what to expect when purchasing a property in France
...the key differences across the Channel
I do not know if our readers have ever watched
Masterchef in France and in England. It is
surprising to see how different these two shows are. Despite
the disparity, the aim of the two shows is to find the next Paul
Ducasse or Gordon Ramsay, no matter how differently they would
prepare a dish. I think that English and French law are also
different: both notaires and solicitors work with a different law,
customs and practice but at the end of the day we all want to make
sure that we apply the law as we learnt it and secure our clients’
interests. I often hear clients commenting on their matter
asking why is it not similar or dealt with in the same as it would
be in England.
I will not explain the difference between French and English
law, but instead would like to reply to three frequent questions
that clients ask when they are seeking to deal with French law.
1. Why has the notaire not transferred to my account the
proceeds of sale the same day as completion?
We have already explained the process of selling a property in
France with the legal and tax implications but the word
“completion” has a different definition in France when dealing with
a notaire. Completion is the moment in England when both parties
are ready to sell/purchase. The buyer's solicitor sends the money
electronically to the seller's solicitor and money can be
transferred to the vendor’s account the same day by his solicitor.
Completion can take place by phone, fax or post.
In France completion of a property takes place
at the Notaire’s office in the presence of the parties or their
representatives by power of attorney. Completion can take place at
a different place but it is exceptional. Before signing the deed of
sale the notaire has an obligation to check that the price and
provision of fees have been cleared at his bank, in the purchaser’s
client account. The notaire signs the contract and it will be
registered in a book before being passed to the office accountant
to deal with taxation. It is common for deeds to be dealt with the
day after by the accountant and the money is then transferred over
to the vendor’s client account. Before releasing the funds to
the vendors the Notaire will have to make sure that all debts have
been identified and any fees to discharge guarantees, payment of
creditors and Capital Gains Tax provisioned for. Then the proceeds
can be sent to the vendor’s account by cheque or bank transfer.
This is for this reason that notaires never automatically release
the funds to the vendors the same day but a few days after
completion. It is normal practice for the Notaire to retain the
funds until he is sure that he can safely send them. I would also
like to remind you that the Notaire may also keep the funds for up
to two weeks in the case of the sale of an apartment. The reason is
that the managing company, once it has been notified of
the transaction, has a period of two weeks to return to the
notaire a form Certificat de l’article 20 confirming that
the vendor does not owe any further charges. Without this document
the notaire has the legal right to keep the funds.
However, it does sometimes happen that a
seller who is present on completion at the notaire’s office
asks if he can leave the office with a cheque for the balance
of the proceeds. It is not rare to see a notaire asking his
accountant to draw a cheque on completion notably when the vendors
are in a chain and must complete another purchase the same day.
2. Do I have to ask two witnesses to sign my French Will?
In England there is one type of Wills where
the testator only signs on the last page and asks two witnesses to
sign it at the same time in his presence.
French Civil Code provides two different
types of Will for a testator. Either he asks a notaire to assist
him and prepare a Will that will take the form of a deed where the
notaire dictates the instructions of the testator in the presence
of two witnesses or the testator will handwrite his wishes on a
piece of paper and give it to the notaire. The second form can be
achieved in two ways, but the most common is the holograph Will,
which is the easiest way to write a Will, at any time, anywhere.
The only requirement is that the document must be handwritten by
the testator (not typed), signed and dated by him. Precedents have
already declared valid holograph Wills written at the back of a
magazine, or on a piece of tissue as long it complies with Civil
Code. The main difference with English Law is that there is no need
for the testator to ask two witnesses to certify that he signs it.
This method can be recommended because any heir could try and
challenge a holograph Will for two valid reasons:
- firstly the state of mind of the testator at
the time of writing it. Who knows if the testator had his full mind
when he wrote it?
- secondly was the testator under pressure to
name one beneficiary rather than another one?
It is also important to remember that wherever
you are, a Will will be valid if it complies with the Hague
convention. Basically if you are English you know that Wills in
England are written or typed and signed with two witnesses. If you
proceed this way, even in another country it will remain valid. If
you want to comply with the Llw of your residency or where you own
a property it is recommended to seek advice from a Lawyer.
3. Why can I not leave my property to whoever I want in
France?
The Common Law has the advantage of allowing
you to bequeath your estate to whoever you want without any
restriction. Novices in French Law think that they can also dispose
of their estate to their spouse, partner or friends and exclude
their children from the settlement of the estate. Unfortunately
this is not the case when you deal with French property. There are
two reasons for that:
- first of all Under English law the laws of
succession applying to the real estate (or ‘immovable assets’) will
be the law of the place where the property is situated (lex
situs). If you own a property in France, French law will
dictate the way it should be transferred to your heirs
- secondly The Napoleonic Code (Code
Civil) sets out a mandatory reserve to a category of
relatives, mainly the children and surviving spouse in special
circumstances. For instance couple who own a property in France and
have children from a previous relationship may not be able to apply
UK Law to their French Estate and face a dilemma if 'unwanted'
children are deemed to inherit a share of their French estate.
Fortunately it is still possible to overcome
French civil law by putting in place a structure of ownership that
will either transfer a property to the surviving partner/spouse
when acquiring the property or makes the property governed by
the laws of succession applying to movable property, ie the law
of “domicile” (Mobilia sequuntur personami). In the
second case, the setting up of a company structure could be a
solution providing that the shareholders remain UK
resident/domiciled.
