Property Guide

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Property Guide

Thinking of buying a property in France

Buying an older property 1The 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

New house or flat 2The property developer - Le promoteur 2.1

Time sharing - La multipropriété 2.2

Sale and leaseback - La nouvelle propriété 2.3

Financing your project 3Working out your budget 3.1

Drawing up your finance plan 3.2

General information on property loans 3.3

Procedures 3.4

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Thinking of buyinga propertyin 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.

Buying an older propertyYou 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.

1.1 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 procedureAfter 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 initialformalities, 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. Buyingan 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 1.6in the presence of notary

1.4 The sale agreement

Le compromis de vente

In France the most used form of conditional contract is the Sale Agreement.A reciprocal agreement to which the two parties concerned arecommitted 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 recourseto 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 - usually10% of the purchase price .If a bank loan is required, the Sale Agreement will includethe conditional clause of obtaining a loan. If your loan application is refused, the sale Agreement will be considerednull and void and you will reclaim your deposit.

� Cooling off period of 7 days: delay in which one may pullout or pay the deposit if one wants to go ahead.

1.3 The conditional contract

The promise of a sale “compromis de vente” which can bedrafted 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.

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 buyerduring 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 upthe 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 committedto 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 informationrequired 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 monthsafter 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 onyour 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 usuallybought 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.

2.2 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 yearsperiod. Each year, you yourself have several weeks’ use of the property, free of charge.

2. New houseor flat

The property developer - Le promoteur 2.1

Time sharing - La multipropriété 2.2

Sale and leaseback - La nouvelle propriété 2.3

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 )

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. 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

SECURITYThis 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-offperiod, called “délai de reflexion".Once this period expires, you will need to send the offer backto the bank duly filled in.

EARLY REPAYMENT PENALTIESIn the event of early repayment, you will have to pay a penaltyof up to 3% not outstanding capital.

COOLING OFF PERIODWhen buying an inhabitable property (new or resale),you have a 7-day cooling off period during which you canretract after signing the preliminary contract (SRU law).

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 outsetthan the variable rate with a fixed rate option.

CREDITOR INSURANCEThis insures the borrowers and the joint borrowersin the event of death. In this case, the outstandingcapital is fully reimbursed by the insurance company if full insurance cover has been taken out.

FILE FEEThe 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.

3.4 Procedures

DOCUMENTS REQUIRED WHEN PURCHASING PROPERTY

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”.

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.

� Bank certificates showing outgoing loans and mortgages, amount of monthly returns paidand date of end of loan.

� Proof of pension for retired borrowers.

� Amount of alimony paid (if applicable).

� Proof of personal funds brought into the program.