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Buying property in France: scams and pitfalls

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Everything you need to know is included in our France Property Pack

France remains a prime destination for real estate investment among foreigners, owing to its diverse culture and strong economy.

If you're not a local resident, dealing with the property market in this area can be a bit of a maze. Be prepared for potential obstacles and surprises.

Our community of property-buying customers and our local partners have reported several common issues to us. We've listed them all in our France Property Pack.

This article provides a brief overview of potential pitfalls that may arise during the property buying process in this country.

Is it safe or risky to invest in real estate in France?

France's real estate market is predominantly safe, especially when you compare it to emerging markets.

However, buyers should beware of properties in historically significant areas.

For example, properties in regions like Normandy, which boasts several historical sites, can sometimes come with restrictions on renovations due to their historical value.

In terms of scams, one specific scenario to be wary of is agents charging "inspection fees" for properties that are not for sale or don't exist. Such scams prey on foreigners' unfamiliarity with local customs.

One notable challenge for foreigners is the "Viager" system, a unique property sale method in France. In a "Viager" sale, buyers pay a lump sum upfront (bouquet) and then monthly payments to the seller for the rest of the seller's life. It's a gamble; if the seller lives longer than anticipated, it can end up being a costly affair.

While the notarial system in France is commendable, it's vital to understand that the notary often represents both the buyer and the seller, a stark contrast to practices in countries like the US.

This dual representation can sometimes lead to perceived conflicts of interest.

France's inheritance laws can be a surprise for many foreigners. In France, children have protected rights to their parents' estate.

So, if a foreigner buys property and then passes away, their children might have a legal claim to the property, even if the deceased's will states otherwise. This has led to unexpected and complex legal battles for many foreign property owners.

The French government's "wealth tax" on high-value properties is another consideration. For instance, properties worth more than €1.3 million are subject to this tax, which can be an unexpected cost.

Additionally, the notary fees, typically around 7-10% of the property's price, are often higher than commission rates buyers might expect in other countries.

Many foreigners, expecting a swift process, are often taken aback by the "cooling off" period in France.

After signing the initial contract, buyers have a ten-day period to back out. While this can be seen as a protective measure, it can also lead to frustrating renegotiations or lost deals.

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Potential real estate buying mistakes in France

The concept of "droit de préemption urbain"

One specific pitfall you should be aware of when buying residential property in France, especially as a foreigner, is underestimating the importance and complexity of the "droit de préemption urbain" (DPU).

This is a unique feature of French property law.

The droit de préemption urbain allows local municipalities in France the first right to purchase a property before the buyer if it's considered to be in the public interest, often for urban planning or development purposes.

This means that even if you have agreed on a sale with a seller, the local municipality can step in and purchase the property at the same conditions agreed upon.

You should be particularly vigilant if the property you're interested in is located in an area with active urban development or in a town that is experiencing rapid growth or change.

The frequency of the exercise of this right can vary significantly depending on the location and the local government's development plans.

To navigate this, you should conduct thorough research on the local area's urban planning policies and consult with a local notaire or real estate expert who can provide insights into the likelihood of DPU being exercised on your property of interest.

It's essential to factor this into your planning and timeline for purchasing property in France, as the process can lead to unexpected delays or even the cancellation of your purchase plans.

The "viager" system

Another unique and often overlooked aspect when buying residential property in France is understanding the implications of the "viager" system.

This system is relatively rare outside of France and can be a pitfall for unsuspecting foreign buyers.

In a viager sale, you purchase a property from an elderly seller who retains the right to live in the property until their death. The purchase price typically includes an initial lump sum payment, known as the "bouquet," followed by regular payments, or "rente," for the duration of the seller's life.

This system can seem attractive due to the lower initial cost, but it carries significant risks and uncertainties.

The major challenge here is the unpredictability of the duration of payments, as they depend on the seller's lifespan. This can lead to financial complications if the seller lives much longer than anticipated.

