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Buying realty in france

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Buying realty in france
The buying process differs from one country to another, and notably between the US and Europe.
Legislation applied differs from one agency to another depending on the country.
French legislation monitors scrupulously the realty acquisition process in France.

The realty acquisition process

The “promesse d’achat” is often the first stage in the acquisition of realty. This is a written offer from a potential buyer, and is submitted if the initial price demanded by the seller is not offered. This stage is not mandatory, and is applied if the buyer’s offer is at the not at the initial price set by the vendor.
At the second stage, a “compromis de vente” is signed. This document is considered by French law as a contract legally binding with certain conditions the buyer and seller, and defines the sales conditions.
At the signing of the “compromis de vente”, the buyer pays a deposit (“indemnité d’immobilisation”) of between 5% and 10% of the sales price. The conditions of the law SRU dated 13th December 2000 (loi Solidarité et Renouvellements Urbains ) however give the buyer a “cooling-off” period of 7 days during which he/she may retract from the “compromis de vente” with no requirement to justify his/her choice. The potential buyer must send the demand to retract by registered mail with acknowledgment of receipt.
The vendor on the other hand cannot withdraw from the “compromis de vente” without having a valid reason. Once this cooling-off period is over the “compromis de vente” is legally binding between the two parties. The buyer may not now withdraw from the sales agreement without losing his/her deposit.
The “compromis de vente” may however contain suspensive conditions which, if not satisfied, may make its completion impossible: for example the obtaining of a bankers loan or a building permit. In this case, the buyer has the faculty to not acquire the property without being penalized.
The signature of the final sales agreement takes place in a notary office, making the sale complete and secure. Unlike a “public notary” in the USA, a notary in France must offer advice in the same way as a specialized lawyer. He/she is a judicial officer named by the “Garde des Sceaux “and as such is invested with a delegation of public powers. He/she is totally impartial and must ensure for the two parties the legal conformity of the sale.

The requirements of the buying process

The law requires that the results of certain inspections be provided during the process of a realty sale.
The sellers of properties constructed before 1949 and in what is known as a “zone à risque” (a risk zone) must present a report concerning the possible presence of lead.
- The decree 99-471 of 8th June 1999 requires an investigative search for termites dating from less than six months before the date of the signing of the “acte authentique”. The respect of this decree is obligatory.
- The decree 96-97 dated 7th February 1996 stipulates that an investigative search for asbestos must be carried out in any building for which the building permit was granted before the 1st July 1997.
- A comprehensive descriptive of all gas installations over fifteen years old must be provided.
- The DPE (Energy Performance Certificate) is now obligatory for all buildings of over 50m² and fitted with a heating system.

The seller of a luxury realty asset must also provide the relevant documents to prove his/her ownership. Other documents must also be provided prior to the sale: charges paid over the last quarter, minutes from the latest general assembly of the co-ownership, property and waste management tax.
The buyer must ensure that these regulations are met, as well as other elements such as boundary limits, possible building permits and annual taxes and charges.
The realty agent may however directly assist the buyer or recommend a specialist in the relevant field, for example a solicitor or an architect.

Fees incurred in a realty acquisition

The realty agent’s fees are included in the sales price posted in the agency windows and on their internet sites. This sum is at the charge of the buyer. The negotiation process is however dependent on the two parties and is decided by them. The buyer must also take into account in addition to the sales price the notary fees, registration fees and land transfer taxes. These generally amount to approximately 10% of the sales price.