French administrative formalities are bound up in "red tape", and a property transaction is no exception. However, the system is in many ways better and safer than that applying in most other countries, including England.
To buy you should make a written offer on a property that is accepted by the owner, you will usually be expected to put down a deposit of 10% of the purchase price, which you may forfeit if you change your mind, unless there is a bona fide reason for doing so. All normal property transactions must pass through a "notaire" (notary) who is the only person who can make the title searches and obtain certain legal documents necessary to make the transaction possible.
The purchaser can choose the notary he wants to handle the transaction. The purchaser is responsible for the payment of the "notary fees", which depending on the selling price, can be as much as 8% on small old properties (though around 6.5% is more usual), or as little as 1.5 to 2.% on newly built properties, with an additional cost of around 1 - 1.5% if a mortgage is to be registered on the property. One should note that prices of property are generally advertised exclusive of these charges. The notary does not get the entire fee. His fees are determined by the French state. If an owner wants to impose his notary - which is allowed under French law - be aware that you have the right to choose your own notary who will work in collaboration with the owner's notary. In fact, it is quite common to have two notaries working on the same transaction, with no additional cost to the purchaser as fees are shared. However, the delay may be a little longer due to the necessity for the two notaries to correspond with each other.?
Let us take a hypothetical example of a property transaction. Mr Brown has visited some properties with "hyeres.com". He decides to make an offer on a property listed at 300,000 Euros and informs us that he is prepared to pay say, 280,000 Euros. The real estate agent will normally require a written offer from the purchaser in order to be able to convince the owner to accept the offer.
Once the two parties have come to an agreement on the sale price, the terms and conditions of the sale are discussed with the notary who then prepares the preliminary contract or "compromis de vente". This contract is just as important as the final document transferring title as it must contain all the clauses and conditions precedent to the sale. These include clear title, easements, certificates stating whether the property conforms to current legislation on asbestos and other matters, and, most importantly, whether the purchase is subject to the condition of obtaining finance.
Signature of the compromis de vente should not be taken lightly. Before doing so, Mr Brown should be absolutely sure that he wants the property and that he is aware of the contents of the contract he is signing. Should the notary not speak sufficiently good English, Mr Brown should ask for a translator or, if the contract has been sent to him in the UK, have it explained to him word for word in English.
It is usually at this stage that a deposit of 10% of the purchase price (5% when purchasing property "off plan") has to be made. Payment, by cheque, which must be drawn on a French bank, or bank transfer, will normally be made to a notary and although some agencies with the correct insurance have the right to put a cheque into their own escrow account, it is probably wiser to insist on making the payment to the notary whom you wish to act for you.
Mr Brown will receive a copy of the compromis de vente signed by both parties, and from the date of reception he has seven days which to change his mind. At the end of this period, the contract becomes binding and the transaction is now "under compromis". The owner cannot sell to anyone else, nor change the price, and if he refuses to sign the final document the purchaser can obtain a court order forcing him to sell. On the other hand the purchaser can pull out without loosing his deposit if one of the clauses or conditions precedent inserted in the contract has not been fulfilled. Otherwise he may be able to pull out but will almost certainly loose his deposit.
The notary will require two or three months from the signing of the compromis to prepare all the necessary paperwork before getting the parties together to sign the title deed ("acte definitive"). During this period it is wise to consult with the notary or a tax lawyer to decide what is the best way to purchase in order to avoid future difficulties, for example with French succession law.
When both the parties have signed and Mr Brown has paid to the notary the remaining 90% or 95% of the purchase price as well as the notary fees, the notary settles any debts the owner may have (typically to banks), pays real estate agent commission and then gives the balance to the owner.
As of the final signature, Mr Brown becomes the legal owner of the property and receives the keys.