What happens behind the scenes when buying a property in France?
Reproduced with kind permission from Christophe Dutertre – www.FranceTaxLaw.com – article first published 31/10/2018
I often have clients asking how long does a property transaction take to be completed in France. The average timescale is between 2 to 3 months but often depends on the particularities of each transaction. Indeed, some of you may purchase a property without any renovation work, ready to move in, others may want to renovate or extend it and would require planning permission before signing, a mortgage may be required, a division of lands, or the property/land is occupied.
I often have clients asking how long does a property transaction take to be completed in France. The average timescale is between 2 to 3 months but often depends on the particularities of each transaction. Indeed, some of you may purchase a property without any renovation work, ready to move in, others may want to renovate or extend it and would require planning permission before signing, a mortgage may be required, a division of lands, or the
property/land is occupied.
The purpose of this article is not to tell you exactly when you would complete your purchase but to give you an idea of the formalities that a Notaire should request before signing the final deed with the parties and the average timescale for each of them to be returned to the Notaire. There are standard formalities for each transaction and others that will depend on the nature of the property that you are purchasing.
Notaires have to carry out preliminary formalities before completing and post formalities after completion. I use the word “Notaire” but in practice we all know that Notaires barely deal with their files and it will be one of his/her associates who will be in charge. They are either clerks or qualified Notaires. At the end of the day they are qualified to instruct your file, answer your queries and guide you until completion.
FORMALITIES BEFORE COMPLETION
Please note that I have set out below the most common formalities. The list is not exhaustive and further formalities may be required depending on the nature of the transaction.
-Title deed: If he has to request it from another Notaire or the land registry it can take a few days or a few weeks (with the land registry).
-Request a cadastral plan extrait Modele 1 : You can access the cadastral maps via the internet but the form that you would download would not give you the information that a Notaire. Document usually returned within a few days.
-If the property is within a condominium regulation you must obtain a document setting out the current charges owed by the vendors (état pre-date). Document requested before the drafting of the initial contract. Depending on the managing company it can sometimes take a couple of weeks to obtain the form.
-Property within a development (lotissement): The Notaire must obtain a copy of the regulations, authorisation to create the lotissement (permis d’amenager). Regulations to be requested from the managing company, if any, or at the land registry. The permis d’aménager should be obtained from the Mairie. From one week to 3 to 4 weeks.
-Urbanism note or urbanism certificate requested at the Mairie: Document usually returned within a month if standard urbanism certificate. If more complex, such as urbanism certificate pre operationnel, delay can take up to 2 months if the document is not instructed by the mairie but local authorities
-Right of pre-emption : right of pre-emption can be either from the Mairie of the local agricultural administration SAFER. In both cases the authorities have legally 2 months to answer. Without their response the Notaire cannot complete. A response can be obtained before the expiry if the parties expect to sign quickly.
-Work carried out on the property within 10 years. Planning permission, declaration of completion, certificate of conformity and NHBC guarantee to be obtained. The vendor should provide all the information. Available immediately (in theory!!)
-Land registry search : document requested at the local land registry. Depending on the location of the property, each land registry works differently. Normal timescale to get the document is 2 to 4 weeks.
-Existing mortgage on the property. The Notaire must request a final breakdown from the bank to redeem the mortgage. Final breakdown to obtain from the bank at a specific date near completion. In theory a few days to obtain the document
-Property is occupied by a tenant: right of the pre-emption for the tenant to check. Notification of sale to be sent to the tenant. From the day the notification is received from the tenant he has a delay of one month to respond.
-Request the last taxe fonciere to apportionate the cost between the vendor and purchaser on completion
-The purchaser wants to extend the property or renovate it. Depending on the nature of the work a declaration of work will be necessary or a planning permission. Declaration of work to be granted within a month. Planning permission purged of any recourse can be from 4 months to 6/8 months depending on the location of the property.
-An estate agent has negotiated the transaction: obtain a copy of the mandate and organise the payment of his fees. The Estate agent will always provide an invoice to the Notaire before completion to get paid.
-Use of the property: Are there any conventions agreed between the parties to take possession before or after completion? The purchaser will use the property on completion. However, it may happen that the purchaser wishes to enter into the property before completion or the vendor to keep occupying the property after completion. The Notaire will need to find an arrangement and draw up the relevant clause in the deed.
-Cooling off period : the Notaire will send the cooling off period to the purchasers once the contract is signed by both parties. Notaires tend to use the electronic notification AR24 rather than postage notification.
-Stamp duty: Is the sale subject to the standard rate, reduced rate or VAT? Depending on the nature of the transaction or the person who buys or sells the stamp duty may vary.
-Capital gains tax: is there any CGT to be paid by the vendors? The Notaire will liaise with the vendor if he is subject to CGT to calculate his tax liability on completion
FORMALITIES AFTER COMPLETION
-Payment of the price to the vendor: Be aware that Notaires will always pay the proceeds to the vendor’s bank account, paying to a third party is not permitted.
-Calculate the fees and tax: The account department will “tax” the deed meaning calculate the fees, disbursements, stamp duty, and expenses on the deed
-Registration of the deed: The Notaire will register the deed at the Land Registry within one month from completion.
-Payment of the taxes: The Notaire will pay any CGT plus stamp duty and land registry tax.
-Redemption of any mortgage, charges, taxes: It will be the notaire’s responsibility to redeem any existing mortgage, pay any unpaid tax (local taxes for instance)
-Notification of the transaction to various parties: Notification of the sale to any managing company (syndic de copropriete), insurance company, banks.
-Certified copy sent to the purchasers and banks, if any.
Once the deed is returned from the Land registry with the registration stamp, the copy will be addressed to the purchaser together with the final breakdown of cost and any refund on the provision of fees. Copy of the deed is also sent to a bank if the purchaser contracted a mortgage.