French Legal FAQ
All information provided is for general guidance only. You are encouraged to seek professional advice from experts on all questions relating to French property law, inheritance law and taxation. Should you require advice on these subjects, we can put in you in contact with our trusted partners.
Are there any restrictions for foreigners buying property in France?
Can I buy property in France with my Irish pension fund?
Can I buy property in France with my company, trust, or SIPP?
What does the French notaire do?
How much are the legal fees on a property transaction in France?
Can I buy a French property with the intention to rent it out?
What do I need to know about French inheritance law?
Are there any restrictions for foreigners buying property in France?
France does not have any special restrictions for foreigners who buy French property.
Can I buy property in France with my Irish pension fund?
Buying French property with an Irish pension fund is relatively straightforward. The French property purchase is made in the name of the individual pension holder and the French mortgage is also taken out in the name of the individual. The Irish pension for that individual then provides the down payment funds to purchase the property and usually also makes the mortgage payments. The French bank will take a first charge on the property adn the Irish pension trust will take a second charge on the property, the result being the buyer cannot sell the property with the mortgage outstanding or without the Irish Pension Trust knowing. As the mortgage is in the individual's name, they must still meet the usual criteria to qualify to borrow in France.
Can I buy property in France with my company, trust, or SIPP?
It is technically possible to buy French property with a foreign company, trust, or SIPP (UK self invested personal pension) however it is expensive and complicated and few French banks will do it. Do note that the parties on the title of the property must normally be the same parties on the mortgage so you cannot take a mortgage individually for a property your company owns. Also, the French lender requires your foreign company, trust, or SIPP to create a French company called an SCI (civil property ownership company) that will buy the property. An SCI can take 6 weeks to create so plan ahead. As a French SCI must have at least 2 shareholders, you may need to own some of the SCI shares in your own name.
France Home Finance does not offer mortgages for foreign companies, trusts, or SIPPS.
What is an SCI?
An SCI (société civile immobilier) is a company established under French law, which is set up to manage and rent out property. If the property is purchased by an SCI, the members of the SCI own shares in the company, which then owns the property. Families will often set up an SCI together to be able to easily pass shares between members of the SCI, especially in the case of death of one of the shareholders. This can be useful as your property is subject to French inheritance law whether or not you are a resident of France or if you die in France.
For example, if a couple have children and one spouse dies, French law dictates that 50% of the property must automatically go to the children. If the couple prefers all of the property to be left to the surviving spouse, an SCI is a solution. An SCI’ is really the most useful in the case where a couple have been previously married with children, remarry and have new children or in the case of intentional disinheritance.
The cost to set up an SCI can be approximately 2000 to 4000€ and the company must have its own bank account and file an annual general assembly report. It’s important to obtain sound legal advice if you plan to purchase through an SCI to be sure you will be able to take full advantage of the benefits, and to correctly structure the purchase and the loan.
Either a notaire or a French solicitor (lawyer) can set up an SCI. Please note that the SCI must be named on the compromise de vente (or reservation contract in the case of leaseback), must be set up before your obtain your mortgage offer and must be named on the property title. If needed, France Home Finance can put you in touch with experienced legal advisors who can advise you on the pros and cons of an SCI for your situation.
What does the French notaire do?
A Notaire is the most qualified solicitor (lawyer) in the French legal system, studying seven years to obtain their degree. The notaire is both a Public Officer and a legal counselor in specific areas of the law, including real estate, family, tax and corporate law. The notaire has the power to authenticate certain agreements, such as real estate sales, which cannot be enforced by any other means. French law imposes a broad personal liability on the notaire to ensure that transactions are executed correctly and legally.
Notaires also subscribe to a common insurance, which provides an immediate financial guarantee to the client in case of an error. Thus you have the security of working with a specialized lawyer to ensure that your transaction is properly completed. Do note that the French notaire does not ordinarily provide proactive legal advice on the transaction. Rather, their role is to ensure the legal act is correctly carried out and to answer your specific questions.
How much are the legal fees on a property transaction in France?
Legal fees refer to the taxes, mortgage registration charges and notaire fees that a buyer incurs when purchasing a French property. Usually this amounts to 6 to 8% of the purchase price for an existing French property. These fees consist of tax on the purchase, costs to register and authenticate certain documents, putting the “mortgage” or “lien” on the property, and the fees paid to the notaire for doing this work.
Legal fees are approximately 3-5% of the purchase price for a new construction or a French property less than 5 years old.
The notaire fees are fixed by law for most transactions. Be aware that if there are two notaires (buyer's and seller's) the fees are shared between them. Thus retaining your own notaire will not increase the fees. For existing French properties, it is advisable to have your own notaire to be sure your interests are represented in the transaction. France Home Finance can put you in contact with English speaking notaires who can expertly guide you through the buying process.
While for many buyers the legal fees seem very high, it is worth remembering that annual property taxes in France and particularly Paris, are substantially lower than in many other countries.
Can I buy a French property with the intention to rent it out?
Buying a French property with the intention to rent it out is possible, whether or not you will have a French mortgage. Do note that in apartment buildings, the bylaws of the owner's association could have a clause against renting but this is rare. Further, there has been a movement in the city of Paris to enforce a long ignored law requiring an owner to have commercial zoning on their apartment to be able to rent for less than a year contract. This does not apply for a primary residence. This has been in response to the many owners offering daily or weekly rentals to tourists in Paris and the rise of companies like Air BnB.
Your future rental income will not always be taken into account when calculating your total capacity to borrow. For example, it is not possible to obtain a French mortgage simply on the basis that the future rent will cover the French mortgage payments.
What do I need to know about French inheritance law?
It’s important to educate yourself on the way inheritance works in France. If you own property in France, your estate will be subject to French inheritance tax even if you die in another country. In some cases a tax treaty between your home country and France may prevent beneficiaries from being taxed twice. The French system is different in that French law insists that inherited properties are divided equally among the immediate family members. Recent legislation should make it possible to select the country where you want to the inheritance regime to apply for all your assets. This was still under review as of November, 2015.
For example, if a married couple has two children and one of the couple passes on, half of the property goes to the surviving spouse and the other half is split evenly among the children. This means that a spouse cannot leave all of the property to the surviving spouse automatically. Imagine how complicated it can get in the case of divorce, remarriage and a second set of children. In the event of a sale, all parties must agree.
There are of course solutions to this issue. One example is that you can purchase the French property in the name of a Société Civile Immobilière (SCI). If you do plan to purchase with an SCI – decide this BEFORE you make the offer on the property as it takes time to set it up. The SCI would also be the borrower on the mortgage. This must all be done in advance as it is difficult and can be costly to buy as individuals then sell to an SCI at a later date. Sometimes executing a contract between spouses is enough to accomplish the desired result. In any case, it’s best to consult a French notaire who can provide advice specific to your situation.
