Family Law: News and Notes from the Chambre de Notaires
Volume XIX, Issue 40
A REPORT FROM THE GREATER PARIS SUMMIT OF THE CHAMBRE DE NOTAIRES DE PARIS
On September 21st all of the economic and political decision-makers of the Ile de France region met at the “Greater Paris Summit” co-organized by the Notaires du Grand Paris.
During this day rich in debate and controversy, a consensus was reached: the housing crisis in the Ile de France region is persisting and growing.
The people of Ile-de-France are the first victims. Each of us lives it on a daily basis. Who does not have in his family circle or friends relatives confronted with poor housing and the difficulty of finding housing?
It is this observation that has led the Notaires of Greater Paris to sit down and invent solutions to facilitate access to quality housing.
As practitioners of real estate transactions, Notaires have always had the mission of adapting existing rules to their clients’ needs. As partners of all real estate players (developers, architects, institutional funds, etc.), they understand all the difficulties that constrain the supply of and demand for housing and, even more so, the solutions available to professionals and individuals alike.
Drawing on their diverse experience in the real estate markets of Paris, Hauts-de-Seine, Seine-et-Marne, Essonne and Yvelines, the 3,000 Notaires du Grand Paris have put forward 30 proposals in this document, based on five main lines of action.
Some of these proposals have already been made by other housing stakeholders, while others are new. All are driven by a strong and shared conviction.
To be effective, we must “do everything possible” and act on all fronts: new construction, of course, but also the mobilization of existing housing stock, access to property and the digitization of the real estate market.
We hope that this contribution will be as widely shared as possible, that it will spark debate and that it will move the lines. Greater Paris needs it!
You may find this interesting reading (in French). Download the PDF here.
HOW DOES THE NOTAIRE GET PAID?
The term “Notaire’s fees” is often used to refer to the sums paid to the Notaire for the purchase of a property or the settlement of an estate, for example. In reality, these fees correspond mainly to taxes collected by the Notaire on behalf of the Treasury or to sums (“disbursements”) owed to other professionals (e.g. surveyor, trustee, etc.) and constitute only part of his remuneration.
The remuneration of notaries is provided by emoluments or fees. The emoluments are provided by the “tariff of notaries.” They remunerate the preparation and drafting of the main acts established by notaries such as real estate sales, loans, donations, marriage contracts, powers of attorney, declarations of inheritance or partitions. The “notaries’ tariff” is set by the Commercial Code; it is the result of a joint order of the Ministers of Justice and the Economy and is in principle revised at least every five years, after the opinion of the Competition Authority.
The fees may be calculated proportionally, in increments, according to the prices expressed in the deed or the values of the goods concerned (for example, the price of the property sold, the value of what is given or the amount of the gross assets of an estate) or may be subject to a fixed amount (for example, for a deed of inheritance notarization, a release of mortgage or a marriage contract).
The fee is unique and applicable regardless of the Notaire chosen and the client’s situation. It cannot be discussed or negotiated on a case-by-case basis.
However, the law authorizes notaries to grant “discounts” on the proportional fees and within the limits that it sets (see on this point articles R.444-10 and A.444-174 of the Commercial Code). However, it should be noted that a Notaire is not obliged to grant a discount and when he does so, he must apply it in the same way to all his clients for a given type of act (for example for sales, for donations or for declarations of succession). The discounts that a Notaire decides to apply must be posted in his office.
The notaries’ tariff is the subject of articles L.444-1 et seq., R.444-1 et seq. and A.444-53 et seq. of the French Commercial Code, which is available online.
It is also available on the website of the Paris Chamber of Notaries by clicking on the following link: THE NOTARIES’ TARIFF/2021.
It is also available in the Notaire offices of the Compagnie des Notaires de Paris. The website of the Paris Chamber of Notaries also provides the public with a simulator for calculating the fees and emoluments due for a real estate sale deed (in addition to a simulator for inheritance tax and capital gains tax).
The fees remunerate all the services that are not provided for by the tariff. These are mainly legal consultations and advice and a number of acts including, for example, residential or commercial leases, company deeds, commercial contracts, compromises and promises of sale, real estate negotiation or management.
Unlike emoluments, fees are fixed by the Notaire in agreement with the client. This agreement is materialized by a fee agreement. The amount of these fees is fixed in consideration of the time spent, the complexity of the case and the importance of the interests at stake.
Please note: if a client interrupts the mission entrusted to the Notaire before its end, the Notaire is entitled to remuneration, in the form of fees, for the work he has already accomplished, even if the mission would normally have given rise to emoluments.
It is always possible to have one’s own Notaire intervene in addition to the one who has been appointed to draw up an act.
If this act is “tariffed,” and gives rise to a proportional emolument, the notaries will share this emolument, without it costing either party more. This will be the case, for example, for a real estate sale or a partition. However, some acts do not give rise to a sharing of emoluments between the notaries (for example, the real estate attestation after a death or the declaration of succession).
The sharing of emoluments does not apply either when the act is remunerated by fixed emoluments (for example for a PACS or a marriage contract).
In all cases where the sharing of fees does not apply, the client can always be assisted by his own Notaire, but he alone will have to bear the cost of the fees that the Notaire will charge him, in addition to the fees due to the other Notaire.
