Selling Guide for Property in France

Want to be well informed on French Real Estate law? Based on experience and expertise, our guide covers all the most important procedures involved when selling the freehold (pleine propriété) of French property (immeubles or immobilier). And be sure to check out our Quick Facts and Tips.

Legal Guide to Selling French Property

Full ownership, or ownership in pleine propriété entitles you to sell your property provided that you are over 18 years old, have fully legal capacity to sell and the sale is in agreement with the legislation and third party rights (e.g. mortgagees’ rights, neighbour’s easements, tenant’s rights of occupation or pre-emption). The property must usually be protected by registration at the local bureau des hypothèques (local land registry).

To proceed with the sale transaction it would be very helpful if you have a Solicitor in the United Kingdom who can advise you on the implications of the sale. You should also instruct a notaire, as only a French notaire practising in France can draw up the deed (acte de vente), which formally transfers legal ownership of your property to your buyer.

French agents usually charge commission on a percentage basis - usually between 4% and 8% of the sale price – as agreed in a mandat (written authority) and usually expressed to be either ‘TVA comprise’ or ‘TTC’ (inclusive of French VAT at 19.6%) or exclusive of TVA (‘hors taxe’ or ‘HT’).

The mandat should specify whether the commission is payable by you, your buyer or split between you both. The mandate should specify the minimum acceptable sale price and express commission as a percentage of the agreed sale price. You find out more information about mandat on the pettys website.*

There are two main legal stages involved in your sale:

The Sale Contract

You and your buyer need to sing-up a preliminary sales agreement often called a ‘Compromis de Vente’ or ‘Promesse de Vente’ something referred to as the ‘sous seing privé’. This is normally signed at an earlier stage than is common in England.

There are two main forms of contract. The more common type is a compromis de vente which is an agreement signed by both parties and subsequently repeated before the notaire by an acte de vente.

Instead of entering into a bilateral preliminary agreement, you may grant your buyer a unilateral right or option to purchase (promesse de vente) for a maximum duration of 6 months. This agreement binds you but leaves your buyer the option whether to proceed with the purchase and is subject to certain additional formalities such as registration. During the option period the seller is prevented from attempting to sell or lease to another party hence the necessity for registration. If the buyer decides not to proceed, the contract is cancelled but you can keep the deposit.

Whatever the type of contract used, it should not be signed before you have had it thoroughly checked and approved. Some contracts include English translations, but many are misleading or unintelligible. What has been left out of a French document can be just as important as its contents.

Once you have signed a contract, you are almost always bound to complete the sale. Before signing a contract, you should therefore ensure that it truly records what you have agreed and contains all the appropriate clauses for your protection. If not, you lose the opportunity to insert your own tailor-made requirements.

The Deposit

When the contract has been signed by the buyer, he pays a deposit of 10% of the purchase price. If your property is less than 5 years old the deposit will be 5%. This is deposited with the notaire or the estate agent if he is authorised to accept deposits.

Final Signature

Once the French conveyancing searches and documents have been completed by the notaire, normally after 8 – 12 weeks, your buyer is asked to pay to the notaire the balance of the purchase price. The notaire is personally liable for the French registration taxes on the sale and will also insist on having these and his costs from your buyer before proceeding.

Taxation

Under Article 1593 of the French Code Civil, all the legal costs of and incidental to an acte de vente are payable by the buyer unless otherwise agreed. This is the case even if you and your buyer are represented by separate notaires.

Capital Gains Taxation

French and UK capital gains tax (‘CGT’ in relation to the English form of the tax) must be taken into account if you are selling your property and other possessions in France.

You will be exempt from Capital Gains Tax in France if your property is your main residence and you have been resident for tax purposes in France for one year. It is important therefore to complete your tax return in France.

You can find out more information on the pettys website* and see other examples of exemption from the Tax.

UK CGT

It is not always appreciated by British residents that capital gains made in France are taxable in the UK and you must report the sale of your property to the Inland Revenue on your UK tax return. The French Tax autorities will pass on to the Inland Revenue any information they have, either about your sale or your other French tax affairs.

French VAT (TVA)

Where you have had certain works carried out to the property within the five years preceding the sale, you may be liable to pay back any VAT allowances you will have been granted. This tax is also chargeable in most instances on a first sale within five years of purchase of a new development.

You can advertise your property for sale on ourwebsite – we do not charge any commission on the sale price, only our standard rate for advertising with us. You can enter your details direct, or please contact us if you require further information. If you require a professional advice on selling your French property, we recommend you contact Prettys solicitors.*

* This article was adapted and used with permission from Prettys Solicitors and is intended as a guide only. Information relating to individual circumstances should be sought by contacting Prettys solicitors direct and mentioning you have seen this article on French Connections.