Interesting developments in the French Riviera housing market; real estate agents must handle and publish fixed commission percentages and, in the meanwhile, they are being battled by the notary. Those serious notaries are quietly but slowly taking over a piece of the real estate market. Bad for real estate brokers and good for house owners/sellers. But how does the purchase and sale of houses in France actually work and what does a notary do during the process from first reservation to definite purchase?
The purchase of an apartment or villa in the South of France France often precedes a period of doubt. You seek and visit, you weigh and weigh, you look and compare; is this a good location and will they not build a factory opposite our dream home? Or everything is so perfect with what you’re looking for, you start to doubt. And strange but true: ‘too good to be true is a reason for some to some people not to buy it. The perfect location, sea view, a swimming pool and a parking garage, all within the budget. And then, at the last moment, decide not to buy it. We’ve been involved in many situations when we accompany people that want to buy a second home on the French Riviera.
A quick deal? No way
Some nationalities think taking a suitcase with money is the fastest way to do business on the Côte d’Azur. We have experienced this several times; a potential buyer opened a suitcase with 5 or 600,000 euros; and told us it honestly came from ‘grandmother’s heritage in Somewherefarrawayski’. And if we could arrange that this money arrived at the buyer. Even though the seller is tempted to say yes; a cash receipt will never be given by a French notary. And you need the notary to register the property legally in your name.
The notary is actually a tax official who ensures that any sale of an apartment or villa is legally effected and the French State is not in any way prejudiced. Did you know that a French notary can not access the casino? This is to avoid any discredit or make him blackmailable. Therefore, notaries are very straightforward persons; crazy about details and rules and always confident about uncertainty. Use the notary to your advantage!
The notary is indispensable in the sale or purchase of a real estate in France. He or she advises, prepares documents and supports our customers during the sale or purchase.
Provisional purchase agreement (Compromis de vente)
A written provisional sale agreement is not mandatory but in all cases better than an oral purchase agreement. With a preliminary purchase agreement, you have all aspects of the purchase on paper. With the signing of a preliminary sale agreement, future visits and promotional actions for the sale of the property will also be frozen.
Both parties are beginning to assume that you become the buyer of the property. Many formalities still must be carried out, including the collection of various documents that are properly audited by the notary. The basic information contained in the Provisional Purchase Agreement is also used for the official purchase agreement, supplemented with cadastral drawings, plans and relevant additional information.
DPU (Droit de Préemption Urbain Act)
If you have reached a provisional purchase agreement and you have the money in your back pocket, you still have to wait another two months for the municipality to agree on your purchase. The DPU (Droit de Préemption Urbain) allows a municipality to take over the purchase for the same amount you have just negotiated with great effort. This however only happens if it is an important historical property or the mayor wants to use the location for future expansion plans.
What does a notary do?
The notary first checks who you are and your tax status. Will you be the only owner or should the new villa also be named in your partner’s name? The notary wants to know exactly what your marital or fiscal situation is, in order to protect you from potential consequences of potential future situations. For example, do you buy a house in France and you are not married? If your partner passes away, half of your home suddenly becomes from the French state. With a contract or marriage, you will prevent this. The notary also collects the latest legislation on local taxes and looks into the technical condition of the property using the Diagnostic Technique that the seller has to perform.
The seller will be informed of the tax effects of the sale, the so-called ‘Plus Value’ tax on the added value. This gain is taxed after deduction of all costs for renovations and the percentage has been a political game for many years. At present, the plus value is 19% on net profit, if you sell within 5 years. For each year, this percentage drops. After 22 years, you can keep the full profit without paying taxes. An exact rating can be found here.
The notary also looks at whether the funding is legally established. Exotic BV’s or suitcases with cash money will not pass the notaries’ desk. All payments must be made via the bank with an IBAN, BIC and SWIFT code.
In total, more than 100 points are checked before the official purchase contract is drawn up.
Registration of purchase
Your purchase of a villa or apartment in France is registered by the notary in a public register (publicité foncière) that registers, monitors and maintains all real estate transactions. This includes the financing, the data about the current owner and the future owner. For the buyer, this is a nice extra check, for example, whether the seller is actually the rightful owner. This system is designed to prevent fraud. In the past, it was regularly done that land was sold while the owner did not know it!
The registration is digitally stored, but the notary is obliged to keep a copy of 75 years in his / her archive. After that, the documents will be stored in the National Archives.
What does the real estate broker earn in France?
The notary also checks whether the selling broker works according to the Loi ALUR (also Loi Duflot). This law has been active since April 2017 and obliges every broker to publish a clear commission. And the published percentage can no longer be negotiated with the seller or buyer. At the moment, sales agents in the top segment of the Côte d’Azur ask for 6 or 7% commission on the final selling price. For the seller, this means an additional increase in the selling price. The commission will be paid to the sales broker via the notary after deduction of VAT. The buyer pays no charge for the purchase.
Notary ensures legal certainty
During the course of the preliminary purchase agreement to the final purchase agreement, the French notary will do everything possible to protect everyone. One of the pillars of society is that legal certainty is respected and the weak are protected against the strong.
Last development: Notary operates as a sales party
The role of notaries in the Alpes Maritimes is becoming increasingly more important. More and more people choose to sell the houses themselves and place their home on a promotional platform. The traditional broker is circumvented in this way. The notary can determine the value of your property based on sales transactions in the same city and district. A development that many real estate agents face with pain in the stomach. First, real estate agents got competition from real estate lawyers that are allowed to make a mandate de vente. But notaries go a step further and publish houses on their own housing site, with more than 100,000 houses on it. These are often priced more sharply because the 7% of a broker is missing.
The notary will draw up the provisional sales contract that the seller and the buyer together sign and then meet each other again notary. Of course, this saves you money for a real estate broker. Still, a promotional real estate agency with a smart website and its own network of home searching clients can give a better and more personalized service to the local market and its buyers.
DIY house for sale in France
If you want to sell a house or apartment in France, you can also choose to outsource the legal part by the notary and release a communication budget for promotion on well-known sites where you can publish your home; as in Living at the Côte d’Azur. You actively take over the role of the broker or promoter. However, if you do not want to answer phone calls on Sundays or in the evening plus dozens of e-mails, you can also choose to outsource the sales and promotion through the platform for a lower percentage than the broker.
For more information on these latest developments and the offer of the French notary, look at https://www.immobilier.notaires.fr/
Reading tip> Ten reasons to work with a buyer agent
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