In a seller’s market, like we have seen in Paris the past few years, one must be prepared to make an offer virtually the moment you see the property, and in most cases, offer the full asking price, to ensure that it won’t be sold to the next person who walks in the door to visit it. (The sellers are morally obligated to accept asking price!)
You may think this is a joke, but at the Adrian Leeds Group, LLC, we’ve had two such situations, where our client hesitated for only a few hours and lost the property for exactly those reasons. This has been an excellent time to buy, if you can find the right property, as interest rates have been at an all time low and the U.S. dollar to euro rate of exchange has been more favorable than it’s been in a long time.
We had not seen prices drop in central Paris and “au contraire” — prices held very well, considering the small inventory with which the agents have had to work.
Should you be lucky enough to find the property (and we do recommend you work with experienced property finders to do that), here’s what you can expect to be the process:
Step 1. The Purchase Offer
You find an apartment you wish to purchase (with financing) and the agent or property consultant recommends you make an offer on the property.
In the offer, you propose to the seller a certain price, any contingencies to the purchase and a limited amount of time within which to respond to the offer.
If you were to offer ‘asking price,’ the seller would be morally obligated to accept your offer and therefore you could virtually ‘guarantee’ the property would be held for you and no one else could ‘out bid’ your offer.
There are contingencies which could be very important to the offer, such as appliances and furnishings which you would want to ‘purchase’ with the apartment and any other requirements the seller must be obligated to fulfill.
Note that even if you believe you will not keep the old appliances, any value to them will be deducted from the selling price noted on the “Acte de Vente” (final title deed), thereby reducing your Notaire taxes and fees! So, do not say NO to anything they wish to include with the purchase.
Step 2. Choosing the Notaire
The offer letter does not legally bind you to a purchase. If the seller accepts your offer, or if negotiations go back and forth until a ‘deal’ is set, then only when a “Promesse de Vente” or “Compromis de Vente” (Purchase Contract) is signed, is the contract binding.
It is at this stage that a Notaire must be employed to represent you and a date of signature is set. It is highly recommended that each party choose his own Notaire for representation and it costs not a penny more as the Notaires share their commissions.
We recommend working with a Notaire who speaks English and charges nothing extra for that. If you are working with a property consultant who is familiar with the documentation and process or a Notaire you fully trust, then a translation of these documents should not be necessary.
The Notaire will require a long list of documents in order to prepare for the signing of the Purchase Contract, most of which will be provided by the Notaire of the seller.
But you must be prepared to provide your personal information and a copy of your passport along with how you intend to ‘structure’ the purchase — that is who will actually hold title to the property. You may choose to change the structure for the signing of the Acte de Vente as long as the Purchase Contract allows for a “clause de substitution.”
Should you choose to take a mortgage, you may also want to include a “clause suspensive,” or contingency clause, that protects you from default should you not be able to obtain financing. Be sure to ask your lender, Notaire or property consultant how to arrange this, as this is an integral part of the process and is designed to protect both the buyer and seller. (Or see below for a more detailed explanation.)
Step 3. Signing the “Promesse de Vente” or “Compromis de Vente” (Purchase Contract)
The Notaires will prepare the documentation for the signing of the Purchase Contract and you will be asked to provide a deposit held in escrow by the Notaire. This is normally 10% of the purchase price of the property, however, in today’s market with prices escalating in central Paris, sellers will often agree to holding 5%, as long as the buyer is willing to pay the full 10% should a default occur.
At this time, the seller must provide the required diagnostics: energy efficiency, termites, lead, asbestos, natural risk, swimming pools, flooding, quarries and the “Loi Carrez” (official habitable space). He must also provide the “Réglement de Copropriété” (homeowners association bylaws), the “carnet d’entretier de l’immeuble” (maintenance record of the building) and proof of the “copropriété” annual fees.
