Buying Property In France13 June 2017
How To Buy Off-Plan Property in France
The property buying process is similar to that of other European countries, but one area where the process in France is much better is that of transparency and security. Off-plan property remains a popular way for both investors and second home owners to buy real estate in France. It allows developers to secure buyers and capital before beginning construction but is equally beneficial for buyers who can pay for their property often at a lower rate and benefit from favourable progressive payment options. They may even have the opportunity to personalize their property.
France is one of the most secure countries in the world when it comes to buying off-plan property as buyers’ interests and money are protected by a number of clauses along the way. Of course, whilst there is a robust framework of consumer rights for property investors in France, the law always has its limits so buyers still need to take a commercial approach towards their investment.
Note: This buying process starts from the point in time where you will be paying the deposit. By this stage, almost all clients will have already ascertained whether they will be buying in cash or using a mortgage.
The "VEFA" (Vente en l'Etat Futur d'Achèvement) is the main contract use for the purchase of an off-plan property in France.
Placing an option
Once you have made a decision to buy a certain property, most developers allow you to ‘place an option’ on the property. This takes the unit off the market for a short period of time thus giving you a small window of time to finalise your details (secure mortgage finance) and collate any outstanding information you require in order for the agent/vendor to put together your official reservation contract ‘contract de reservation’.
To plan an option you simply have to complete a reservation form and send a security deposit of between 2% and 5% of the property price. This deposit will confirm your reservation and it is held by a ‘Notaire’ until the final VEFA contract is signed and ratified. This means a buyer’s money is secure and protected right up until the point at which the title deed transfers take place (carried out by the Notaire) and you then become the freeholder of the property.
One of the most common ways a buyer loses their ‘option’ and therefore their preferred unit is being slow to provide the necessary information. Once all the information has been supplied, reservation contracts can normally be prepared and sent to a buyer within two days. Below is a list of the information usually required;
- Completed reservation from
- Passport copy
- Birth certificate
- Proof of address (Note: If the clients are married, the same documents are required for each along with their marriage certificate.)
- Proof of deposit transfer
- An indication of financing — whether you’re buying cash or using a mortgage
Reservation of the property
Once your deposit, reservation form and all necessary information has been received, you will be sent the reservation contract. The reservation contract must contain certain information, in particular:
- The surface area of the property in question, number of principal rooms, etc
- Details on the property’s specifications (‘note technique sommaire’)
- The sale price and details of whether this is fixed or open to any revision
- The details of any mortgage finance
- The envisaged latest date of signature of the sale deed (and usually the envisaged latest building completion date)
- The reproduction in full of the provisions of articles R261-28 to 31 of the Code de la Construction et de l’Habitation (French Construction and Dwelling Code)
Hopefully, by this stage you have already begun the process of organising your mortgage finance, if necessary.
Cooling off period
Once the reservation contract has been signed you have a seven day 'cooling off' period, during which time you can withdraw from the contract and receive a full refund of your deposit.
Once the "contrat de réservation" is signed you have a ten-day 'cooling-off' period, during which time you can withdraw from the contract and receive a full refund of your deposit.
The ten-day cooling off period does not start until you have received a copy of the contract documentation, which should be sent to you by recorded delivery. It does not matter that you may have been handed a copy by the developer at the time you signed the contract. There must be formal, certified confirmation you have received the contract, which can normally only be achieved by a recorded delivery receipt.
If you withdraw from the contract beyond this date then you may lose your deposit, unless you are able to invoke one of the permitted reasons allowed by law, e.g. failure by developer to proceed in accordance with the preliminary contract.
Signature with the "Notaire"
Once the cooling off period has passed you have essentially agreed to purchase the property in question. As the property is off-plan, there can sometimes be certain details for the developer to confirm before the final VEFA contract can be put together for each buyer. Once the VEFA contracts are ready you will be asked to sign the ‘acte de vente’, which will make you the official owner of the property.
As non-resident buyers may not be able to travel to the Notary’s office in person, they normally sign over power of attorney to their own notary and then send this to the notary in charge of the project. At the same time, you must transfer the necessary funds to the notary for the deed signing. If you are a UK resident you must also get your power of attorney documents ratified at the Foreign Office.
The notification by the notary is the final stage in order for the signing of the deeds to go ahead.
Stage payments - L’appel de fond
Under the terms of the VEFA contract, you will be required to make stage payments to the developer. The schedule is referred to as "‘l'échelonnement du paiement du prix". The payments will be a percentage of the total purchase price, which will vary depending on whether it is an apartment or a house. Below is an example how the stage payments may be broken down.
- 5% Initial deposit
- 30% of the total price when the foundations have been laid
- 35% of the total price when the property is weatherproof
- 25% of the total price when construction is complete
- 5 %of the total price the day the property becomes available to the buyer (the day you receive the keys)
Receiving your property - La remise des clefs
As with any property purchase, the final stage of the process is when you are given the keys to the property. With off-plan purchases this stage normally coincides with the last stage payment as per the terms of the VEFA contract. You will then have a period of one month to take possession of your home and inform the developer of any issues relating to the property.