Buy a property in France

The vast majority of people who buy homes in France don’t obtain independent legal advice, and most of those who experience problems have taken no precautions whatsoever.

Of those that do take legal advice, many do so only after having paid a deposit and signed a contract or, more commonly, after they’ve run into problems.

The most important thing to do before buying property in France (or indeed anywhere) is to obtain expert, independent legal advice from someone who’s familiar with French law.

As when buying property in any country, you should never pay any money or sign anything without first taking legal advice in a language in which you’re fluent from an experienced lawyer. You will find that the small cost (in comparison to the price of a home) of obtaining legal advice is excellent value, if only for the peace of mind it affords. Trying to cut corners to save a few Euros on legal costs is foolhardy in the extreme when a large sum of money is at stake.

It’s never wise to rely solely on advice proffered by those with a financial interest in selling you a property, such as a builder or estate agent, although their advice may be excellent and totally unbiased.

The process of buying a property in France is different depending on whether you buy a newly built or an existing property.

The differences between an off plan apartment in CAEN and an existing cottage in Normandy are obvious. The cottage has been there for  years. It has had a long time to accumulate rights and obligations. When you go in, the lights work and water comes out of the taps.


Build or bust

The off plan property has not yet been built. You do not know what it will look like. You do not know how well it will be built. If the builder goes bust it might even not be built.

A newly built property is a property which is off plan, or if already existing, is less than five years old and has not been sold. This is called in French vente en l’état futur d’achèvement or VEFA. All other transactions with other properties are resale.

For a new build purchase the buyer will be asked to sign a « reservation contract » (contrat de reservation) where he or she commits to buy the property described in the contract, in the event of the developer offering it for sale.

Clause

The developer will offer the property for sale, subject to obtaining the necessary authorisations and to being successful in marketing the properties, getting enough interest from buyers to make it worthwhile going ahead with the build. There is usually a clause in the contract allowing the developer not to proceed with the sale - with no compensation for the unfortunate buyer - if he does not go ahead with the project because planning permission was not granted or the marketing flopped.

The purchaser of an existing property will be asked, most of the time, especially if it is out of Paris, to sign a compromis de vente  which is a binding contract where both parties commit themselves to the sale. There is no uncertainty in such a contract: the vendor commits himself to sell and the buyer commits himself to purchase. The property is there and you can see what it looks like.

Deposit

In practise, purchasers of an off plan property need to make their minds up very quickly as they get sold in a matter of weeks if not days. They can even be asked to pay a 5% deposit before the reservation contract is even handed over to them. There is no danger in doing so, because the purchaser benefits from a 7 days cooling off period of time and will not be committed to the purchase up to the time the cooling off period expires.

Of course, the property will only be reserved to you on the condition that shortly after the deposit is paid, a reservation contract is signed. The contractual description of the property is usually short; this is why the accuracy of the plan annexed to the contract is so important.


Cooling off

For a resale purchase, the buyer has the time to visit the property before he makes his offer, the offer can be accepted or refused by the vendor. The contract is only prepared after the offer has been accepted. The deposit is paid at a later stage: at the end of the cooling off period.

In both types of purchase, the buyer is committed to the deal only after the contract signed by both parties is notified to him by recorded delivery. The main difference is that for newly built purchase, the deposit is often asked for upfront; whereas for resale purchase it is payable once both parties have signed the contract and the latter is notified to the buyer by recorded delivery.

Regarding the signature of the deed of sale (acte de vente), here again the experience is different. For a resale purchase this is usually signed within three to four months. For a new build it depends on what the contract says. The acte de vente can occur quickly if the developer had already obtained the relevant authorisations (purchase of the plot and planning permission granted) at the time of the reservation contract’s signature. It can take a long time if the project was in its early stages when the reservation contract was signed.

Patience

The distinctive feature of a resale purchase is that legal completion coincides with possession of the property; the same day that you complete (if you are in France) the keys are handed over to you and you walk in your property.

 
In contrast, the buyer of a new build will need a little more patience. If legal completion takes place a couple of months after the reservation contract is signed, handing over the keys will not take place before the building is finished - and that can take another year or so.

VAT is payable on the price of a newly built property, usually at 19.6%. On the other hand, the property transfer tax is low (frais réduits). A purchase of an existing property (more than five years old or less than five years old but sold for the second time), is not subject to VAT – but you have to pay other property transfer taxes usually totalling 6.89% instead.


Legal guarantee

Finally the main difference between the two purchases is the legal guarantee of the vendor towards its purchaser.

Basically, there is no guarantee given to the purchaser of a more than ten years old property from the vendor, the buyer takes the property ‘in its present condition’ (prendre l’immeuble vendu dans son état au jour de la prise de possession.)

It is his responsibility to make the necessary checks that the property is structurally sound. It will not be possible to make a claim against the vendor if there is an error in the property’s description, size and even if a fault in its structure appears later on.

There is no room here to go into detail about a case where a vendor deliberately chose not to disclose to the buyer the problem and did so intentionally. This is very difficult to prove. A structural survey of the property is a wise solution to avoid any unpleasant surprises and any legal risk.


Protection

In contrast, when you buy a new build property you benefit from a range of legal guarantees that run from the day you receive the keys. There are various warranties granted to the purchaser that buyers need to be aware of, especially the one that guarantees that the building will be finished in the result that the developer goes bankrupt. The notary details them at length in the deed of sale.

