FAQ PURCHASING PROCESS | FAQ TITLE | FAQ BOUNDARIES | FAQ TAX
FAQ PURCHASING PROCESS
Q: Do I need an English lawyer when buying in France?
A: No, but you really do need a dually qualified one. The initial contract is usually drawn up by the agent, generally in standard format. This may not afford you proper protection without modification. Even if a French speaker, you may not have sufficient command of the language to discuss complicated legal issues or identify areas requiring alteration. Even if the agent speaks English, he/she may not appreciate your contractual needs or be in a position to advise you as to the impact of French succession law in your situation. As for the notaire, he/she is not there to protect your interests. In keeping with his/her role as public official whose primary duty is to the state, the notaire does not represent either party in the transaction. His/her main role here is to draft and give authenticity to the deed of transfer, ensuring that it conforms to the current law and to the preliminary contract. Although the notaire should inform the parties of their contractual rights and obligations, where an agent is involved the notaire is unlikely even to have seen the initial contract until it has already become binding upon you. Just as the English High Street solicitor is not equipped to deal with French law the notaire is not best place to advise as to the effect of French law on foreign nationals. You would be advised therefore to ensure that you have specialist independent legal advice from the outset.
Q: The estate agent tells me I can appoint my own notaire at no extra fee - is this the case?
A: This is the case, however the answer to the earlier question still holds true. The appointed notaire will not have English legal qualification and will not therefore be in a position to appreciate your position thus is ill equipped to assist you. Unless under very specific circumstances experience teaches us that the appointment of the second notaire generally has a negative effect on the good offices and responsiveness of the appointed notaire as in this situation he/she is obliged to collaborate with another notaire for a split fee.
Q: Is it possible for me to lose my deposit if I decide not to proceed with the purchase?
A: Yes, you should not generally part with your deposit until you have signed the compromis. The funds should be deposited with the appointed notaire or somewhat less usually the agent. Once you have signed the compromis and the cooling-off period has expired the contract becomes binding unless you have had suspensive conditions inserted into the compromis or the vendor has made submissions that can be demonstrated to be untrue and thus make some substantial and negative impact on the value or use of the property. If you withdraw without justification after this point you then risk losing the deposit and may be liable under a penalty clause for compensation and payment of the agent’s commission depending upon the terms of the contract you have signed.
Q: Will the notaire translate the acte de vente?
A: The deed of sale/purchase deed (acte de vente or acte d’acquisition) is signed in front of the notaire (or where any of the parties cannot attend the completion meeting, the notaire will sign the deed on their behalf under proxy). At the completion meeting the notaire reads the text of the purchase deed to the parties before signing. The notaire must satisfy him/herself that all parties have understood the content. If any of the parties do not speak fluent French, the notaire will generally require a translator/interpreter to be present at the signing. It is not normal for notaires to provide translations. The agent may well provide one however, this will not negate the necessity for you to have a translator present as the notaire will have to ensure that you understand any questions that may arise during the course of the meeting. Although the notaire has a duty to ensure that you understand the text of what you are signing, a translation providing word-for-word reflection of the text will not explain the implications, which as with any legal document may not be clear to the non-specialist. The inherent difficulty in translating legal terminology is that there is often no direct equivalent concept in another jurisdiction, which can lead to fundamental misunderstandings unless you have an advisor who is fully conversant with both systems of law.
Q: I am buying the furniture within the property – should I get an inventory?
A: An inventory should be attached to the compromis. It is not obligatory but since the compromis is a contract ask yourself would I be advised to sign any contract in which a proportion of the articles to be purchased were not defined. In addition, you should inspect the items prior to signature and ensure that provision is made in the contract as to the condition and working order.
Q: We purchased our French property some years ago and now wish to sell, however we have mislaid the title deed. The notaire who dealt with our purchase is no longer in practice. Can we obtain a copy and will the fact that we no longer have the original prevent us from proceeding with the sale? Is our title to the property at risk?
A: In order to sell the property you must provide proof of good title. The notaire will verify yours and previous title prior to signature of the purchase deed. You can instruct any notaire to deal with your sale. If the notaire who dealt with your purchase is no longer practising, an authenticated copy of the title deed can be obtained from his/her successor. If a notaire’s practice is closed then the deeds and documentation are transferred to another practice. When you purchased the property the notaire will have retained the original deed which he/she will have forwarded to the bureau des hypotheques for registration of title. The original will have been returned to the notaire and an authenticated copy sent to you. The fact that you have lost your copy is not therefore a problem. You can also obtain a copy from the local bureau des hypotheques, for which a small fee will be charged. If you would like assistance in locating the notaire’s successor and/or the address of the local bureau des hypotheques please let us know the name of the original notaire and the address of your property and we will provide you with this information.
