Property Guide 2015 - Banque Populaire Occitane

Property Guide
26 fev 2007
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Property Guide
Thinking of buying a property in France
Buying an older property 1
The estate agent - L’agent immobilier 1.1
Signing the preliminary contract procedure 1.2
The conditional contract 1.3
The sale agreement - Le compromis de vente 1.4
The promise of a sale - La promesse de vente 1.5
Thinking of buying
a property
in France
There are certain specifics to property buying in France. In order to help
with the formalities, the Banque Populaire Occitane has put together this
practical guide, so that you can have the following information at your
fingertips: it will give you a basic understanding of the French house purchase
procedure. We hope to give you practical advice and useful information
which we think is essential to know when buying a property in France.
The aim of this guide is to describe what the Mortgage à la française is.
L’acte authentique : signature of the deed of a sale 1.6
in the presence of notary
New house or flat 2
The property developer - Le promoteur 2.1
Time sharing - La multipropriété 2.2
Sale and leaseback - La nouvelle propriété 2.3
Financing your project 3
Working out your budget 3.1
Drawing up your finance plan 3.2
General information on property loans 3.3
Procedures 3.4
Buying an older property
You will find the widest choice of houses and apartments
via estate agents, small ads, specialists or general interest
newspapers.
To find “the house of your dreams” ask to be shown a selection.
Visit the property you have chosen several times,
before making a decision.
If you have decided to buy an older property and you have
used an “agent immobilier” or if you have simply dealt
directly with the vendor, take the time to examine
the property thoroughly.
If you have a good first impression don’t hesitate to ask
the opinion of an expert like an architect or surveyor.
They can give you essential information on the buildings
or on the future renovation work.
1. Buying
an older property
The estate agent - L’agent immobilier 1.1
Signing the preliminary contract procedure 1.2
The conditional contract 1.3
The sale agreement - Le compromis de vente 1.4
The promise of a sale - La promesse de vente 1.5
L’acte authentique : signature of the deed of a sale 1.6
in the presence of notary
1.1 The estate agent - L’agent immobilier
This an intermediary for property transactions between
the owners and the buyers.
“L’agent immobilier” is a professional who is required
to hold a certificate for property transactions
“carte de transactions sur immeubles” issued by the Prefet.
1.2 Signing the preliminary
contract procedure
After having agreed a price with the vendor, you now
need to formally record the agreement by signing
a conditional contract. Once you have carried out these initial
formalities, you need to reserve the property.
In most cases, you sign a preliminary contract with a “notaire”
or an estate agent, in the form of a “promesse d’achat” (1.5)
or a “compromis de vente” (1.4).
1.4 The sale agreement
Le compromis de vente
1.3 The conditional contract
The promise of a sale “compromis de vente” which can be
drafted and witnessed by a notary - notaire by an “acte authentique” or more simply by a third party
such as the estate agent.
The “compromis de vente” is a temporary contract
relating the conditions of a sale before the signature
of the definitive contact between the seller
and the buyer.To avoid “les pour parler”
the “compromis de vente” must be written with attention
and clarity. In that case, it is called a “sous seing privé”.
A notary can always advise you and collect together
all the necessary documents required to draft the deed
of sale “acte de vente”.
The notary is a “public official”, his main duty
is to ensure that all deeds signed under his responsibility
have authentic, absolute and incontestable value.
Expert reports (termites, lead, asbestos and energy efficiency)
are compulsory prior to the preliminary contract,
and are the responsibility of the vendor.
In France the most used form of conditional contract
is the Sale Agreement.
A reciprocal agreement to which the two parties concerned are
committed on signing.
The purchaser is committed to the agreed price
and the vendor to selling.
Main clauses
Description and definition of the property.
Vendor’s title to the property.
The price and method of payment with or without recourse
to a loan.
The completion date
(signature of the deed of Sale in the presence of the notary).
Deposit paid described as either - débit or acompte - usually
10% of the purchase price .
If a bank loan is required, the Sale Agreement will include
the conditional clause of obtaining a loan. If your loan
application is refused, the sale Agreement will be considered
null and void and you will reclaim your deposit.
Cooling off period of 7 days: delay in which one may pull
out or pay the deposit if one wants to go ahead.
1.5 The promise of a sale
La promesse de vente
With this type of contract, the vendor commits himself
to selling to the purchaser but allows the purchaser
an option to buy with a cooling off period of usually 3 months.
In return for the vendor‘s promise to sell to no other buyer
during the agreed period, the purchaser pays a deposit
to the notary of approximately 10 % of the purchase price,
known as the - indemnité d’immobilisation.
The deposit will be forfeited if the purchaser does not take up
the option within the specified time.
We advise you to avoid certain forms of agreement :
The exchange of letters “l’échange de lettres”,
this form of agreement has a dangerous aspect,
here the purchaser risks experiencing problems
at a later stage.
The offer of sale “l’offre de vente”:
the purchaser should not settle for a simple offer
of sale signed by the vendor, as this may be withdrawn
at any time before the purchaser has formally accepted it.
The offer of purchase “l’offre d’achat”:
in this kind of agreement the vendor is not committed
to sell, though the purchaser is irrevocably committed
to buying the property once the vendor
has accepted the offer.
1.6 L’acte authentique:
signature of the deed of sale
in the presence of the notary
Once the notary has collected together all the information
required and all the relevant conditional clauses
have been satisfied, completion can take place
and the deed of sale - acte de vente - may be signed
in the presence of the notary.
