Everything you need to know about buying property in la belle France.
With the dollar remaining strong against the franc, now is a good time to contemplate buying a house in France. Bargains are few in Paris and Provence, but in much of the rest of the country a solid, well-built, picturesque home can be bought for anywhere from US$50,000 to US$500,000, depending on the region and how much renovation you are prepared to handle.
I bought my own home in the Dordogne, in the southwest of the country, eight years ago, when the dollar was also stronger than average. I chose the Dordogne because it was dear to my heart, but other factors entered into the decision as well: houses were not expensive there, for the most part, and the region sees a good number of tourists in the summer months. Because I planned to rent the house by the week when we weren't using it, I needed to know it was in an area with plenty of attractions. Every buyer has different requirements. And every buyer needs a plan. The tips below are designed to help would-be owners of French property to formulate and carry out such a plan.
Getting Prepared
Although people do do it, it's certainly not advisable to buy property without knowing a good deal about the region in which you are buying. Visit often, and get to know what life would be like there for a few weeks or for an extended time. Where would you (or your guests or renters) shop, buy gas, get a car fixed? Where are the nearest train stations and airports? Who would be your neighbors? What is there to do in winter when the tourists have gone home? Are plumbers and carpenters and masons and electricians nearby? Living in a house in France, even as a short-term renter requires adaptations: make sure you are confident you could conduct your daily life in the region without undue frustration before you buy.
People also buy houses in France without speaking French. I don't recommend it. I once wrote a check to a local merchant for a new refrigerator and he looked astonished and told me that most of his British customers hand the check to him and let him fill it out because they don't know how to write a French check. If you don't speak French, you may be able to get by, but it will be a struggle, and your chances of getting ripped off will be high. You needn't be fluent - few of us truly are - but my rule of thumb is, if you're not prepared to have a telephone conversation with a workman, you're not ready yet.
You can visit properties for sale with one or more real estate agencies (agences immobilier), on your own using published listings, or both. English-speaking real estate agencies do exist, and many agencies will have at least one agent who speaks English. For each property you inspect, find out who has owned the house in recent history and how it has been used (as a year-round residence, as a rental home, or as a holiday home). Inquire about utility bills (electricity, e.g., is a good deal more expensive in France than in the USA) and property and local taxes (they vary by département and municipality). Inquire as to who the neighbors are and what they do - I found the French loved to divulge information about the people who lived nearby, and in some cases learned useful information in making a decision (I did not buy the house down the lane from the guy who raised boar).
When I met with the owner of the house I eventually bought, I drew up a list of about 100 questions the night before the meeting. The poor man was shocked when I pulled out the list, but I received a good education on French property from going through this exercise. I asked about every system in the house (heat, electrical, water, gas) and every appliance. I had him show me how to turn everything on and off. I ran him around the entire property, asking where the septic system was, what the property boundaries were, how the pool controls worked - and I made maps of the property so I would remember everything. I also measured the house and made floor plans. I got the names and addresses of people who lived nearby who might care for the property when I wasn't there. I asked him for recommendations for workmen who might already be familiar with the house and who were reliable. I asked him about wild animals, about insects, about bushes and trees and how to care for them. I got information about doctors and dentists, clinics and pharmacies. I asked about the age of the roof (and climbed all over it to inspect it), what repairs had been made and when anywhere on the property, when additions had been put on, and who had lived in the house and how it had been used. I asked everything I could think to ask.
How the System Works
When I was satisfied I wanted to buy the house, the negotiations began. Keep in mind that the listed price is most often not the actual price, unless the listing indicates frais compris, or fees included. Assume that you can negotiate with the seller, just as you do here, and shave something off the price. Then, to that negotiated price, you must add an additional 10 percent, called a dépôt de garantie, which you put up when you sign the promesse d'achat, or promse to buy. This amount goes into an escrow account, earning no interest, until the purchase is completed (two to three months, on average). It covers the cost of the mortgage application, notary and legal fees, and real estate commissions.
At the same time that you sign the promesse d'achat, the seller signs a promesse de vente, or promise to sell. You have now entered into a mutual agreement. You can get out of this agreement, but not without forfeiting the 10 percent you have put down, so be sure you have found the house of your dreams before you sign on the dotted line. Also be sure that the promesse d'achat contains a clause suspensive de prêt, which will render the promesse invalid if you are unable to obtain a mortgage.
The best, or least complicated, way to buy a house is by yourself or with your spouse. Other arrangements, even joint purchases with relatives and friends, should be avoided unless you are willing either to pay more (as in the case of a group of people who band together into a kind of business group to buy) or to invest some serious time in researching France's notoriously complex inheritance laws. Many agents and notaries will discourage or even prohibit joint purchases. If you insist on joint ownership, you may apply for recognition as a société civile immobilière, which is essentially a jointly owned company in which purchasers receive shares according to the amount they contribute to the purchase. The initial cost to establish such a société is about FF35,000, with about FF10,000 payable yearly thereafter.
Acting on what seemed like good advice from my French agent, I first tried to obtain a mortgage from my own bank in America. They had never heard of such a thing and wouldn't contemplate it. They sent me to the Banque Nationale de Paris in New York, where a loan officer kept asking me "You want to buy a house in France where?" a grammatical oddity that had me befuddled for some time before I realized she thought I meant a town called France somewhere in the USA. When I said "France, Europe" there was an endless pause, then a definite "No. No. We don't do that." After many such conversations with U.S. banks, I gave up and went back to my agent. "No problem," she said, "we arrange mortgages for clients all the time." So, though I had to relinquish the control of researching and selecting the right company, the matter was taken care of expeditiously and at no extra cost to me. Getting a mortgage for clients is one thing you are paying the 10 percent fee for, though your agent may not volunteer that information.
One month's worth of pay stubs, personal income tax returns, three years of corporate returns because we owned a business, and a statement from an accountant as to past and projected earnings were the only things required to satisfy the loan officers. Our real estate agent opened an account for us at a local bank (required to obtain a mortgage) with a draft in French francs that we mailed to her. The loan was approved in three weeks. Following the agent's advice, we chose an ARM loan (and as interest rates have dropped dramatically since our purchase, are glad we did).
Our agent told us that unless we resided in Europe full-time, the most the mortgage company would give us was 70 percent of the price of the house. I don't know if that's French law, or just our mortgage company, but most Americans I know who have bought houses in France have put down between 30 and 50 percent. We put down 30 percent, in addition to the 10 percent we had already paid into the dépôt de garantie, for a total of 40 percent. The longest term mortgage offered is 15 years.
Finalizing the deal involves signing a document called the procuration, the final commitment paper. You can travel to France and sign this or you can sign and have it witnessed at the French embassy or a consulate. The cost for us was FF600. When all documentation is signed, your notary will hold a meeting at which the buyer and seller normally appear. If you cannot, or choose not to (as we did) attend that meeting, it is essential that your signed procuration, bearing the seal of the French embassy, be in the hands of your notary at this meeting. At some point, your notary will mail or deliver the deed to your house. Mine arrived one afternoon five months after our purchase, carried by a lady with a market basket. My deed was wedged between the carrots and lettuce.
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