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Q: We have recently purchased a house in France and wish to know whether there are there any restrictions governing how close we can plant trees to the boundary between our land and our neighbour’s property.
A: Unless specific local regulations exist the general situation is that where a tree is likely to be of a greater height than 2m it should be planted at least 2m from the boundary. Trees or shrubs of a height of less than 2m should be planted at least 0.5m from the boundary. If there is a wall situated on the boundary then you can plant along the wall for example in espalier, in which case the plant should not be higher than the wall. If the required distances are not respected your neighbour will have the right to demand that you either fell the trees or reduce their height. If the trees encroach upon your neighbour’s land, he or she can require you to have them cut, but may not cut them him/herself without your or the court’s permission. In the event that the roots grow into the neighbour’s land however he/she may cut these without your permission.
Q: Are there any restrictions as to how close a residential property can be built to a working farm?
There are limits as to how close any residential property can be built to agricultural buildings in particular those housing animals. The specific distances that must be respected depend upon the use of the farm building concerned and are determined locally. Where plans for a proposed construction or change of use do not respect the required distance it is unlikely that planning permission will be granted unless the chambre d’agriculture
grants a special dispensation. Enquiries should be made at the local mairie
and if necessary application made to the local chambre
to determine whether a proposed project is possible and if so under what conditions.
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Q: Will I have to pay capital gains tax on the sale of my French property and if so how much?
A: Capital gains tax is payable upon the sale of real estate property in France unless the property is your principle residence or you have owned it for more than 15 years. It is possible for British owners of property in France who are not resident in France to be exempt from capital gains tax on the sale of their property providing that the person was tax resident in France for a continuous period of at least two years at any point previous to the sale. This has recently been extended to cover the sale of a second property on condition that the second sale takes place at least five years after the first, and that the second property is the person’s only property in France at the time of the sale.
The capital gain is calculated by determining the difference between the sale price and the purchase price. Fees and expenses in respect of the original purchase and sale are taken into account in the calculation, thereby reducing the capital gain, which is then taxed at the flat rate of 16%. The cost of renovation work carried out in the property can also be taken into account, reducing the capital gain.
An allowance is applicable for the length of time you have owned the property. There is no allowance for the first five years of ownership. For the following ten years a discount of 10% per year is allowed resulting in there being no liability to tax after 15 full years.
Q: What is French wealth tax and under what conditions is it payable?
A: The ISF (Impôt de solidarité sur la fortune) is an annual tax which is payable by individuals who own property of a net value in excess of 750000€ (as at 1st January 2006 ). The people concerned must make a declaration each year. Married people and cohabitees should make a joint declaration as tax is assessed per household. Those who are tax resident in France are liable for ISF considering all their property situated in France and worldwide, except where certain property is exempt and where international conventions apply. Individuals who are not tax resident in France and own property in France are liable for payment of ISF only in respect of their property situated in France, except where property is exempt and international conventions apply. The tax is calculated according to a scale which is fixed annually, they currently range from 0.55% to 1.8% depending upon the tranche of value concerned.
Q: I am 68 years old and considering gifting my apartment in France currently valued at 150 000€ to my daughter as I have been told that there are tax benefits in doing this. Is this the case?
A: Each parent can gift each of his/her children up to 50 000€ every six years without gift tax. This means that within the space of 18 years each parent can gift 150 000€ to each child tax-free. The more you gift your children during your lifetime the less they will have to pay in terms of inheritance tax. Where a gift is made in excess of the 50000€ , tax reductions are available according to the age of the person making the gift. It is in the interests of owners with children to start making gifts as early as possible and certainly from their 50’s onward. If you have not previously gifted your daughter she will benefit from the allowance of 50 000€. The remaining 100 000€ will be taxable. Normally gift tax of 18 300€ would be payable on this sum however taking into account your age a reduction of 50% will be available meaning that 9 150€ will be payable. Please note that the notaire will also charge a fee with respect to the conveyance.
Q: Why is there no VAT on your conveyancing fees?
A: The tax authorities in the UK consider our conveyancing service to be one intrinsically linked to the acquisition of an interest in land outside the UK and thus VAT exempt in the UK. We pass this cost saving to our clients. Our succession and inheritance work is subject to VAT and whilst existent within our fixed price package the two elements are clearly defined and thus not only cost effective but competitively priced.
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