Here are some terms and words commonly encountered by our clients. We hope you find this handy reference of use.
Acte de notoriété this is one of the deeds needed in a French probate. The deed is drafted by the notaire, based on the information and documents provided by the legal heirs/beneficiaries or the executor and after standard searches are carried out. This deed confirms who are the deceased legal heirs or beneficiaries and in which proportion each of them are inheriting the French estate.
Acte de vente: This is the final deed to the property and is signed usually two months after the purchaser’s 10 days cooling off period has elapsed.
The title deed provides the purchaser with proof of ownership to the property, and provides information on the parties involved; description of the property; the conditions of sale, price; planning regulations; result of the searches; result of the compulsory surveys, etc. It is a document which is usually 20-30 pages long.
Attestation de propriété: this is one of the deeds needed in a French probate when the deceased owned a French property (or part of a French property). The deed is drafted by the notaire, based on the information and documents provided by the heirs/beneficiaries or the executor and after standard searches are carried out. This is the new deed to the property and will show who are the owners of the property and in which proportion they each own the property. It will provide proof of ownership to the legal heirs/beneficiaries.
Capital Gains Tax / Plus Value: This is due when you sale your French property and make a profit (i.e. you sell the property for a higher price you bought it for). The French Capital Gains tax works differently from the UK system. If you have owned the property for over 22 years, a portion of the French Capital Gains tax will no longer apply. You are fully exempt from French Capital Gains tax after 30 years of ownership. There are various tax allowances applicable, depending on the time you have owned the French property.
Although you might not have French Capital Gains tax to pay, you might still be liable to pay UK Capital Gains Tax on your French property if you are resident in the UK.
Compromis de Vente: This is the preliminary binding contract. It is signed early on before the searches are carried out and therefore it is vital to ensure there are appropriate clauses to protect the purchaser’s interest, such as obtaining a mortgage; or there are no rights of way across the property which have not been disclosed; or obtaining an urbanism certificate confirming you can extend/renovate the property, have a swimming pool, etc. It is a binding contract and the purchaser can only withdraw during their 10-days cooling off period or if one of the conditions has not been fulfilled. If the purchasers want to withdraw when the conditions have been fulfilled, they would lose the deposit and expose themselves to further penalty. The vendors, once they have signed the compromis, are bound by its terms and cannot withdraw from the contract, thus it is also important the vendors understand the conditions of the contract and seek legal advice.
Cooling-off period: This is only for the purchasers’ benefit. When the compromis has been signed by both parties, the purchasers will be notified, and a copy of the signed contract sent to them. Their 10-days cooling off period starts on the day following the first time the copy of the signed compromis is first attempted to be delivered, whether the purchasers are home to receive it or not. Nowadays, more and more often the signed compromis is notified electronically, meaning the purchaser are immediately informed when their 10-days cooling off period starts.
Déclaration de succession: this is the tax declaration that is filled in for a French probate. It list all the assets which were part of the deceased’s French estate, as well as any debts attached to it. It confirms the tax allowance applicable to the legal heirs or beneficiaries and shows the amount of French Inheritance taxes due by each individual heirs/beneficiaries.
Deposit/Dépot de Garantie: In most French property sale, the purchasers pay, at the time the compromis is signed, in the notaire’s holding account a deposit of 5%-10%. If the purchasers withdraw from the transaction during their 10-days cooling off period or later because one the conditions is not fulfilled, the deposit will be returned to them. However, if the purchasers withdraw after the end of their 10-days cooling off period, when all conditions are fulfilled they would lose their deposit.
Estate Agent/Agent Immobilier: French properties are often sold through a French estate agent but not always – the sale can be done privately like in the UK. The French estate agent’s fees are much higher than in the UK, their fees are usually between 5%-10% of the sale price and are normally included in the price displayed, for example 350 000€ FAI it means frais d’agence inclus, i.e. estate agent’s fees included.
Estate Planning: This is to choose the ownership structure or French Wills, during your French property purchase, to ensure the property passes in accordance with your wishes and minimises French Inheritance tax. It is vital to discuss this during your purchase with a specialist French property Lawyer since a French notaire will not provide you with such advice and would not have the knowledge of the interaction of French and English law. Without the appropriate advice, you could end up with the wrong form of ownership structure this could mean that the property does not passes to the person you want to and/or the person inheriting the property pays a higher level of French inheritance taxes.
We offer French estate planning advice when advising on your French property purchase. Although it is best to have the ownership structure set up at the time of the purchase, this can be done after.
Notaire: French lawyers, who are also public officers appointed by the government, who have a monopoly over the transfer of ownership of French properties. Whether it is a French property sale/purchase; a probate/succession where there is a French property; the gift of the French property; a transfer of the ownership of the French property following a divorce, etc. a French notaire will have to be involved.
The notaire will carry out the searches and draft the deed to the property, and ensure it is duly registered. However, they are not going to provide you with advice on the property purchase, on its process and definitely not on French estate planning.
The notaire’s fees is about 7% of the purchase price, this includes stamp duty, registration’s fees, etc and all other taxes due for a French property purchase.
The notaire’s fees are exclusively paid by the purchasers.
Probate: This is when someone has died and their estate needs to be dealt with. The probate, or part of it, will have to be dealt with in France if the deceased owned a property in France; or was living in France at the time of their death.
The French probate process is different from the English system, various documents will be needed by the notaire to draft the deeds to the probate. It is a rather complex process and you should ask a specialist lawyer to help you with this.
A French probate takes typically 9 months to be completed from when the notaire is first instructed.
Offre d’achat: This is when the purchaser makes an offer for a property. Sometimes, the estate agent will draft the offer in writing to have a more formal offer. It is important to note that, under French Law, if the purchaser’s offer is accepted, whether in writing or verbally, a contract is deemed as having been formed. Because the purchasers benefit from a ten-days cooling off period, the agent and vendors are rarely going to pressure the buyers in going ahead if they have changed their mind. It is therefore best when making the offer to say it is subject to the compromis. However, once the vendors have accepted the offer, they are bound by it.
SCI: this is a civil and fiscally transparent company. This is one of the forms of ownership structure that can be used when purchasing a French property. This form of ownership structure was frequently used up to a few years ago when the family situation was slightly complicated because of stepchildren or in case of same sex relationship. However, since same-sex couple can now get married and because of a European Law allowing British people to chose the law of their nationality to apply to their French estate, this option is now rarely recommended.
Text: Copyright 2020, French Property Legal Services Ltd
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