The title deed is signed between you and the vendor
on the “notaire” ’s premises. It is the final stage involved
in buying your property and usually takes place three months
after signing the preliminary contract (the legal delay
is 90 days but may be changed with the vendor’s agreement).
All the get out clauses mentioned in the preliminary
contract must be fulfilled so that the sale can take place.
A few days prior to signing the title deed,
ask the “notaire” to send you the draft copy.
Read it through and talk to him/her about any points
that are unclear.
If you are considering buying a new property or building on
your own, the procedure will be slightly different.
There are two possibilities open to you : to buy a property,
not yet constructed , based on an architect ‘s plan,
“acheter sur plan” or to buy a property with vacant
possession, “clés en main”.These types of property are usually
bought exclusively through a Property developer
“promoteur”.
2.1 The property developer
Le promoteur
The property developer is an expert who is responsible
for a construction project. He sells flats or other units
of property along with the land on which they are being built.
2. New house
or flat
The property developer - Le promoteur 2.1
Time sharing - La multipropriété 2.2
Sale and leaseback - La nouvelle propriété 2.3
2.2 Time sharing - La multipropriété
Shares are purchased in a Civil Real Estate Company,
which owns a building, such as a block of flats.
This gives you part ownership of a particular flat
and you will have the right to use it for a given period
each year.You can resell or change this period
according to your own personal needs.
2.3 Sale and leaseback
La nouvelle propriété
You buy a property which you then leaseback
to the property company for a minimum of 9 years.
This gives the purchaser 30% discount of the purchase
price and absolves him of all services
and maintenance charges for that period.
The property company will collect the rent for the 9 years
period. Each year, you yourself have several weeks’ use
of the property, free of charge.
3.1 Working out your budget
In your budget you should consider the following costs:
– The purchase price of the property
– Renovation (get quotes)
– “Notaire” ’s fees
( similar to closing costs)
– Estate agent ‘s fees
– Others including mortgage fees
(hypotheque and bank file fees )
3. Financing
your project
Working out your budget 3.1
Drawing up your finance plan 3.2
General information on property loans 3.3
Procedures 3.4
When applying for a loan, you must contribute some
personal investment.This is normally around 30%
of the amount needed for your project
(after deducting expenses such as the “notaire” ’s fees).
3.2 Drawing up your finance plan
Make an appointment with a Banque Populaire Occitane
advisor.We can carry out various simulations to offer you
the most appropriate loan for the situation.
Take care:
You have to know the total amount of your debts
in France (loan applied for, loans currently being reimbursed,
fixed outgoings such as rent, maintenance payments etc.)
which must not exceed 30% of your income.
3.3 General information
on property loans
CURRENCY
Euros
DURATION
Can go to a maximum of 25 years
RATE
The customer has a choice
of two types of rate:
FIXED RATE: the rate cannot be modified
for the entire duration of the loan.
The rate cannot be increased.
You cannot take advantage of reductions in the rate.
FLEXIBLE RATE WITH FLOOR AND CEILING CAPS:
the rate is revised once a year according
to a reference rate, with floor cap
(the rate cannot drop below a certain threshold)
fixed when you sign the loan contract.
Compromise between the two other types of rate,
you know in advance what the maximum increase
in rate will be.
The rate is slightly less attractive from the outset
than the variable rate with a fixed rate option.
CREDITOR INSURANCE
This insures the borrowers and the joint borrowers
in the event of death. In this case, the outstanding
capital is fully reimbursed by the insurance company
if full insurance cover has been taken out.
FILE FEE
The bank charge varies according
to the amount of the loan, with a maximum.
Our advice: Banque Populaire Occitane advises
all borrowers and joint borrowers to take out
full insurance.
SECURITY
This is compulsory and comes in two possible forms:
- “Privilége du Preteur de Deniers” (PPD).
Generally used when buying resale property and written
into the title deed by the “notaire”.
This security enables the bank to seize the property
if you do not keep up your loan repayments.
The advantage of the PPD is that it costs less than
a traditional hypothèque.
-“Hypothèque”: when a loan is taken out for construction
or renovation, the bank cannot use a PPD.
In this case, a classic mortgage is required.
ACCEPTATION OF THE “OFFRE DE PRÊT”
Valid for 30 days including a compulsory 11 days cooling-off
period, called “délai de reflexion".
Once this period expires, you will need to send the offer back
to the bank duly filled in.
EARLY REPAYMENT PENALTIES
In the event of early repayment, you will have to pay a penalty
of up to 3% not outstanding capital.
COOLING OFF PERIOD
When buying an inhabitable property (new or resale),
you have a 7-day cooling off period during which you can
retract after signing the preliminary contract (SRU law).
3.4 Procedures
DOCUMENTS REQUIRED
WHEN PURCHASING PROPERTY
DOCUMENTS REQUIRED
FOR A PROPERTY LOAN
Annual information of income
(Tax certificate P60 in UK) and last three payslips
(borrower and joint borrower) or,
for self employed persons, profit and loss accounts
of the last two years with accountant assessment.
Last three months bank statements.
Proof of pension for retired borrowers.
When purchasing land or resale property:
“attestation” (certificate) from the “Notaire” describing
the property and the price.
For renovation :
Quotes of the work.
Copy of planning permission if applicable.
Certificate of property or copy of the deed
from the “Notaire”.
Bank certificates showing outgoing loans
and mortgages, amount of monthly returns paid
and date of end of loan.
Amount of alimony paid (if applicable).
Proof of personal funds brought into the program.