The guarantees are a legal requirement and extremely beneficial - provided the developer has taken the relevant insurance policy to cover his liability.

French law gives a strong protection to off plan buyers and it is important to be aware of them, understand them and - most of all - to know the developer’s insurer, the policy number and the conditions in which a claim can be made.

Knowledge of the system is the key thing to feel comfortable in the process of buying; it is in the interest of the buyer, whatever property he is buying, to understand his rights and his obligation, this understanding will make the experience of buying a more enjoyable experience.

Healthcare in France

Despite being expensive to maintain, the French healthcare service is one of the best in the world, offering a wide choice of general practitioners and healthcare specialists.

The French healthcare system is funded by the working population. French employees pay about 20 per cent of their gross salary – the self-employed pay even more - deducted at source, to fund the social security system, known as Sécurité sociale. A significant proportion of this money goes towards public healthcare, to which every legal resident of France has access under the law of universal coverage called la Couverture maladie universelle.

In the past all EU expats arriving in France were eligible to join the French healthcare system. However, now those arrived in France after 23 November 2007, and who are not planning to work, are officially retired or in possession of documents which mean their healthcare costs are covered by the government of their original country, will not be allowed to join the system until they reach state retirement age or have lived here for five years. Until then, they have to hold private health insurance.

When a person subscribes to Sécurité sociale, part of the cost of their medical treatment is covered by the state. However, regardless of cover anyone in France can consult a doctor or specialist. Similarly, everyone has the right to emergency hospital treatment, although for those who subscribe to Sécurité sociale, the cost is partly reimbursed.

State healthcare

There is no great difference in the quality of care between private and public hospitals in France and there is not necessarily any great difference in price. Being treated in private clinics in France does not mean avoiding waiting lists for the simple reason that, with a few specific exceptions, waiting lists such as those in the UK do not exist. And going private does not mean you will have to foot the entire bill.

Unlike in the UK in France treatment, whether private or public, is not free at the point of delivery. Even if you subscribe to the Sécurité sociale, on seeing a doctor or specialist (specialiste) you first pay the full bill (tarif) and are then reimbursed at a later date (about 10 days). Generally speaking, Sécurité sociale refunds 70 per cent of the cost of a visit to a médecin traitant (a GP or family doctor) and most specialistes.

When you affiliate to the system you will receive your carte vitale (green card) which you must take with you whenever you visit a doctor, specialist or hospital, and when you pick up prescribed medicines.

Hiring an artisan in France

Thousands of property owners across France are anxiously awaiting the arrival of a mason, plumber, carpenter, gardener or pool builder.

When choosing an artisan to do some work, this is what you should do:

* Obtain good devis: many court cases are caused by a failure in or lack of communication. The devis is the first step to a good, honest conversation with your builder. They should be detailed and specific: « terracing around the pool », « tiling the shower », is insufficient. Also, try hard to obtain at least two devis.

* Deadlines: Always add deadlines to your devis: the start and completion date. If you have a personal deadline – say a summer rental – add that to the devis. This puts the artisan officially on notice of your time requirements. While few French builders will agree to penalty clauses (which in any event are difficult to enforce) these recorded time lines will be helpful if you ever go to court. Without them it may be difficult to prove that your pool was promised for June 2008 - not June 2009.

Obtain a devis for every change of plan: Typically every project goes over budget, because the client decides to double the insulation or upgrade the tile to marble.

Too often these changes take place in a casual conversation on site without anything in writing. This can be a costly mistake. Set a target amount for your project - say €1,000 - and ask for and sign a devis for any deviation that goes above that level. It can be a simple sentence.

Keep a project notebook, and record every change, write down the estimate and both of you sign and date it. (If you are contractor, this will also protect you.)

Ask for proof of the contractor’s insurance: Always ensure the builder is properly registered and has proof of proper insurance. If the devis seems cheap it may mean the builder is not paying insurance fees. If your contractor does not have insurance you may find it difficult to obtain financial reparation if something goes wrong.

Use experienced builders: It is difficult for an inexperienced contractor to know all the building codes and norms defined under French law. Even more so when a carpenter suddenly takes on a plumbing job. Always ask for recommendations.

Pay the VAT: As lawyers we must instruct you to pay the VAT on renovations. But there are good reasons to do so (beside the fact it is the law). You are paying for a 10-year guarantee. Your artisans will pay more attention to their work.

Advance payments and factures (or bills): In France it is customary to pay one third of the devis on account. After that any further payments usually require a facture for works completed.

Nevertheless, foreign homeowners often pay too much in advance and/or pay bills without a facture, often on the basis of a phone call or an email. Sometimes homeowners share their bank account with the artisans. Please do not.

When in France, be French. Ask for proper devis and receipts for materials, pay only on the receipt of itemized factures, and, in addition, if you are outside of France ask for photographs of the completed work.

Keep a social distance from your contractors: There is a tendency among foreign homeowners to become too familiar with their artisans. It does not hurt to share an occasional beer or glass of calvados. But strive to maintain a professional relationship while the works are ongoing, or you will lose your ability to negotiate or correct mistakes.

Subcontractors: Do not pay subcontractors directly, without following the same process: devis, insurance check, recommendation check, signature and facture.

These steps will not guarantee a problem-free renovation – often because the artisans themselves use subcontractors. But they will offer you a heightened level of legal protection and, at the least, significant peace of mind.

You will also be better prepared for any possible legal action and the negotiating power that comes with it.