GUIDE TO PURCHASING A PROPERTY IN SOUTH FRANCE
The French Riviera provides a large selection of different types of properties and also very different locations. Whether an apartment with sea view on the Promenade des Anglais, a waterfront villa on Cap Ferrat, a country house in Mougins, a Belle Epoque villa on Cap Martin or a penthouse in Beaulieu sur Mer, in this region everyone will find his dream home.
Step 1: Deciding to Buy & Choosing an Area
The first step in the home buying process is deciding to purchase and choosing the desired neighborhood. The French Riviera offers some of the best areas to own real estate in Europe due to the stability of the markets and overall long term strength of property values. Desirability for these areas is driven by mild climate offering 300 sunny days, magnificent country- and seaside, perfect infra-structure and the availability of high quality health care and education at all levels. Most sought after areas are Saint Jean Cap Ferrat, Beaulieu-sur-Mer, Eze-sur-Mer, Cap d’Ail, Roquebrune Cap Martin, Villefranche-sur-Mer, Nice, Cap d’Antibes, Cannes and Mougins.
Step 2: Home search
After having chosen the location, the buyer has to fix the budget, which he wants to invest for a property in Southern France and may then begin his home search.
Purchasing real estate can be a daunting process for first time buyers, especially when it involves a different country. International buyers should engage the assistance of a real estate professional with expertise in the chosen location.
A highly qualified real estate agent and his brokers shall be able to assess the buyer’s needs and requirements, explain the different neighborhoods in detail and find the property that will best suit the home buyer’s needs.
The home selling practice in France is not as transparent as in some other countries, as a common Multiple Listing Service is missing - one more good reason to choose a Professional Broker with a Regional Network providing access to all available Properties in the market. A well organized real estate agent shall be able to identify and qualify those properties for the buyer.
The real estate broker must also be experienced with handling transactions with international buyers, speak their languages and understand their culture in order for the buying process to be as seamless as possible.
Buying real estate in South of France shall be easy, as long as buyers use the assistance of an expert in the area that can help them navigate through the process. Buyers of residential property do not have to pay real estate brokers in France for the most part, as all broker fees are covered by the seller in most instances. As such, engaging the assistance of a highly qualified professional to handle the process can only benefit the buyer .
Step 3: Offer to purchase (letter of intent)
Once, the buyer has found his property, the real estate professional will guide him through the offer to purchase, providing advice on the different terms of the offer. A highly qualified agent who is knowledgeable about the market in which the property is located will be able to guide the buyer and to have the right arguments in order to increase the probability of having the offer accepted by the seller. Usually the offer will be done in a written from to underline the serious and to have a clear and transparent basis to negotiate the conditions with the vendor. Such a purchase offer is usually called letter of intent including the principal terms as price, preceded conditions and delays. If the vendor agrees on the conditions, he shall accept them with his signature under the letter of intent. At this stage the vendor is already bound and can be forced by law to sell his property to the purchaser whilst the purchaser is not yet committed.
Step 4: Preliminary contract (“compromis de vente”)
The agreement regarding the sale price and all other terms and conditions of the sale need to be fixed in a preliminary contract "compromis de vente" or “promesse de vente”. The seller has to supply current diagnostics like lead, asbestos, termites (if in a designated area), electricity conformity, insulation efficiency and technical and natural risks (such as flooding and fire risks). The seller is also legally obliged to make the buyer aware of any defects or problems they should know about. The preliminary contract is just as important as the final purchase deed as it must contain all the clauses and conditions precedent to the sale, mostly important:
Get-out Conditions – “Clauses suspensives”
They permit the purchaser to withdraw from the purchase under certain circumstances.
Typical reasons to include get-out-conditions might be:
- obtaining a mortgage
- getting outline planning permission
When the preliminary contract has been signed, the purchaser has a
Ten days Cooling-off Period
During this time, he can withdraw from the sale without incurring a penalty, but the vendor cannot. After the cooling –off period the contract becomes binding on both parties.
Now, the purchaser has to pay the
Deposit, usually about 5-10% of the purchase price
on the escrow account of the solicitor. If he withdraws from the sale, he could lose the deposit, unless it is for one of the reasons listed in the get-out conditions.
Once the preliminary contract is signed and the deposit is paid, the searches on the property, including ownership, land boundaries easements and or eventual preemption rights will be done by the solicitor. Most of the municipality authorities have a preemption right in some areas of their communities – if this is the case in the area of the property, which is going to be sold, the solicitor has to demand, if the municipality wants to preempt. The municipality has up to 2 months to decide.
Purchase in the own name or in the name of a SCI?
Depending on the family situation, the purpose of the purchase of real estate as SCI (civil society, which serves exclusively for the acquisition and management of a property and does not have commercial background) may be beneficial. For example, real estate ownership within a family can be more easily distributed or proportionally changed without having to sell the property itself.
The SCI can provide inheritance and gift tax benefits under certain conditions. The incidental acquisition costs of purchasing SCI Shares are less expensive than transferring the property itself.
Even after the signing of the preliminary contract, the buyer still has the opportunity to decide in which name he buys, provided he has included a
Substitution Clause "Clause de Substitution"
in the preliminary contract.
Step 5: Final Signing – (acte authentique)
When all searches have been done and the necessary elements are available, all conditions have been satisfied and eventual preemption right holders have confirmed not willing to preempt, the whole preliminary agreement will be repeated in the final deed, this time without any condition.
The purchaser gets the ownership of the property in the legal second, when signing the final act.
Purchase fees (frais notaire)
The purchaser has to pay
- the purchase taxes “droits de mutation” of 5,81 %
- the solicitor’s fees “frais notaire” of around 1 %
- the register fees of around 0,2 %,
- all together around 7,1 % called the “frais notaire”
In addition eventual financing costs have to be paid according to the bank loan.
Step 6: After the sale
The sale is done – and now?
A Professional Real Estate Agent shall take care of the ongoing obligations concerning his property and offer a full service after sale, including meter reading and changing the electricity, water, gas and telephone subscriptions.
He advises him with house insurance and bank account matters and recommend people for the maintenance of the property, as for example gardener and pool service. This after sale service is especially useful for non-residents, who are not permanently available and often do not speak the French language.
Please note that this information is intended as an introductory guide to the general process of buying a home in Southern France. It explains some of the commonly used terminologies and outlines the overall process of a real estate transaction. It does not replace legal or tax advice. If this is desired, we can arrange meetings with professionals being qualified and authorised to give advice. Author: Beatrix Eikel, 19.02.2018