Buying property: 5 words to find your way

You are looking for your next main residence, or you would like to make a rental investment. It is important to understand the legal terms you will come across along the way when buying property. David Notaires – Aix en Provence looks here at 5 important definitions when you buy a property.

“CO-OWNERSHIP” (COPROPRIÉTÉ)

We always advise you to ask the estate agency (or the owner) showing you the property whether it is in a co-ownership or in a housing estate. These two terms can have major consequences for your property project.

If the property you wish to buy is in a co-ownership, this means that you will own a unit to which you alone will have access (typically your flat), and a proportion – called a share – of the common parts (such as the entrance hall or the stairs) together with the other co-owners.

The walls, floors and roof are also common parts.
Maintenance and works on these common parts are shared according to your share. Let us take an example: you own a flat and 200/1000ths of the common parts. In that case, the overall renovation of the façade, costing 10,000 euros, will be invoiced to you at 2,000 euros.
This is why it is important to find out about the physical and financial condition of the co-ownership before buying. When were the last major works carried out? Is the building well maintained? Are there any unpaid charges or ongoing proceedings?
The managing agent (syndic) will be able to provide you with all this information.

Finally, in some cases, you may become the owner of common parts that you alone will use. These are called common parts with exclusive use. This may be an inner courtyard, for example. How the maintenance and repair costs of this special common part are shared then depends on the co-ownership regulations. In particular, they may provide that, while maintenance is borne by the user, the co-owners share the cost of major works.

An important point

A co-ownership can be vertical (a building on several floors) but also horizontal. A horizontal co-ownership may, for example, consist of several houses on a single plot of land held in common ownership. This has many consequences. In particular, each owner will have to ask the general meeting for permission to change the footprint on the land. This may be the case for installing a swimming pool, building an extension, and so on.

“HOUSING ESTATE” (LOTISSEMENT)

A housing estate is made up of several plots of land resulting from an initial division of the land with a view to building on it. Once the buildings are erected, these plots share common services. These may include an access road and connection to water and electricity. They share rules for the harmony of the buildings and of the layout of each plot. Owners within a housing estate generally organise themselves within an Association Syndicale Libre (ASL), a residents' association.

If you are buying a plot in a housing estate to build your house, make sure you include in the preliminary sale agreement a condition precedent of obtaining planning permission.

In a housing estate, the land and the house built on it belong to you. However, in addition to the planning rules, you must comply with the procedures and rules of the housing estate. These rules may concern, for example, the height of buildings, the type of openings, the type of fencing, etc.
Sometimes, certain alterations or works require special permission from the ASL.

If you are buying a house or a plot in a housing estate, it is important to obtain the documents relating to the estate. These include the regulations (which no longer apply after ten years), the specifications (cahier des charges), the articles of association of the ASL and the minutes of the latest meetings. Indeed, while some planning rules lapse after a certain period, relations between the owners of the estate remain subject to the rules of the estate without any time limit.

“MORTGAGES” (HYPOTHÈQUES)

This word comes up several times in the property buying process: mortgage guarantee, mortgage search, conventional mortgage, mortgage registry, release of mortgage…

A mortgage is a charge registered against the property. If the debtor does not repay, it allows the creditor to seize the property to settle the debt.
A mortgage guarantee therefore consists precisely in registering a mortgage. It is a guarantee that banks may request, alongside a bank guarantee (caution) for example. It comes in two sub-types: the lender's lien (privilège de prêteur de deniers) for the amount of the price of the property, on the one hand, and the conventional mortgage for anything above that amount, on the other. The concept is the same in both cases: it is a charge registered against the property.

Moreover, the land registration service (service de la publicité foncière) has replaced the former mortgage registry. It is the public register recording all the rights and charges over properties. Every change of owner of a property (sale, gift, succession, division…) must be entered in the land register. The same applies to any additional charge on the property (mortgages, easements…). This is what makes the French legal system of property ownership so secure.

Finally, if your seller had themselves given the property as security, they will have to obtain the release of the mortgage in order to sell you the property.

Why is it important to obtain the mortgage search report?

The mortgage search report (état hypothécaire) is a summary document. It sets out the rights and charges over the property you are going to buy. At the time of your purchase, the notaire carries out several checks using this document. In particular, the notaire makes sure that the seller really is the owner. It also makes it possible to check that the property can be sold, that is to say free of any charge that would make the sale impossible. Finally, it will show you the easements (right of way, right of view…) that burden the property or benefit it.

The mortgage search report is always requested before each transaction. It is renewed if necessary, so that the information it contains is as recent as possible.

“COOLING-OFF PERIOD” (RÉTRACTATION)

The cooling-off period gives the buyer 10 days to make sure they are buying with full awareness. This period invites you to confirm that your investment is well thought out and responsible.
It is important to note that only the buyer can withdraw; the seller has no such option.

During these 10 calendar days after the first presentation of the letter or email with acknowledgement of receipt, or the hand delivery of the preliminary sale contract (compromis or promesse), the buyer may withdraw – that is to say pull out of the purchase without giving any particular reason and without losing their deposit. The buyer's deposit is then refunded in full within 21 days.

Buying a property is an important step that should be considered carefully and well in advance. We strongly recommend that you do not wait for the cooling-off period to decide not to go ahead with a purchase. Furthermore, apart from the compulsory administrative documents that come later, we believe it is essential to obtain all the useful information about the property as early as the preliminary sale agreement. This will save you from investing your time, and temporarily tying up your funds, in a purchase that leads nowhere.

“LOAN OFFER” (OFFRE DE PRÊT)

The loan offer must be distinguished from the agreement in principle. It is the final document issued by the bank confirming its agreement to finance your property purchase and setting out the terms, in particular as regards guarantees, interest rate, repayment and insurance…

If you need a loan to finance your purchase, this must be stated in the promesse or the compromis. It will be the subject of a condition precedent. In that case, if you do not obtain the loan offer, you will have the option of withdrawing from the purchase. Your deposit will then be refunded.

Please note that two loan refusals are generally needed to be able to withdraw from the sale for lack of financing. So remember to apply for a loan with at least two banks. If you use a broker, ask them to provide you with at least two certificates of loan applications made to banks (and not to the broker itself), under the conditions set out in the contract.

Your notaire supports you when you buy property

Your notaire's role is to explain the legal regime of the property you wish to buy, as well as the rules that apply to the purchase itself. We recommend that you contact your notaire as soon as the seller has accepted your offer.

For David Notaires – Aix en Provence, Elodie Letouche