FOR every person looking to buy in France there has to be another willing to sell, but what are the steps involved when putting your home up for sale?
As in England, selling a property in France is generally more straightforward than buying, but there are still plenty of traps for the unwary, writes Guillaume Barlet.
Some areas, which need careful attention, include:
Latent defects or vices cachés
Under French law, a vendor is bound to a warranty on account of the latent defects of the property which render it unfit for the use for which it was intended, or which so impair that use that the buyer would not have acquired it, or would only have given a lesser price for it, had he known of them.
This is known as the garantie de vices cachés.
If a vendor is not necessarily liable for defects that are apparent, i.e. which a buyer could have been aware of himself, a buyer is not expected to seek the advice of an expert, so a defect may be considered latent even though an expert could have discovered it.
Generally, the fact that the vendor is unaware of a defect does not prevent him from being liable.
Liability for latent defects gives rise to an action in annulment of the sale or for a diminution in price. In addition to this, the buyer may claim damages.
Any action by a buyer based on a vendor’s liability for latent defects must be instituted within two years of its discovery.
Sale contracts generally include provisions stating that the vendor gives no guarantee as to the state of the building, and also excludes all liability for defects both latent and apparent.
However, such an exclusion clause does not extend to any defects that the vendor would have known of and not disclosed.
The vendor is also compelled by law to instruct a surveyor who will search for certain defects.
Mandatory surveys
The vendor is liable for these surveys. The ones that have to be carried out depend on the location and situation of the property.
Even if one or more of these surveys were carried out when the property was bought and were clear, new ones may still have to be obtained when selling.
An asbestos survey is compulsory if the property was built before July 1, 1997, and a lead survey is necessary if the property was built before January 1, 1948.
Also, if the property is situated in an area declared as susceptible to termite infestation, a survey will have to be carried out. The affected areas can change, so even if a termite survey was not required when purchased, it might now be compulsory.
If the property is not situated in one of the affected areas, the vendor can still retain liability if termites are discovered within a short period after completion.
Since June 1, 2006, where the property is located in an area registered as liable to be affected by natural or technological disasters such risk must be mentioned by the vendor.
Since November 1, 2006, a survey relating to energy efficiency must be attached to the purchase contract. This document is purely informative.
Since November 1, 2007, any purchase contract for a property should include a survey stating the condition of the indoor gas installation when this installation has been fitted more than 15 years before the date of the compromis.
Since January 1, 2009, any purchase contract for a property should include a survey stating the condition of the indoor electric installation when this installation has been fitted more than 15 years before the date of the compromis.
Communes are supposed to check all drainage not connected to the main system (including septic tanks) before January 1, 2013 and every eight years from then on.
In certain circumstances, other surveys can be mandatory and it is always sensible to seek specialist advice.
Capital Gains Tax
Any gains arising from the disposal of a property can be subject to capital gains tax.
Calculating whether there has been a capital gain involves deducting the purchase price from the sale price. Depending on the amount of time the vendor held the property, the agent’s commission and legal fees could be deducted along with the costs of renovating the property provided proper receipts have been kept.
If selling within five years, the vendor will usually not be allowed to claim some of the special allowances.
Since March 11, 2010, if the vendor is not subject to VAT, the sale of a property built ‘off-plan’ less than five years after it has been completed should be the only case where it is subject to VAT.
If a property is sold with furniture and other contents, a document proving the existence of such contents is necessary and this has the effect of excluding the price for the contents from any capital gains tax calculation.
So even when selling a property in France, getting good advice at an early stage can save a lot of time, trouble and tax.
Guillaume Barlet is a French lawyer specialising in French assets and wealth management issues for Bank House Investment Management Limited, contact him by e-mail or call 01242 520074.
Comments
3 responses to “Tips when selling your French property”
I am puzzled by the comment “selling a property in France is generally more straightforward than buying” – having done both more than once we have been frustrated by the lack of activity and apathy on the part of the agents, paid for(directly or indirectly)by the buyer of course.
In addition the seller is locked into the “Compromis de Vente” and has their hands tied even when the buyers behaviour would lead to terminating the agreement if it was in the UK.
Having the protection of the Compromis does not prevent those people who do not conduct themselves honourably from making the transaction fraught with difficulties.
Dear Sand Hep,
I understand the frustration that one may feel when going through the French conveyancing process on either side of the deal. In particular, the pace of the procedure added to the differences with the UK system can at times be off-putting. The property market for the last two years has also not been that easy to navigate.
However, please note that my perspective is mainly a legal one. As a seller, the knowledge of the property itself means he or she will not have the same uncertainty that a buyer would face. The seriousness with which a buyer will carry out the procedure to completion is the main element of uncertainty for the seller. In case of doubt, there are ways to strengthen the compromis in one of the parties’ favour.
Certain estate agents can be more difficult to deal with than others but this is not always the case and depends more on the level of reactivity of the agent than on the legal system itself. Their main role is to find a buyer for the seller or vice versa and some agents may strictly stick to this role.
You are absolutely right that the compromis is the most important part of the sale/purchase procedure as it is the one committing the parties to each other. But as a private agreement, it is the responsibility of the parties or their legal representative to make sure that their interests are protected. The compromis is therefore not an unalterable document and can be modified accordingly before it is signed.
Unfortunately, despite all possible efforts, the risk remains that one of the parties may not act “honourably” although this can be the case in any contract.
Should you wish to reduce the level of risk, I suggest that you seek advice from a professional to assist you and make sure that what could be a difficult ordeal becomes an exciting journey. The fact that you have gone through this process before does not necessarily protect you against this risk in particular because the market and the legal aspects of property matters change relentlessly.
As you mentioned that you have purchased and sold property in France more than once, I am guessing that the outcome has outshined the difficulties you may have faced.
I wish you all the best for the future.
Addendum to article above (septic tank compliance)
Sale of property not connected to public drainage system
French law provides that mandatory surveys must include a document established by the commune assessing the compliance of the installation (usually a septic tank).
This obligation that should have been enforced on 1st January 2013 has been shortened to 1st January 2011.
From then on, the compliance document will have to be issued by the vendor less than 3 years before completion. If the installation is not compliant, the buyer will have to carry out the necessary measures to meet the legal standards within a year after completion (unless other arrangements were agreed with the vendor).
If these modifications seem to fairly answer the need to accelerate the compliance of septic tank and equivalent installations, the enforcement of this measure within 6 months may be difficult to carry out in practice.
In effect, the rule committing the communes to have checked these installations by 31st December 2012 at the latest has not yet been modified. Moreover, some communes have not yet carried out the necessary structures to check installations.
Great confusion may stem from this new arrangement and it may be advisable to systematically provide a compliance document before completion even if in some cases its requirement is uncertain.