Also, you won't have immediate access to the property, which can be an issue if your plans change.

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"Servitudes" or property easements

A less known but crucial aspect to consider when buying residential property in France, particularly for a foreigner, is the potential complication arising from "servitudes" or property easements.

These are more complex in France compared to many other countries.

Servitudes in French law refer to certain rights that a neighboring property might have over the property you are considering buying. These could include rights of way, rights to run utility lines, or even certain agricultural rights, like grazing. The catch is that these servitudes are often not well documented or might be based on long-standing local practices rather than formal agreements.

For example, if you purchase a property in a rural area, there might be an unwritten, longstanding agreement that allows a neighbor to cross your land to reach their own.

Such arrangements are often not mentioned in the standard property disclosures but can have significant practical implications for your use and enjoyment of the property.

The concept of "copropriété" system

Another unique aspect to be aware of when buying residential property in France, especially for a foreigner, is the complex nature of the "copropriété" system, particularly in apartment buildings or condominiums.

The copropriété system refers to a property divided into individual units (like apartments) owned by different people, along with shared common areas and facilities. Each unit owner is part of a "syndicat de copropriété," which is a legal entity managing the collective interests of the property owners.

This includes maintenance of common areas, handling administrative matters, and making decisions about the property.

Understanding the nuances of a copropriété is crucial.

It is not just about owning your apartment; you are also entering into a collective arrangement with all other owners in the building. This includes shared financial responsibilities for maintenance and repairs, which can sometimes lead to significant additional costs.

Before buying, you should thoroughly review the copropriété's regulations ("règlement de copropriété") and the minutes from past general meetings. These documents provide valuable insights into the building's management, any ongoing issues, and the financial health of the copropriété.

Also, consider the potential for future assessments or significant maintenance projects that might require additional financial contributions from you.

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"Zone classée" or protected zoning laws

An aspect often overlooked by foreigners purchasing residential property in France is the complexity and potential impact of "zone classée" or protected zoning laws.

This is particularly relevant if you're interested in properties in historical or environmentally sensitive areas.

Zone classée refers to areas that are protected due to their historical, cultural, or environmental significance. If the property you are considering falls within one of these zones, there will be strict regulations governing renovations, alterations, and sometimes even maintenance.

For example, if you buy a property in a historical district, like parts of Paris, Lyon, or other cities with rich heritage, you might find that making changes to the façade, windows, or even the interior requires approval from local heritage bodies.

These regulations can significantly impact your plans, especially if you intend to renovate or modernize the property. The approval process can be lengthy and there's no guarantee that permission will be granted.

Additionally, maintaining a property in such zones can be more costly due to the need to use specific materials or construction techniques in line with the historical or environmental character of the area.

Risks regarding "loi Carrez"

A specific and often unexpected issue for foreigners buying residential property in France is the implications of the "loi Carrez."

This law, unique to France, governs the way property floor area is measured in the case of properties in a copropriété (like apartments or condominiums).

Under the loi Carrez, only certain areas of a property count towards its official square footage.

For example, areas with a ceiling height of less than 1.8 meters (about 5 feet 11 inches) are not included in the total. This can include attic spaces, mezzanines, or rooms with sloping ceilings. The implications for you as a buyer are significant, like the property you are considering might be advertised with a certain square footage, but the actual loi Carrez measurement might be less.

This becomes crucial when the sale is based on square footage, as is common. If the loi Carrez measurement is less than stated, you may have grounds to renegotiate the price or even back out of the sale.

Conversely, if you're selling a property, a miscalculation can lead to disputes and financial losses.

To safeguard yourself, ensure that a certified expert measures the property before you commit to the purchase.

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"Taxe foncière" and "taxe d'habitation"

Another unique and potentially challenging aspect for foreigners buying residential property in France is dealing with the "taxe foncière" and "taxe d'habitation."

These are local property taxes with nuances that can be particularly perplexing for those not familiar with the French system.

