The buying process differs from one country to another, and particularly between the US and Europe.
Consequently the legislation applied by our international network depends on the location of the agency.
The acquisition of realty in France is subject to very strict legislation.
The “promesse d’achat” is often the first stage in the acquisition of realty. This is a written offer from a potential buyer, and is submitted if the initial price demanded by the seller is not offered. This stage is not mandatory, and is not applied if the buyer’s offer is at the initial price
At the second stage, a “compromis de vente” is signed. This document is considered by French law as a contract that at certain conditions legally binds the buyer and seller, and defines the sales conditions.
At the signing of the “compromis de vente”, the buyer pays a deposit (the “indemnité d’immobilisation”) of between 5% and 10% of the sales price, The conditions of the law SRU dated 13th December 2000 however give the buyer a “cooling-off” period of 7 days during which he/she may retract from the “compromis de vente” with no requirement to justify his/her choice. The potential buyer must send the demand to retract by registered mail with recorded delivery.
The seller however does not have this possibility and cannot retract from the “compromis de vente” that he/she has signed without a valid reason. At the end of this period, the “compromis de vente” is considered valid between the buyer and seller, and the buyer may no longer retract without losing his/her deposit unless a suspensive condition defined in the “compromis de vente” allows him/her to do so. An example would be a suspensive condition in which it is stated that, if the acquisition proves impossible owing to the refusal of a bank loan or of a building permit, the potential buyer may retract from the acquisition with no contractual penalty being applied.
If the process of the “compromis de vente” is unimpeded, the final stage comes with the signature at a notary’s office of the “acte authentique”. The French “notaire” is not the same as the “Notary Public” one would find in the USA. The French notary is similar to a specialized attorney, a public official with the responsibility of receiving all the "actes" and contracts and is appointed by decree under the authority of the Minister of Justice. Impartial, he/she advises both the buyer and seller and verifies that the sale conforms to all relevant legal requirements.
The law requires that the results of certain inspections be provided during the process of a realty sale.
The sellers of properties constructed before 1949 and in what is known as a “zone à risque” (a risk zone) must present a report concerning the possible presence of lead.
Also: - The decree 99-471 of 8th June 1999 requires an investigative search for termites dating from less than six months before the date of the signing of the “acte authentique”. The respect of this decree is mandatory.
- The decree 96-97 dated 7th February 1996 stipulates that an investigative search for asbestos must be carried out in any building for which the building permit was granted before the 1st July 1997.
- A comprehensive descriptive of all gas installations over fifteen years old must be provided.
- The DPE (Energy Performance Certificate) is now obligatory for all buildings of over 50m² and fitted with a heating system.
The seller of a property must also provide the relevant documents to prove his/her ownership, as well as other documents such as the charges paid over the last quarter, the property tax or the minutes from the latest general assembly of the co-ownership.
Though traditionally the buyer ensures that these and other conditions are respected, the realty agent is competent to advise in the majority of cases.
Should further expertise be required, the agent can direct to an expert professional in the relevant field (architect, solicitor).
The realty agent’s fees are included in the sales price as posted in the agency window and their internet site. This sum is at the charge of the buyer. The negotiation process is however dependent on the two parties and is decided by them. The buyer must also take into account the notary fees, registration fees and land transfer taxes. These generally amount to approximately 10% of the sales price.
The role of a realty agent is to intermediate between two parties or more in order to carry the sale of a property through to the “acte authentique”.
According to the law 70-9 dated 2nd January 1970 the “Loi Hoguet” and its decree to implement dated 20th July 1972 regulates and controls this process.
The agent must comply with several obligations, and notably :
- Subscribe to professional liability insurance
- Hold a “carte professionnelle” delivered by the “préfet” and renewed each year.
- Have at his disposal a financial guarantee through a bank or financial organisation (article 17 of the decree dated 20 July1972),
- Be in possession of a written mandate authorising him to act on behalf of an owner.
Furthermore, the agent must display a number of legal documents:
- The number of his “carte professionelle”, the sum of his professional liability
- The name and address of the relevant company
- The name of the credit agency, and the account number into which payment of funds are placed.
The brokerage contract guarantees the agent's obligations to the owner seller.
The brokerage contract is mandatory, and must be signed by both the seller and the realty agent. Once signed, the realty agent shall represent the owner seller and has the assignment of finding a buyer in order to bring the transaction to a successful conclusion.
The brokerage contract defines the limits of the realty agent’s assignment, as well as the sum of his remuneration. The brokerage contract guarantees the conditions under which the property will be sold and specifies the sales price which has been determined through consultation between the owner seller and the realty agent. The realty agent’s fees will be required from the buyer from the moment the sale has been brought to a successful conclusion. The brokerage contract is a requirement for it fixes the conditions under which a property is to be put up for sale.
- The basic brokerage contract (mandat simple) which allows the seller to entrust the transaction to other professionals or to sell by his own means.
- The exclusive brokerage contract (mandat exclusive) which binds the transaction to a sole realty agent.
Brokerage contracts must have a time limit, fixed generally at 6 months.
The realty agent is also controlled by other measures, among them the decree dated 29th June 1990 relating to the making public of the tariffs perceived by professionals in realty transactions.
Realty agency fees are unrestricted and have been since 1987. The sole requirement is that the applied fees be displayed as a percentage, visible at the entry to the agency and presented tax inclusive (TTC).
Realty agency commission rates in France vary on average from 4% to 10%. Paris Ouest Sotheby’s International Realty benefits from the unparallelled combination of incomparable marketing tools and a unique international showplace, yet at around 5%, our fees are in check.