When purchasing property in France, one first signs an initial contract and after various legal and other checks have completed, the final contract is signed.
The initial (or preliminary) contract defines the price, terms and conditions of the sale. As in England, the final contract is signed only after various activities (for example, checking land deeds, confirming that there are no debts secured against the property) are completed. However, despite being know as a preliminary contract, one should note that it is legally binding. Consequently, you should only sign the contract if:
- You understand everything in the contract. This may mean that you need to obtain a translation or may need to get legal advice. Fortunately, there are a number of English speaking notaires that can do both for you.
- You agree with everything in the contract. Do not sign anything that you do not agree with. Although there are 'standard' contracts, one can make any additions, deletions or changes that both parties agree to. Just because it is 'standard' does not mean that you have to sign it.
- The contract covers the full agreement. When buying a property, you may come to a number of verbal agreements with the seller. For example, that certain items of furniture will be included or that certain renovations will be completed. To avoid possible disappointment (whether it be from misunderstanding or otherwise), any such agreements should be documented in the preliminary contract. If they are not, you are committing yourself to buying the house, with no guarantee that any separate agreements will actually be met.
- Any important conditions are included. There may be certain conditions which are important to you. For example, you may be buying additional land adjacent to the house. Or, you may require a mortgage or be depending on a tentative job offer to be made a firm job offer. No matter what the condition, you can have it as part of the contract (as a Condition Suspensive), so that if it doesn't happen, you are released from your commitment to buy the house and will receive your refund back. The estate agent or the seller may say that such conditions are not part of the sales contract; do not be put off by this as a contract can include any conditions both parties agree to, so if the condition is important enough to you, you should insist.
- Deposit to Notaire. For security, the property deposit should be paid to the Notaire or to a bonded estate agent, not the buyer.
The contract is signed by both the buyer and the seller, normally at the same time. It will include:
- The personal details of the buyer and seller
- A description of the property
- The price
- The date by which completion must take place
- Conditions Suspensives
- Penalties payable if the conditions of the contract are not met. In general, these specify that the buyer will lose their deposit if they do not complete the sale. If the seller does not complete, they normally must refund the deposit and pay the same amount again to the buyer as a penalty. In this way, the amount of the deposit protects both the buyer and the seller from the other party backing out of the contract.
As well as the deposit, the buyer will pay the stamp duty and registration fees at this time.
The contract is subject to a 7-day cooling-off period. This means that the buyer can cancel the contract at any point during this period. However, if you decide to do this, it is important that you are able to prove that you did the cancellation within the 7-day period, in the event that the buyer should claim that they did not receive the notification. Consequently, use of registered mail or other certified delivery of your cancellation is important.
Before signing the contract, you may wish to check if there are any planning applications that could affect your property. In villages, local planning applications would normally be checked at the mayor's office (marie) and in towns it would be at the préfecture. Just as in the UK, it is also advisable to have a building surveyor examine the property prior to contract signature.
If you intend to have your mortgage cover not only the purchase price but also any renovations you plan, you should arrange estimates as soon as possible so that they can be considered as part of your mortgage application. Keep in mind that tradesmen are often very busy (and on occasion will also postpone appointments), so you may need a fair bit of time to obtain the required written estimates.