Your search for the ideal property has been successful, and you’ve found an apartment or a house which suits your needs. In order to seal your commitment and that of the seller’s, the time has come to validate a preliminary contract, called a “compromis de vente” or “promesse de vente” in French. This is a key phase that requires dedicated support.
In order to validate a preliminary contract, you can call on the services of your estate agent and / or your notary. The latter, a real estate law professional, will ensure the validation of a fully compliant preliminary contract. Ask your mortgage broker or estate agent if they can recommend an English-speaking notaire. It’s best to have a notaire different than the seller’s notaire. Some notaires provide translated contracts/compromis. Some clients use the services of a local lawyer to validate this important contract and its conditions. Your mortgage broker can assist with the clauses relating to financing mentioned in the contract.
In order to confirm your interest, you must write an offer to purchase the property and send it to your estate agent or any intermediary in direct contact with the seller.
Only once this offer has been accepted, the preliminary contract will be drafted. This can take many forms. It can be a sales agreement or a promise of sale. The promise of sale is based on the seller’s commitment to sell you the property exclusively. The sales agreement is based on a mutual commitment of purchase and sale. While the promise of sale must be registered with the tax authorities, this step is not necessary for a sales agreement.
Your notaire/agent will request some basic documents to complete the contract, including passports, marriage certificate, address…
You will first receive a draft of the contract – make sure to send a copy of your mortgage broker for them to confirm the finance conditions are adequate.
Ideally you will have a translation of this document, or have an English speaking lawyer validate it for you.
The loan contingency or ‘clause suspensive’ for your French mortgage
An important clause to have if you are buying subject to finance obtention, is to have this confirmed in the ‘clause suspensive’, the loan contingency.
This clause will ensure that, in the event of having your mortgage application declined by French banks, you will be able to recuperate your deposit and be freed from the contract terms.
Once this contract is signed, you will have up to 60 days to obtain your mortgage approval, to then go onto signing the “Acte de Vente”, the deed of sale, approximately a month later.
The following information will be included in the compromis drafted by the notaire:
- The complete ownership title must be included in the documents with information on the origin of the property, the details of the previous deed of sale and anything that identifies the property. Thus, the details of the cadastral zones, the area or the destination of the dwelling will appear in the authentic deed of sale.
- The notary will check if the property is used as collateral (mortgage) by the current owner and proceed to lift this if this is the case.
- The seller must provide a set of property diagnoses before the signing of the deed of sale, the nature of which varies according to the location and nature of the property. A technical diagnostic file can be created to compile them, called “diagnostiques’. This is considered equivalent to a property inspection.
- An unsecured latent defects clause must be included in the authentic deed to protect any purchaser who does not have the status of professional seller.
- It is necessary to obtain the certainty that no act of pre-emption is in progress concerning the property that is the subject of the sale during the preparation of the signing of the deed of sale.
The deposit upon signing a contract for a French property purchase
When signing the preliminary contract, a deposit is required. This is again an important event and is in fact the first financial commitment asked of the buyer. The security deposit usually represents 10% of the final sale price for the purchase of an old house, and cannot exceed 5% of the final sale price for the purchase of a new property. The amount of the security deposit remains at the discretion of the buyer and the seller, and may be subject to adjustments depending on the case.
At the signing, the notary informs the buyer of the tax implications of the purchase: they will give you an estimate of the costs necessary for the transfer of ownership, and can already tell you the amount you will pay on the day of signing in relation to various taxes and charges on a pro rata basis for the current year. This relates specifically to property tax or service charges if applicable.
Deadlines to be respected regarding the contract for French property purchase
A period of 10 days (which cannot be shortened) allows the buyer to withdraw on his commitment. This is an unavoidable period during which only the buyer benefits. Conversely, on the seller’s side, it is impossible to withdraw from a sale once the preliminary contract is validated.
The next deadlines, if buying with financing, are to submit your application to the bank no later than the period given, usually 30 days from the first signature, and to receive your mortgage approval or refusal within 60 days of that signing. If you do not respect these deadlines, your deposit may be at risk as a penalty for not applying in time. Your mortgage broker is here to assist you and ensure your full application is with the bank(s) on time and that it respects the obligations set out in the financing section of the contract.
The contract will also indicate the expected completion/transfer of ownership date.
The 5 Steps of the Property Purchase Process in France :
- Searching for a property in France and a French real estate loan
- The signing of the preliminary sales contract for purchase of French property
- The financing request & preparation of the credit file for a French mortgage
- The mortgage offer in France
- The deed of sale & signing preparation for purchase of French property