How to buy or sell a French property

Very different from a US notary public, the French notaire is both a lawyer – whose core practice includes real estate, family law, estate planning, etc. – and a public officer who acts on behalf of the state after having been personally appointed by the Minister of Justice. The deeds he drafts are very binding, with the same legal strength as a court judgement.

The notaire is a centerpiece of the real estate process; he intervenes as soon as the deal is closed between the parties in order to advise the clients, drafts the deeds that will enact their agreement, and record the transfer of ownership.

His involvement offers strong legal protections for both parties as he guarantees the following:

• The seller is the real owner of the property
• No mortgage will remain over the property once the sale is completed
• The price is fully paid to the seller
• The transfer of ownership is officially recorded
• All the taxes generated by the transaction have been paid to the tax authority

Regarding the parties :

The notaire as to ensure the identity and the legal capacity of the buyer and of the seller. He will require a copy of their valid ID and birth certificates.

If one is married, the notaire has to identify his matrimonial property regime and will require a copy of his marriage certificate (and his prenuptial agreement/marriage contract, if any).

Regarding the property :

By analyzing the legal title of the seller, the notaire will ensure he the real owner of the property being sold and may also detect some issues such s some transformation works having been performed without the proper authorization or the irregular annexation of common areas.

The seller is legally bound to disclose to the potential purchaser the results of the technical audits regarding the presence in the property of lead, asbestos, termites, etc. The notaire will help his client to analyze and understand the conclusion of those reports.

Regarding the co-ownership association :

When the property sold is made up of one or more units of a condominium, the Law makes it compulsory for the notaire to obtain forward to the potential buyer some important elements regarding the co-ownership association.

Thanks to his regulation, the purchaser will be aware of the financial situation of the association and the renovation works recently decided, which will enable him to figure out what his share if the global expenses of the building will likely be.

The buyer and seller are often in a hurry to conclude the sale, having a mind that signing the preliminary contract is not great commitment. This is a false perception. Despite the name, the preliminary contract agreement constitutes a genuine contract which imposes major obligations on bolth parties.

In the promise to sell, the owner takes the commitment to sell to the potential buyer his / her property at a given price. The buyer is being granted an exclusive option for a limited period of time (generally 2 or 3 months) and therefore has the choice to buy or not to buy. During this time period, the seller is prohibited from cancelling the sale of offering the property to another buyer.

Security deposit :

In exchange, the potential buyer pays to an escrow account, opened by the notaire, a security deposit, which is usually 10% of the selling price. It will have to be paid by wire transfer to the notaire even prior to the signature of the preliminary contract, in order to make sure the escrow account has received it by then.

If the potential buyer decides to proceed with the purchase, the deposit is deducted from the total price to be paid. But if the potential buyer decided he doesn’t wish to buy the property anymore, outside of the withdraw period or other specific conditions set forth by the preliminary contract (obtaining a loan agreement for example), the owners retains the deposit as compensation.

Withdrawal period :

According to the French Law, every individual acting in a real estate transaction as a non-professional buyer is granted a 10-days cooling off period during which he will be able to withdraw from his commitment without any financial consequences.

This time period stats the day after the potential buyer has been handed a copy of the signed preliminary contract or has been delivered a registered letter enclosing it.

Loan contingency :

When the purchaser needs to obtain a loan to secure the transaction, the preliminary contract will be signed under the condition for him to be granted one. This is a very strong protection for him, as the contract will be void with no financial penalty if his loan application is denied. Usually, the preliminary contract will frame this condition and require the buyer to act in good faith and do everything necessary to obtain this loan agreement.

Carrez Law : 

The seller of an apartment is compelled by the Carrez Law to disclose the precise surface area of the property, which represents a very strong legal protection for the purchaser, who would have a legal claim against the seller if the surface area of the apartment appears to be smaller of more than 5%.

Once the preliminary contract is signed, the notaire will us the time period before the signature if the closing deed (usually from 2 or 3 months) to perform some final checks and verifications.

He will make sure there is no mortgage on the property and, if one is revealed, he will obtain the authorization from the lender to sell the place and the exact amount to be deducted from the selling price reimburse the bank.

He will also obtain the final documents from city hall and, necessary, will officially notify the sale in order to obtain the renunciation from the city to exert its preemptive rights.

Meanwhile, this time period will benefit the seller as he will have time to empty the property and move out. Equally, this time will be necessary for the purchaser to go through the various steps with the banker to be granted his loan.

The closing deed, most of the time, merely reiterates the conditions of the agreement recorded in the preliminary contract. Its signature is nonetheless a crucial step, as the sale process officially ends with the signature of the closing deed.

The transfer of ownership and the right to use the property will be officially recorded in the sale agreement, in exchange for the full payment of the price, through the account of the notaire.

Finally, the notaire will pay the various taxes generated by the transaction (purchase tax on behalf if the buyer and capital gains tax on behalf of the seller) and will obtain the registration of the deed at the land registry office, making the buyer the new official owner of the property.
The purchaser will receive right away his title of ownership trough an electronic document (email of flash drive).