The procedure of a garantie deplacée is the same as the one for a mortgage loan.

Taking a garantie deplacée means to mortgage your French property in order to use up to 80% of the funds (that you have released by mortgaging) to buy a new property abroad. So the bank will use the mortgage of your property as collateral.

This procedure has several advantages:

-          It avoids you taking out a loan
-          It allows you to invest your own wealth with competitive rates for25 years
-          It offers you the possibility to buy a new property whenever you want whilst remaining the home owner of your French property.

To do this you need:

-          To own a property in France without a mortgage
-          To release the funds at the Notary’s. The Notary called “Notaire” in France is an independent authority who represents neither the buyer nor the seller but who is here to ensure that the correct procedure is respected
-          To supply a reservation contract (with the translation in French) that proves that you are buying a new property abroad

For more information do not hesitate to contact Sextant French Mortgages on 020 7428 4918 or by email on info@sextantmortgages.com

Notaire fees, or ‘frais de notaire’, are in part fees paid to the notaire in return for their services. These are a compulsory element for any French property purchase. It is essential to take them into account when deciding how much you can afford to spend on your new home. Of course, as with all legal conventions, if there is anything you are struggling to understand over the course of your purchase, just ask!

The important thing with legal fees is that they are generally not included in the asking price featured in property adverts so must be taken into account when deciding how much you can afford to spend.

The notaire plays a significant role throughout the purchasing process, including:

- giving advice every step of the way
- answering queries on how to structure the transaction
- advise on inheritance laws and other related tax issues that you may want guidance on

It is their job to ensure due diligence – they are there to oversee the paperwork generated by a property purchase, and to ensure that all proceedings are in accordance with French law. As well as acting in property conveyancing, they also have a role to play in inheritance procedures, marriage contracts, wills, divorce settlements and the letting of property.

Notaires are not salaried by the French government, meaning they earn their income exclusively through the fees charged for their services. Legal fees however, are not paid exclusively to the notaire- the majority goes to the Treasury, or corresponds to professional fees owed to the land and building surveyors, amongst others. As a general rule, for a purchase without a mortgage, the percentage of legal fees that go to the notaire tends to be around 1%, although a scale system is in operation. This scale system means the higher the sale price of the property, the smaller the cut taken by the notaire.

For example, for a purchase between €17k and €30k, around 1.1% of the ‘frais de notaire’ goes directly to the notaire, while for a purchase above €30k, the notaire will only take around 0.825%.

The rates for legal fees are fixed by the French government and are determined in relation to the sale price of the property. While the percentage of the fee going to the notaire does not change whether the house in question is a new build or an older property, the age of the property is used to calculate the total fees due. Broadly speaking, they are usually between 6 and 8% for a resale property, and between 2 and 3% for a ‘new build’ property – i.e one that is less than five years old.

Here is a good calculator which will give you an estimation of the Notaire fee you need to pay: notaire fee calculator

France’s newspaper ‘Le Monde’ published some outstanding figures referring to real estate in Paris and in its suburban areas.

Paris property prices increased by 20% in 2010

A study carried out by the Chamber of Notaries of Paris and Ile de France published on December 9th revealed an increase of 20% is expected in house prices in 2010, with a new record of approximately 7,500 euro / m 2 on average by the year’s end. According to the notaires, the increasing property prices in Paris “should keep up for the first months of 2011 at least,” reaching a new record of 8,000 euro/m2 on average.

This price boom is mainly related to the capital’s popularity among foreigners with the return on the market of “second-time buyers” and low interest rates. ” Housing demand is very strong and still solvent. What’s more, we are seeing the noticeable return on the market of households who sell their property after making a substantial capital gain from their first purchase in order to make another purchase. “ Foreigners, those looking in the historic centre in particular, are numerous,” declared Christian Lefebvre, President of the Chamber of Notaries of Paris and the Ile-de-France at AFP.

The rise in the city centre of Paris in the third term of 2010 was still only of 13.8% in comparison with the same term in 2009. The average price had then passed the threshold of 7,000 euros/m2 (7030 euros), largely erasing the old record (6680 euros/m2).
At the end of 2010, and for the first time, notaries in Ile-de-France were able to provide statistics based on preliminary contracts referring to real estate, rather than solely on deeds signed a few months after. The previous figure of +20% in 2010 results from a representative panel of preliminary contracts received by notaries for September, October and November 2010. “This first quarterly indicator price (…) from the end of November 2010 foreshadows the index prices of the final sales contracts between November 2010 and February 2011”, declared the Paris chamber of notaries.

In comparison with 2009, the increase in the region of Ile-de-France, just outside Paris, is less strong but will still exceed 10% in 2010, in particular for apartments.

