1. Identification of the property.
2. Offer. Negotiations are generally short and sweet with offer, counter proposal and agreement usually being effected through the agent in a day or less. Protracted negotiations are considered as unsavoury and not encouraged. In some cases the existing furniture forms part of the negotiation, if the furnishing suits the property and the taste of the buyer. It often suits the seller not to have to arrange to move and perhaps store or otherwise dispose of bulky furniture.
3. Agreement is reached through the agent.
4. A sale agreement is compiled by the agent. This is a “compromis de vente”. It is a fairly standard document designed to protect the buyer more than the seller. It covers all the special conditions that may have been agreed to, as well as standard conditions relating to deeds searches to be performed by the Notary, such as; termite, asbestos and lead checks etc. This document is in French and, should a legal translation be required, the cost would be around €300.
5. The buyer signs the “compromis de vente” or his representative does so on his behalf. The agent then takes it to the seller.
6. Once both parties have signed the buyer has 7 days in which to reconsider and may pull out of the agreement for any reason at all. The seller does not have that privilege. Once he signs he is legally bound and can not renege for any reason. No British style “gezumping” is possible. Once the 7 days has passed the agreement is binding on both parties except for one circumstance. If the buyer fails in his application for credit the agreement is void, and he must be refunded his deposit (see 8) in full by the notary. If he pulls out for any other reason he risks forfeiting his deposit (seller’s discretion, but the seller would still have to prove in court that he has been financially prejudiced before the notary will release the deposit to him – not an easy option.)
7. A Notary is appointed. (The seller will have his own). Every property transaction in France takes place through notaries. They are highly trained and esteemed. It is their responsibility to ensure that every legal requirement is met and that the rights of every party are properly protected.
8. Transfer of deposit. The buyer must immediately on signing the “compromise de vente”, transfer 10% of the purchase price to the holding account of his notary. It will form part of his payment on signing day.
9. Application for credit. The buyer applies for credit if he is not paying cash. Credit application should take a month, and in France the primary criterion for issuing of credit is the applicant’s income at home. His ability to repay monthly from his salary, earnings from investments, dividend earnings, etc. rather than his assets per se is examined.
10. The notary must commission all the required physical checks (asbestos, termites, etc.) and must complete the deeds checks.
11. Loan offer. The lending bank will make an offer of a loan. (The notary receives a copy). The loan offer, if accepted, must be signed by the buyer but only after a compulsory 11 day “cool off” period. Once that has been completed, and the offer has been formally accepted the notary can begin to set a date for signing with the seller’s notary.
12. Funds. The notary will communicate to the buyer the amount of funds that are required from the buyer, being:

• Purchase price
• Plus up to 7% notary’s and transfer fees on properties older than 5 years, or 2 to 3% on newer buildings
• Less deposit originally lodged
• Less the amount of any loan granted

  These funds must be transferred to the notary’s holding account (the same as the deposit) before transfer.

13. Transfer. On the appointed day the buyer’s notary meets with the seller’s representative and notary and with some ceremony which may include reading of every document in full and in French, cheques are written and exchanged, and the keys and property change hands. If the buyer is not present the notary represents him with his power of attorney. (This is a very good idea where non-French speaking buyers is concerned, because otherwise the notary is obliged by law to hire the services of a very expensive court-appointed translator and the proceedings take three times as long)

The standard mortgage

• The Interest Rate for a standard mortgage at the moment is approximately 4.5% and adjusts upward or downward only once per year, on the anniversary of the loan. The rate is fixed to the ECB (European Central Bank) rate.
• Loans can be taken out over periods up to 20 years although 15 years or less is usually recommended for people who will turn 70 before the end of the loan period.
• Importantly adjustments in interest rates, up or down, do not affect the monthly repayment amount, instead the term of the loan is extended or reduced.
• Life insurance, at a rate of approximately 0.30%, is compulsory and is built into the interest rate quoted above. Applicants who will be 70 or older at the end of their loan will be offered a “senior contract” and insurance is charged separately and calculated individually.

Other finance options

• “Non standard” financing options, such as interst only loans, are available in certain circumstances.

Additional information

• The process from identification of the investment to transfer takes about two months if credit is not required, and three months if a credit application is processed. However delays for one reason or another are fairly common, and normally have to do with the credit application.
• Notary’s fees and transfer fees and taxes combined amount to approximately 7% of purchase price (they are calculated on a sliding scale)
• It is possible to borrow and invest in individual’s names, joint names, partnerships, or as a company set up for the purpose of the investment. The perfect vehicle for this in France is the SCI, (Societe Civil Immobiliere), which can be set up and tailor made to the individual circumstances of the investor with the help of an advocate. It needs a minimum of two shareholders and any division of shares (99% and 1% is acceptable, or 50, 50) and has estate planning and capital gains advantages. The cost to establish an SCI is around €2,300 to 2,500 and there is no additional annual fee, although there will have to be simple annual accounts.
• European Community, United States and Canadian residents may apply for up to 80% mortgage. South Africans can now apply for 70%. Residence is defined by where the applicant earns his income and pays his taxes, not by what passport he carries.
• The 2.5% facilitation fee covers the following items (as required); Assistance in opening of bank accounts, assistance with the establishment of SCI, assistance in the application for mortgage, acquisition of furniture, management of renovations, etc.