The buyer, seller, representing Notaires and agents convene for the actual signing. The buyer and seller may have an outside representative or Notaire sign on his behalf with Power of Attorney. We do not recommend that your own Notaire sign on your behalf, as it’s best to have another outside but interested party reviewing the signing in your interest. This is another situation where a property consultant can be very valuable and act to protect your interests.
Once the “Promesse de Vente” or “Compromis de Vente” is signed, you have seven days within which a full retraction of the purchase can be made with no financial or legal ramifications. This is called the “cooling off period.” For legal reasons, a registered letter must be sent to notify the Notaires and the deposit will be returned within 21 days of the retraction.
Step 4. Preparing for the Final Signing of the Deed: Financing the Property
If you choose to finance the property, applications must be submitted to the banks. Non-resident buyers should work with banks and lending institutions that specialize in non-resident loans or with loan brokers that can provide the service.
The timing is critical, as the Purchase Contract will dictate the deadlines to acquire a loan offer and a 10-day waiting period is mandatory before an offer can be accepted. One contingency of the Purchase Contract (“clause suspensive”) regarding the loan is a protection for both the buyer and seller outlining the specific conditions of the loan. If a loan of a particular amount, at a particular rate, and particular term, as requested by the buyer, is not achievable, by proof of the bank’s rejection of the applicant, then the buyer will not lose his deposit and the property will revert back to the seller.
Meanwhile, the Notaire gathers specific information and prepares for the signing of the final deed. He must verify that the seller is the rightful owner of the property, and that the description of the property is correct in regard to the city planning and easements, along with what money may be owed on the property.
Step 5. The Signing of the “Acte de Vente” (Final Deed)
You have received your loan offer and you have accepted it 10 days later. The day comes to sign your Deed of Sale. The Notaire’s dossier is complete and checks are prepared by you for the balance of the purchase responsibility or money is wire transferred to the Notaire (down payment, taxes and fees), checks are prepared by the lending bank for the payment to the seller and by the Notaires to pay the various commissions and fees.
Once again the buyer, seller, representing Notaires and agents convene for the actual signing. The keys are ready to transfer to you, the buyer, in exchange for the check of payment to the seller.
Step 6. The Final Payment and Deed of Sale
The Notaire hands over a check to the seller in full payment for the property and an “Attestation” of the sale to you, the buyer. The documentation will then be submitted to the Chambre de Notaires for official recording and processing. It may take six months or more before you receive the final recorded deed and normally there is a small refund of overpayment of fees, as the assessment at the time of closing is just an estimate and always greater than the final amount officially due.
You then walk away with keys in hand to your newly purchased French property to enjoy for as many years as you like!
Note: The Adrian Leeds Group, LLC provides complete property services for Anglophones and non-residents who desire to live or invest in France including property consultation and search services, loan assistance, renovation and rental management.
About Adrian Leeds
Adrian Leeds is founder and director of the Adrian Leeds Group, LLC, a team of North Americans who provide complete property consultation services including property search, purchase and sales assistance, financing, and marketing and development of fractional ownership properties. She speaks at conferences and seminars in both the U.S. and France on the topic of Living and Investing in France. Her sites Parler Paris Apartments and Paris Palais Apartments provide reservations and booking services of luxury apartments for a select group of property owners in Paris and France, and vacation rentals for visitors to Paris. She is the author and editor of the Parler Paris Nouvellettre®, editor of French Property Insider, and the author of the first online restaurant guide to Paris soon to be published in print and online for iPhone and iPad under the name of “Adrian Leeds’ Top 100 Cheap and Chic Paris Restaurants.” In addition, she co-hosts her own brainchild, the popular Parler Parlor French/English Conversation Group in Paris where members from 50 different countries meet to practice speaking French and English. Adrian Leeds Group, LLC, her U.S. based company and her France-based company, Parler-France EURL, provide Web-based relationship marketing, public relations consultation and event coordination targeted to “francophiles” living in North America and France.