An increase in the provinces

According to the chamber of Paris Notaries, the changes aren’t as significant but are still above inflation rate (1.5%) outside of Paris. In the third term of 2010 and on an annual rate, the increases were 5.3% for apartments and 8.9% for houses. The major regional cities have charted, for their part, a significant increase in 2010, between 10% and 15%: Rennes (2,250 euros/m2), Nantes (2,450€/m2), Bordeaux (2,700€/m2), Lyon (3,000€/m2) and Marseille (2,500€/m2). The increase remains lower in Toulouse (2,350€/m2) and Brest (1,450€/m2)

In large regional cities, “it is the demographic and economic dynamism, notably with the influx of students and the fact that they’re leaving home, which is at the root of the rising prices,” said Pierre Bazaille, President of the Notarial Institute in real estate. However, he points out, “We must bear in mind that the ‘blip’ in property rates lasted longer between the spring of 2008 and 2009 away from the capital than in Paris and a good half of the increase is actually a catch-up in prices. I think the rise in large cities will carry on in 2011, but not at rate of 10% to 15%,” predicts Mr. Bazaille.

There is a way around this conundrum. Bridging loans not being a possibility anymore for purchasing a property in France, you could in fact take out a French mortgage. Many people believe that opting for a French mortgage is more costly than arranging a mortgage in the UK, but the setting-up costs may be pretty similar, if not cheaper, as the costs here have gone up. All you need is a 15% deposit to be able to take advantage of this golden opportunity.

When deciding to set up a French mortgage, you will have to bear in mind various fees, including notaire’s fees for registering the deed of the mortgage and brokers fees. The latter can seem daunting in terms of arranging a mortgage in a different language. At Sextant Mortgages, our dedicated in-house mortgage team speak English and will arrange it all for you, including liaising with the banks (subject to status).

If you get an agreement for a French mortgage, then your dream home could easily be yours. With French interest rates at their lowest- 2.75% at the time of going to press- and a mortgage product that is free from redemption fees, you can sell your property whenever you wish without any ties. Indeed, you will be able to pay back the loan amount when you’ve sold your property and be mortgage-free. Or, you can choose to use the cash to buy yourself a car, or simply save it for a rainy day.

This could really be the way forward, as the UK property market is moving slowly, for you to not let your dream French property slip through your fingers…

To find out more and get a free quote, please get in touch with our French Mortgage team by telephone on 0207 428 4918 or by email: mortgages@sextantproperties.com

‘Frais de notaire’ are a compulsory element of any house purchase and hugely important- they are generally not included in the asking price featured in property adverts so must be taken into account when deciding how much you can afford to spend. The fee structure may seem puzzling but can be easily clarified.

A notaire is in essence a cross between a solicitor and a town clerk. They play a significant role throughout the purchasing process, including giving advice every step of the way, answering queries on how to structure the transaction, advise on inheritance laws and other related tax issues that you may want guidance on.  It is their job to ensure due dilligence – they are there to supervise the paperwork generated by a property purchase, and to ensure that all proceedings are in accordance with French law.

Notaires are not salaried by the French government, meaning they earn their income exclusively through the fees charged for their services. Notaire fees however, are not paid exclusively to the notaire- the majority goes to the Treasury, or corresponds to professional fees owed to the land and building surveyors, amongst others. A scale system is in place as the higher the sale price of the property, the smaller the cut taken by the notaire. As a general rule, for a purchase without a mortgage, the notaire receives roughly 1% of the notaire fees.

Here is an easy to use calculator which gives estimations of the Notaire fees you need to pay: Notaire Fee Calculator.

One of the main advantages of the donation-partage is that, if all the children accept it prior to death, it will normally avoid quarrels between them upon death, although legal action will still be possible in certain cases.  The donation-partage avoids the situation where the heirs will be the joint owners of all the deceased’s assets and a possible lengthy distribution procedure (‘partage’) in case of disagreement.

It also has an essential advantage in that it enables to avoid a pitfall relating to the valuation of the assets given.  As a matter of fact, once the donor has passed away, the assets given under the donation will be valued at the value retained at the time of the donation, as opposed to the time of the distribution of the estate after death.  This is so while to the contrary, when valuing the share to which each child is entitled, gifts made outright during lifetime will be taken into account at their value at the time of the death, which can create discrepancies in the treatment of children depending on what was given.  Let us consider an example: during his lifetime, a father makes gifts to his two children, one of a real estate property and cash to the other in equal values or two equal sums of cash, one of which is later invested by the child in the purchase of a property when the other spends his gift without buying anything.  Then on the death of the father, the value of the gift taken into account in order to assess the share of the estate that needs to go to the child having bought the property will be the market value thereof at the time of death, while the gift received by the other one (and who has spent it all) will be taken into account at its nominal value, meaning that this child will benefit from the increase in value over time of the property purchased by his sibling.  This can seem quite unfair and the donation-partage remedies that situation by ‘freezing’ the valuation at the time of the gift.