The taxe foncière is a property tax paid by the owner of the property. It is based on the theoretical rental value of the property and varies depending on the location and size of the property. This tax is due regardless of whether you live in the property or rent it out.

It's important to note that the taxe foncière tends to increase annually and can be significantly higher in popular areas or cities.

The taxe d'habitation, on the other hand, is owed by the person living in the property as of January 1st of the tax year. This could be either the owner or the tenant.

However, there have been recent changes to the taxe d'habitation, leading to its gradual reduction and eventual exemption for most primary residences, but this does not apply to second homes or vacation properties.

Before purchasing property in France, you should inquire about the current and historical amounts of both taxes for the property.

This can give you an idea of the ongoing costs associated with the property.

Also, you need to consider how these taxes fit into your overall budget, especially if you are buying a second home or investment property.

Lastly, it’s important to be aware of any planned local developments or policy changes that might affect these taxes in the future.

The concept of "Droit de préemption agricole"

In France, a unique and sometimes overlooked aspect of property buying is the potential impact of agricultural pre-emption rights, known as "Droit de préemption agricole".

This is particularly relevant if you're considering purchasing rural or semi-rural property.

These rights are held by a local agricultural body, SAFER (Sociétés d'Aménagement Foncier et d'Établissement Rural), which has the right to pre-empt the sale of agricultural land to preserve its use for farming. This means that even after you've made an agreement with a seller, SAFER can step in and purchase the property instead if they deem it necessary for local agricultural preservation or development.

Understanding the implications of these rights is crucial, especially in rural France where they are most commonly exercised.

Even if the land you are buying is not currently being used for agriculture, its classification as agricultural land in the past can trigger these rights.

To navigate this, thorough due diligence is needed. You should investigate whether the property is subject to agricultural pre-emption rights and understand the likelihood of SAFER exercising these rights. Consulting with local real estate professionals and legal advisors familiar with rural property transactions in France is advisable.

They can provide insights and help you assess the risks associated with your specific property of interest.

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"Les zones de bruit" or noise pollution zones

In France, another unique consideration when buying residential property, particularly for foreigners, is the intricacy surrounding "les zones de bruit" or noise pollution zones.

This aspect is often underappreciated but can significantly impact your living experience.

Noise pollution zones in France are designated areas around major airports and sometimes other significant noise sources like highways or railways. Properties within these zones are subject to specific regulations and disclosures regarding noise levels.

When a property is in a zone de bruit, sellers are legally required to inform buyers about it, as it can affect the property's value and the quality of life of its inhabitants.

What makes this particularly important in France is the strict enforcement and the potential impact on future property developments or renovations.

For instance, there might be restrictions on the types of windows you can install or requirements for additional soundproofing measures, which can add to the cost of any renovations you plan to undertake.

If you're considering a property near a major airport or other significant noise source, it's crucial to check the local urban plans or ask the real estate agent about the noise pollution zones.

Understanding the specific regulations and requirements for properties in these zones is also crucial.

"Vices cachés" or hidden defects

When purchasing residential property in France, a specific aspect that often catches foreigners by surprise is the potential existence of "hidden defects" or "vices cachés".

This concept is particularly important in French property law.

Vices cachés refer to defects in the property that were not apparent at the time of sale, but which significantly affect the property's use or value. Under French law, the seller is obligated to disclose any known defects, but sometimes issues are genuinely unknown to both the seller and buyer at the time of sale.

If, after the purchase, you discover a hidden defect, you have the right to take legal action against the seller for either a reduction in the sale price or the annulment of the sale.

However, the challenge lies in proving that the defect was present before the purchase and that the seller was unaware of it.

It's essential to conduct a thorough inspection of the property before purchasing. While some issues might only be discovered after you have lived in the property for some time, a detailed initial inspection can help identify potential problems.

Also, understanding the legal framework around vices cachés is important, as it influences your rights and options should you encounter such issues after purchase.

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