- Master plan
- Parking and basement plans
- The SRU document
- The SRU letter
Once the reservation contract and relevant documents are counter-signed by the developer, the developer send one original contract and relevant documents back to the buyer and the notary public. As the buyer is not a French real estate professional, he/she benefits from 10 days cooling off period which allows him/her to think over about his/her decision of purchase. After the cooling off period, the contracts become valid. The deadline of 10 days cooling off period starts upon reception of counter-signed reservation contracts from the developer, by the buyer.
To take out the property from the market, the buyer has to transfer a reservation deposit (usually between 2% to 5 % for off plan property and 10% for resale/ready property) to the escrow account of the notary. The deposit is kept by the notary until the signature of ‘definitive contract’ for transfer of title deed (which is the next step) and then deposit is transferred to the developer. The paid deposit will be deduced from the price of the property.
The deposit is returned to the buyer if:
- He/she decides to cancel the purchase during the 10 days cooling off period
- He/she does not obtain a mortgage. However, this condition must be mentioned in the reservation contract.
- The purchase cannot be completed due to the fault of the developer.
The deposit is secure as it is kept in the escrow account by the notary public.
There is possibility to get finance (mortgage) from French Banks, even if you are not a French citizen or resident. Once you sign the reservation contract, you have 45 days to apply for mortgage, and one month to get the initial approval. If the mortgage is not approved, the contract is cancelled and the buyer claims back the deposit. However, if the mortgage is declined and the buyer decided to purchase the property through his/her own funds, he/she can continue with the purchase as a ‘cash buyer’.
Signature of title deed of sale
When a reservation contract has been signed, the seller or the notary has to notify the buyer about the draft of the ownership contract, at least one month before its signature. (CCH art. R 261-30).
The article L 261-11 du CCH decrees to include in the ownership contract, the full description of the real estate,
« The relevant indication related to the consistence and technical features of the real estate »
Thereby, the consistence of the sold real estate comes from the plans and cross-section, with the useful measurement and the indication of the size of each room and corridor.
The seller has to provide to the buyer, at the time of the ownership contract signature, the condominium regulation. This document should have been provided previously to the buyer (CCH art. L 261-11).
- Then, the buyer should visit the notary office, in order to exchange contract and pay the funds and the legal fees, due at this stage.
- Alternatively, the buyer can provide a power of attorney in his/her from country of residence, legalised by French Embassy. The buyer then sends legalised power of attorney to the notary office to permit him to exchange the contracts.
After the exchange contract, the notary registers the contract with French administration and transfers the legal fees. This process guaranties that the property had been officially transferred under buyer’s name and the buyer is the owner of the property from there onward.
In case of new or off plan project:
You are the owner of the land where the property would be built;
You will be the owner of the future property;
The developer has to build your property corresponding to the contract. (the projects are backed by the bank guarantee. So in case, if the developer unable to build the project, the bank engages itself in building the project in the same technical specification and within the deadline, originally planned by the developer).
Payment for the Property
If it is a ready property:
The full amount of the property and approximately 7% to 8% notary fees have to be transferred to the public notary’s escrow account prior to the signature of the title deed of sale. Once the title deed of sale is signed by the buyer and the seller, the notary will transfer the due amount to the seller.
If it is an off-plan property:
The notary will send to the buyer, request for funds due for the signature of title deed (and would deduct the deposit already paid). The legal/notary fees of 3% is requested at the same time.
After the signature of the title deed, the remaining payments which are linked to the progress of work till handover, are paid in to the escrow account of the developer.
Your obligations as an owner of the property in France:
- To insure the property
- To pay the management fees (or service charges) to the management company, in advance
- To pay the Residential and Property tax once a year.