Process to follow to make a donation-partage:  like any gift, a donation-partage needs to be signed before a Notaire.  Two parents can give their respective personal assets but if there is a community between spouses, it is best to do a joint single deed of gift by which each spouse gives his own personal assets and both spouses give their joint assets at the same time.

In order for it to be valid, all the beneficiaries must accept the donation-partage, although if one refuses, then it will remain valid for the others.  The one who has refused will not be able to take advantage of the above-mentioned rule on valuation and if the assets left in the estate are not sufficient for him to receive his full reserved share of the estate, then he will be entitled to challenge the scope of the donation and have it reduced (‘action en réduction’).

Assets gifted within a donation-partage may consist of specific assets existing, or by way of reintegration of previous outright gifts made.  In that case, however, it is to be noted that the value to be retained for the outright gift will be the value at the date of the donation-partage, not the value at the time of the outright gift.  It is therefore recommended to do a donation-partage in the first place rather than outright gifts.

One does not have to give all of one’s assets under a donation-partage and in case of partial gift, then the surplus of the assets are distributed according to default applicable rules of successions.

Once the donation-partage has been accepted, it is normally impossible to come back on it.  There are exceptions in very exceptional cases, for instance if the gift was made subject to an obligation which was not carried out.

It is possible to provide, in a donation-partage, that should the beneficiary die before the donor, then the donor will get the asset back.  If this is not provided, then on the death of the beneficiary, the assets given will benefit his or her heirs.  However, if the intention is to receive the asset back in case of death of the child or children, it is essential, in case there are several children, not to give them the same assets jointly, in other words in case only one dies, then the assets cannot be returned in full.  It is possible to give assets of unequal value to different children but in that case, the child who has been advantaged will need to pay back the difference in value over and above his reserved share to the estate.

The consequences of the donation-partage on title: as the assets have been gifted, the children can in theory sell them even prior to the death of the donor.  However, should there be a claim in reduction by the other heirs in case they did not receive their rightful share, the purchaser of the asset could be forced to return it or indemnify such heirs.  Only if the donor and all the heirs consent to the sale will that not be possible.

The donation-partage is therefore a very useful tool but it is also a very technical subject and people interested in going down this route should use caution.

Hervé Blatry
Avocat
TEE FRANCE
STANLEY TEE LLP
High Street
Bishops Stortford
Herts CM23 2LU

Tel 01279 710621 and 01279 710654
heb@stanleytee.co.uk

A notaire is essentially a cross between a solicitor and a town clerk. They play an extremely important role throughout the purchasing process, acting as an advisor and making sure that you are aware of all the formalities that need to be completed. It is their job to ensure due dilligence – basically, they exist to oversee the paperwork generated by a property purchase, and to ensure that all proceedings are in accordance with French law. As well as acting in property conveyancing, they also have a role to play in inheritance procedures, marriage contracts, wills, divorce settlements and the letting of property.

Notaire fees, or ‘frais de notaire’, are in part, as the name suggests, fees paid to the notaire in return for their services – they are not employed by the French government, so the notaire earns his or her income directly from the fees charged for their services. However, the notaire is not the sole beneficiary. The majority is made up of fees due to the Treasury, which the notaire is responsible for collecting, and professional fees owed to the land and building surveyors, among others. As a general rule, for a purchase without a mortgage, the percentage of notaire’s fees that go to the notaire tend to be around 1%, although a scale system is in operation – the higher the sale price of the property, the smaller the cut taken by the notaire. For example, for a purchase between €17k and €30k, around 1.1% of the ‘frais de notaire’ goes directly to the notaire, while for a purchase above €30k, the notaire will only take around 0.825%.

The rates for notaire fees are fixed by the French government and are determined in relation to the sale price of the property, and, as previously mentioned, can be rather confusing. While the percentage of the fee going to the notaire does not change whether the house in question is a new build or an older property, the age of the property is used to calculate the total fees due. Broadly speaking, they are usually between 6 and 8% for a resale property, and between 2 and 3% for a ‘new build’ property – that is to say, one that is less than five years old. Here is a good calculator which will give you an estimation of the Notaire fee you need to pay: Notaire Fee Calculator

I was having a look at differents forums related to French property this morning and one of the most frequent question related to a property purchase was the Notaire fee. It cis different for each property and it also depend of the nature of the property (new Build or more than 5 years old).

Here is a good calculator that will help you to have an idea of the notaire fee you will have to pay (it is in French so prepare your dictionary! ):

http://www.anil.org/fr/outils-de-calcul/frais-de-notaire/index.html