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What you must know before the signature of a mutual agreement
« According to article 1589 of Civil code: "A promise of sale is equivalent to a sale, when there is mutual consent of both parties on the matter of the thing and the price »
The mutual agreement generates rights and obligations that the purchaser must know before he's signing this deed, even if the transfer of property of the asset is postponed to the day of the signature of the authentic deed.
Right of retraction
The non professional purchaser can retract within seven days from the following day of the first presentation of the letter signifying the contract. This rule provision applies to the instruments under private signature which the matter is the construction or purchase of a building used for accommodation.
The contract is signified by a recorded-delivery letter or by any other kind of method with the same guarantees for the determination of the date of receipt or delivery.
Who pays the costs ?
According to article 1593 of Civil code "the costs of instruments and other accessory to a sale shall be charged to the purchaser".
Essentially, they include the agency fees, the costs for the drawing up of the deed (notary fees), and taxes for the purchase.
According to article 1715 of General Tax Code, the taxpayer of the property tax is the one who is the owner on the 1st January. On January the first, the owner is the debtor of the entire tax. This principle is also applicable to residence tax ("taxe d'habitation"). However, regarding of property tax, the parties can agree on a different dispatching of this tax. But these agreements will just have effect between the purchaser and the seller. These agreements are not opposable to the tax authorities, which, in all cases, will collect the tax from the person who is the owner on January the first
Easements
An easement is a burden imposed upon a property, build or not (servient tenement), for the benefit of another property belonging to another owner (dominant tenement)
In the deed of sale, it's often stipulated that the purchaser will benefit of the easements if the asset is a dominant tenement and he will bear the open or hidden easements if the asset is a servient tenement. The purchaser will not have action against the vendor. The vendor must declare the easements created by him or the easements that he let create on the assets. The town planning information document will reveal if easements exist which are the result of town planning rules. The preliminary contract is generally concluded subject to a suspensive condition that the town planning information document will not reveal easements which can affect the substance or the value of the asset.
Lead poisoning preventing measures
A certificate relating to the risks of accessibility to lead is appended to the deed realising the sale of a building used even in part to accommodation, build before 1948 and situated within a zone subject to lead poisoning hazards. This certificate must be established since less than one year before the date of the unilateral undertaking to sell or to purchase or of the deed of sale.
If the certificate is not appended to these deeds, no exoneration clause of warranty against hidden defects can be stipulated for defects relating to the accessibility to lead.
Asbestos regulations
A certificate revealing the presence or, possibly, the absence of asbestos in materials or products in the building must be to any contract concluding the sale of some kinds of buildings. Without this appended certificate, no exoneration clause of warranty against hidden defects can be stipulated for the defects relating to the presence of asbestos in these elements of the building
Termites
The owners must provide a parasitical certificate established before less than six months, or warrant the purchaser for the hidden defects of presence of termites, without possibility for them to insert an exoneration clause. This parasitical certificate, established by an expert, identifies the building and indicates the places checked in the building and the ones not checked, the infested elements by termites or which have been in the past and the ones which are not, the date and the place of its drawing up.
How to purchase
When an English person purchases a real estate in France, he worries about what will happen to it after his death.
Considering, French private international inheritance laws, the real estates are submitted to the law of the location of the property.
The transfer of the property is subject to French law. The latter provides for forced heirship in favour of the owner's children
Law applicable to the succession
Article 3, paragraph 2 of the French Civil Code stipulates that real property located in France, even if it belongs to foreigners, is subject to French law. Other assets (bank accounts, securities, furniture and so forth) are considered as being located in the place of the deceased's last residence.
At the death of the owner of a real estate in France, this immoveable asset will be submitted to French inheritance law.
French law, has rules which guarantee a reserved share in the estate to the children To avoid this rule and to allow for example the surviving spouse to dispose of the real estate located in France, different methods exist
On the other hand, the "indivision" ownership can generate some difficulties.