The Notaire has the obligation, as soon as the file is opened, to ask the client for a “provision” intended to cover the costs he will have to incur to carry out his mission (for example, costs of land registration, civil status, recourse to a surveyor …); he can only start his mission after payment of this provision. This can then be readjusted according to the evolution of the file or the cost of the work to be carried out.
In addition, the Notaire must be provisioned with the amount of the emoluments due under the tariff and the rights which will have to be paid to the State before the signature of the acts which he must establish. Otherwise he will not be able to establish these acts. He will have informed the client as soon as possible of the amount of the sums which will have to be paid, in the form of a provisional account, so that this one can take its provisions.
The fees are paid according to the terms agreed between the Notaire and the client and may also be subject to requests for advance payment.
At the end of the case, the Notaire establishes a final account and, depending on the case, refunds to the client the overpayment of the retainer or asks him to settle a balance of the account.
GOOD TO KNOW: Payments made or received by a Notaire on behalf of the parties to a deed received in the authentic form and giving rise to land publicity (for example, a real estate sale or a division including a building) must be made by bank transfer for any payment exceeding €3,000. This threshold is assessed with regard to the total amount of the service, regardless of the number of payments.
INHERITANCE AND ESTATE TAXES—FORCED HEIRSHIP IN FRANCE
The settlement of an estate takes place in several stages, from the drafting of the deed of notoriety to the eventual division of the property. Depending on the situation, the time required to settle an estate varies.
First of all, the Notaire has to find out if the deceased had written a will that he entrusted to his family or to a Notaire. The Notaire must therefore consult the central file of last wills and testaments. If a will is found, the Notaire must draw up a report on the opening and description of the will when it is presented.
Afterwards, the Notaire must draw up an act of notoriety listing the heirs and legatees of the deceased, as well as their respective rights. Then, he will have to draw up a complete inventory of the deceased’s assets. This inventory will allow him to evaluate the assets and liabilities of the estate and to know if it is profitable or not. The assets will be estimated at their market value, that is, at the market price.
It is in consideration of the inventory of assets that the heirs will be able to exercise their succession option, that is, to accept the benefit of the succession according to their rights. The Notaire will then certify the transfer of ownership to the heirs or legatees with a certificate of ownership for securities and a certificate of real estate ownership for buildings.
For the fiscal part of the succession, the heirs will very often mandate the Notaire to draw up the declaration of succession, which may entail the payment of inheritance tax. Finally, the heirs may decide to share the goods or to remain in joint ownership.
Attention: Certain situations lead to an exemption from the declaration or to particular formalities, in particular in the presence of a minor child or a company.
Once the inventory of the deceased’s assets has been made, the Notaire determines the inheritance share of each heir according to the order of the heirs, a will and any donations made to the heirs before the death.
Please note: Certain donations made less than 15 years ago are added to the share of the estate of each heir.
The order of heirs is as follows:
1. Children and their descendants,
2. Parents, brothers and sisters and their descendants,
3. Ascendants other than parents,
4. Collateral heirs (uncles, aunts, first cousins)
If there is a surviving spouse, the estate is divided between the surviving spouse and the children. If there are no children, the spouse shares the estate with the parents of the deceased.
GOOD TO KNOW: In the event of a will, its execution cannot result in the share of the reserved heirs being affected. A reserved heir is an heir who cannot be excluded from the succession. A share of the deceased’s estate is reserved for them. Generally, the heirs with right of retention are the children of the deceased. If there are no children, the surviving spouse is a reserved heir.
Once the shares have been defined for each of the heirs or legatees, each of them will benefit from an allowance on their share of the inheritance before inheritance tax according to their relationship to the deceased and according to whether or not all or part of this allowance was previously applied to donations.
Relationship amount of the allowance in euros:
In direct line (child or parent) – €100,000
Between brothers and sisters – €15,392
Between nephews and nieces – €7,967
Cumulative deduction for one person – €159,325
Other – €1,594
Note: Since 2007, the surviving spouse is exempt from paying inheritance tax. This is also the case for the civil union partner. However, in order to inherit, the partner must be a legatee. A will is therefore necessary. Inheritance tax is calculated according to a progressive scale depending on the relationship with the deceased.
The Notaire accompanies his clients during the organization of their inheritance (donation, will, etc.), but also the heirs once it is opened. His legal knowledge and his functions as a magistrate of amicable settlement give him the power to conciliate the heirs.
Note: Since 2015, France complies with an EU law known as Brussels IV. The law allows property owners in France to elect the laws prevailing in their country of nationality. However, recently passed is a law that prevents people from countries where there is no forced heirship from disinheriting their children. This applies to French property, and is limited to cases where either the deceased or one of his children is a national of an EU country, or has his residence in such a country. This will come into effect on November 1st, 2021, but there have been challenges to the legality of certain aspects of this new ruling, and some lawyers are of the opinion that it could be challenged as contrary to the provisions of the Brussels IV law. The law was aimed at nationals of countries with Sharia law, where female children routinely inherit less than their brothers, but will affect nationals of all countries, such as England and the USA where there is no forced heirship. In addition, even if you can use your U.S. will, inheritance tax on any French property will still be paid at French rates.
The Adrian Leeds Group®
Adrian with her mother, Gert (deceased) and daughter, Erica
P.S. If you are considering a property purchase in France, don’t do it lightly. Let us help you make the smartest decisions to ensure you make the best investment you can, including the ramifications of French law on inheritance. Contact us to learn more.