By Schuyler Hoffman and Adrian Leeds
June 19, 2003
There are several ways to go about finding property to buy in Paris. I have discussed the notaires' auctions as one of those sources in the past (see issue 02-27-2003 "Bidding for Bargains at the Property Auction"). We monitor the properties coming up for auctions and look for any that might be interesting for our clients. This week Adrian and I looked at an apartment that goes on auction Monday the 23rd. We have put it out to a couple of our clients. It is perhaps interesting to relate the details here to give you an idea of how this might work for you.
The studio flat is 20.3 square meters on the third floor of a very charming building at the end of a "petit cite" (like a cul de sac) in the northern end of the 3rd arrondissement, very near Temple and République Mètros and the historic Carreau du Temple.
The location is great, with absolutely delightful views from the apartment. There are many windows throughout... one in the kitchen was walled over at some point. If remodeled, this could be re-opened and make the apartment seem even bigger and brighter. The potential is wonderful.
It needs total renovation -- we estimate about 20,000 euro to make it really nice (new kitchen and bath, and some cosmetic work).
The starting price for the auction is 45,000 euro. A check for 18,000 euro has to be put down as a "consignation fee" (deposit) before bidding begins (normally this is only 20% of the starting bid, but is set at 40% for non-residents).
There doesn't seem to be any regular formula for estimating how much apartments will actually sell for at auction. That being said, this one could go for 65 to 70,000, or as high as 80 or 90,000. Even if it were to sell as high as that, and with the cost of renovations, the location and potential resale and rental value make it well worth it.
Here's how this whole thing works...
The notaire handling the sale of the particular property has what is called the "cahier des charges" available for viewing. This notebook contains all the general provisions of the sale and the particulars for the sale of the specific property, as well as the history of the property... all the information that would be included in a "promesse de vente" and an "acte de vente" (sales contracts). This document, in fact, essentially becomes the acte de vente, missing only the final selling price. It is available to view three weeks prior to the auction.
It is important to take a look at the book since sales through the auction do not come with the normal seven day reflection period to back out of the deal. It is a good idea to know as much as possible in advance. Once you buy property at auction, you own it.
Financing must be arranged in advance. There are also additional expenses that must be allowed for in the financing. The notaire can be contacted in advance to find out the amount of these estimated expenses. Basically, the buyer pays a fee to cover the cost of preparation of the sale, promotion and organization of the auction, etc. This is generally 1% of the sale price with a minimum of 387.50 euro (this can sometimes be 2% with a 775 euro minimum). There will also be the usual real estate transfer taxes, and of course, remuneration for the notaire. This information will also be in the cahier des charge.
The day of the auction, the respective notaires are there beginning at 2pm to accept checks (certified checks) for the consignation fee. They will also require proof of identity, or corporate papers if purchase is through a company (proof of agency to act for the company). A "modèle de pouvoir," power of attorney, form can be obtained from the notaire if someone other than you will be bidding. You sign two copies of a document authorizing you to bid and are given a badge with a bid number.
If your bid is successful you return to the room where the consignation was paid and sign papers for the sale. You then have 45 days to complete payment for the property. If your bid is not successful, your check will be returned to you after completion of the auction and on returning your numbered badge and authorization to bid.
After the auction there is a 10 day delay during which another party can offer a higher bid, of at least 10%, on the property. If this happens, there will be a second auction organized with the starting bid at the sale price (from the first auction) plus 10%. The only other "clauses suspensive" that applies to auction purchases is that of preemption.
It may seem a bit complicated, but for apartments that are a great opportunity, as this studio is, it can be well worth the time an effort. We have attended several of the auctions and actually gone through the process to bid on a property. We have developed our knowledge of this so that we can offer our readers and clients this additional method of purchasing an apartment in Paris.
If you would be interested in utilizing the notaires' auctions as a way to find your pied-à-terre, contact us to arrange for this service at NotaireAuctions