The risks of "indivision" ownership :
When an asset was acquired in "indivision" ownership, at the death of one of the spouses or more generally speaking, of one of the tenants in common, his share will be transferred to his heirs and not to his co-owners.
Therefore, the "indivision" ownership can cause great difficulties. Particularly when there is a dispute between children and parents, when the parents have children from a previous marriage, or worst, when they have children who are still minors.
The change of marital scheme
English spouses, married under the separate estates marital scheme (separate ownership of property marital scheme), consider purchasing an immoveable property in France after a change of their marital scheme. They wish to adopt the French marital scheme of communal estate (joint estate of husband and wife comprising all property, present and future) with a clause awarding the joint ownership to the surviving spouse.
In this settlement, the property is not individually owned by one of spouses. It is a joint ownership property and the couple manages this communal estate. After the death of one of the spouses, the clause awarding the joint ownership to the survivor will be effective and the property will be owned by the surviving spouse.
The change of law applicable to the marital scheme
In application of article 6 of The Hague Convention of 14th March 1978 : a married couple can change the law applicable to the marital scheme during the marriage and adopt, within some limits, the law of their choice.
The married couple's choice
First, a married couple can choose the law of a state which one of them has the nationality.
Then, if one of them has a customary residence in a specific state, they can choose the law of this state.
Finally, the spouses can choose, for immoveable properties, or some of them, the law where these real estates are located. They can also prescribe that the real estates acquired later will be submitted to law where they're located.
Effects of marital scheme changing
In the two first cases, that is to say when one of the spouses has the French nationality or has his residence in France, the change of law is effective on the spouses entire assets,
wherever their location.In the third case, only the real estates are affected by the change of law.
Gifts between spouses
Gifts of future property between spouses are not prohibited by British law. In accordance with French law, the forced heirship of children must be respected. The surviving spouse may therefore receive benefits, but only within the limits of the disposable portion between spouses.
What is a "tontine" agreement ?
"Tontine" is a creation of French law comparable to "joint tenancy". With a "tontine" agreement, the purchasers of a same real estate agree that the survivor will become the sole owner of the jointly held property. With this agreement, the surviving owner can't be worried by the privileged heirs of the deceased
"To be valid, "tontine" must not interfere with the marital scheme of spouses and must be inserted at the moment of the purchase.
Tax aspects of "tontine"
In principle, in pursuance of 1st line of article 754 A of Code Général des Impôts (general tax Code), the real estate inherited in pursuance of a "tontine" clause inserted in a deed of purchase is submitted to the inheritance tax.
One exeption : the house is the principal residence of the survivor and its value is less than 76.000€.
The SCI
An SCI (Société Civile Immobilière) is a kind of company of French Law. It has the advantage to be distinct from its members. The asset acquired by the SCI belongs to the company and not to its members.
Interests to form an SCI
To avoid the French inheritance rules of the reserved share, one could suggest to British persons, domiciled in Great Britain to form an SCI in France - Be careful to the law fraud The use of a structure such as an SCI must not be damageable to the privileged heirs. If the intention of the deceased was to avoid the application of French law, it could be considered as fraudulent and sanctioned by French courts
Tax aspects of an SCI
The Anglo-French agreements govern the fiscal rules applicable to the SCI The immoveable assets located in France and owned by an SCI are subject to French tax laws (income from real property tax, capital gain tax, rental tax, inheritance tax). An SCI is submitted to the tax transparency. Each member of the company must pay the tax in proportion of his shares in the SCI.
Estate taxes in France - Article 4-g of the Franco-British Convention of 21 June 1963 regarding inheritance taxes stipulates that shares of a property investment partnership are taxable in the place where the real property is "used", namely in France.
Income tax in England British tax law regards property investment partnership as joint stock companies and taxes the advantage derived from the gratuitous provision of the residence by the company to its partners as income tax in England. This income may exceed the real market rental value (Income and Corporation Taxes Act of 1988, Articles 145 and 146).
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