At a time when a large proportion of the working population is confined to their homes due to Coronavirus and holidays abroad seem like a fanciful idea, it may appear slightly daring to be contemplating the topic of buying property in France.
However, French property transactions are still taking place and the current financial climate is certainly providing favourable conditions for the purchaser.
If you are considering making a purchase or are already part way through the process, our specialist French qualified Avocat, Herve Blatry, is here to offer expert legal advice on how best to ensure a successful transaction during this time.
If I’ve viewed the property can I still buy it?
Nobody can be expected to make such an important financial decision as buying a property without first having visited it.
However, you may have already been to view a property you were considering, and may now be thinking it is not possible to continue to the next step due to the pandemic – but this isn’t necessarily the case.
In addition, the property you may be looking to purchase may be offered for sale off-plan. Off-plan purchases are very different since by definition, the property in question does not yet exist.
In this case, you will be factoring the location and local amenities into your buying decision and once satisfied with these aspects, all plans, artist’s impressions and virtual visits can be viewed electronically and commented on via e-mail. Similarly, all meetings with estate agents, developers, architects and other contractors, as the case may be, can take place using video conferencing facilities.
The official date of the end of the confinement has been announced by French President Emmanuel Macron as being 11 May 2020. This will probably happen gradually, but property visits should be able to resume fairly soon.
Is now a good time to buy?
The pandemic is creating downward pressure on the French property market, which is enabling buyers to negotiate a favourable price.
Also, the French Government has extended certain timeframes, allowing for more time to bring projects to fruition.
How does the cooling-off period work?
Once an initial contract for purchase, or compromis has been signed by you and your seller, and after this has been notified to you (this can now be done electronically with a secure software), you have ten days during which time you can withdraw from the purchase with no financial penalty.
If you choose to exercise your right to cancel during the cooling-off period, there is no requirement to provide a reason and any monies which have been paid by way of deposit will be returned in full.
Can I secure finance ?
Interest rates in France are at all-time low which makes French mortgages worth considering.
Traditionally in France, the “norm” is a fixed rate mortgage which are readily available for terms in excess of 20 years, although variable but capped interest mortgages and interest only mortgages also exist.
Banks are still lending at this time, although perhaps not as readily as prior to the crisis. There are also good mortgage brokers around.
How does production and signing of documents work during the Coronavirus Lockdown?
All necessary documents – the compromis de vente or reservation contract and annexes; deed of purchase; mortgage offer and power of attorney - can be produced and sent to you and us for review and any amendments can be handled via e-mail.
All documents required for a property purchase can be signed remotely by way of a proxy in favour of any clerk in the Notaire’s office, and everything can be covered by a single proxy, even if it involves a mortgage.
Although the signature of the proxy will need to be witnessed, Notaires in France have been allowed to relax the usual formalities as follows:
- For the certification: the Notaire will usually accept the same process the lawyer witnessing the signature in the UK has accepted including video conferencing and production of your passport followed by a signed and dated scanned copy of the passport sent in the post.
- As regards the requirement for an “Apostille” - an often required formality consisting of a “certification of the signature of the lawyer certifying the signature”, issued by the Foreign Commonwealth Office (“FCO”) at a cost of £30, the same logic now applies, and, he will usually not insist on it, which is good as the FCO is currently closed until further notice.
Are there any specific contractual terms that apply during the coronavirus crisis?
The pandemic has increased the need for special contractual arrangements which already exist for the most part, but which are rarely used. One or more of the following can be used, as required:
- A unilateral promise of sale: this is a contract whereby the vendor unilaterally grants a would-be buyer an exclusive option to buy the property at a given price for a given period of time which can be quite long (eg: one year), in exchange for the payment in escrow of an ‘immobilisation indemnity’.
If the buyer exercises his option during the timeframe, the indemnity is applied against the purchase price. If not, it is paid over to the vendor. Unlike with a compromis de vente where the vendor can apply to the Courts for the sale to proceed as well as securing the payment of a penalty provided in the contract, the unilateral promise of sale is a great way of securing a property over a long period of time while limiting the financial exposure in case of a decision not to purchase.
- A Covid-19 clause: such clauses are now appearing in contracts postponing any contractual (but not statutory) deadlines until the end of the confinement period in France, being 11th May 2020.
- Payments spread over time, including after the transfer of title: for buyers who are concerned about financing their purchase and do not wish to or are unable to obtain a French mortgage, it is possible to agree to spread the payment of the purchase price over a period of time, including after the transfer of title has taken place, so as not to delay taking possession of the property.
Tees is open for business and ready to help you with your French property purchase. Our solicitors are all working from home and continue to deliver a high quality service to all our clients during this time.