Invest in a French Property and a French Way of Life, Too

I received a polite email today from a reader of our Nouvellettres® that she subscribed “in hopes of receiving insight into real estate opportunities and knowledge of the market in Paris,” but “did not subscribe to be lectured on the joys of socialism and how horrible our last president was.”

Those were not my words at all. If she would reread what I wrote in yesterday’s Nouvellettre®, and not what’s she’s making up in her own defensive thinking, she would have understood that the message I tried to impress on you readers has to do with what it’s like to live in France as compared to the U.S. That’s the investment you make when you purchase a property in France—you invest not just in a property, but in a French way of life, too. That French way of life includes a very different kind of political system, legal system and therefore a different way of looking at life…and law.

You can’t separate the two, even if you think it’s just an apartment or a house in which you will spend a few weeks a year enjoying, in a country in which you love being. And why do you have such an affiliation with France? Let’s face it, France is a beautiful country that appreciates fully satisfying all the senses: touch, sight, hearing, smell and taste. France isn’t about getting rich, but about enriching life by doing everything in its power to provide as much as possible for as many of its residents (not just citizens) as possible. That comes from it being the Democratic Socialist nation that it is, to “provide a range of essential services to the public for free or at a significant discount, such as health care and education.” (Source)

Duplex apartment, design by Martine di Mattéo

I have been watching the U.S. Presidential Inauguration with awe as the nation I call home has turned on a dime with a new administration who sees life very differently than the last one. It seems really hopeful that we Americans will once again be able to work together, not divided, to accomplish great things…but then I get an email like this one and I become less hopeful. What I see is someone who’s not only going to have a hard time working together with all Americans, but someone who is going to have a hard time transitioning to life in France, too.

(Image Provided by WNYT.com)

One of the crucial aspects of what we do has less to do with property in France and more to do with helping our clients make that transition. When purchasing property in France, every aspect of the process is different, as are the systems, the laws, the perspective. The roles each of the players play are different. A real estate agent in France doesn’t have the same responsibilities as an agent in the U.S. A “Notaire” is a player that doesn’t exist in the U.S., but has the legal responsibility of processing the transaction and collecting the taxes. The banks that lend money are dealing with a different set of rules and take fewer risks, making the acquisition of a loan a more difficult and cumbersome process. More consumer protection is built in that lengthens the transaction process to months, rather than days or weeks. The closing costs are higher, but the cost of ownership is lower. Inheritance laws and tax obligations are decidedly different. I could go on and on and on. Everything is different. Everything.

And it’s all because France is a Democratic Socialist nation. So, if you don’t politically agree with this idea, then best you take France off your list. You may never understand it and may find it more frustrating than enjoyable. That dream you have to live in France could be more your nightmare than the dream you had hoped for if you can’t adapt to these ideas from the beginning. And this is really what we do. We help you understand it and make that transition as smooth as possible. If you’re open-minded, then you’ll pass the test with flying colors.

If you “did not subscribe to be lectured on the joys of socialism” then don’t entertain a property in France, either. You will be disappointed at every turn. Shocking, but you’ll bite the bullet and pay about 7.5 percent of the price of the property to the state for taxes and fees in closing costs, but your annual taxes will be about one-tenth of what they are in the U.S. It’s also surprising that the seller has no responsibility to sell a perfect product—you buy a property “as is,” but you can do whatever you want to the property without special permits (except for altering structural walls or changing the common parts of the building). The seller is morally obligated to accept asking price, so bidding wars don’t exist. Property prices remain fair and not falsely inflated. The seller is also liable for providing diagnostics and all the supporting documentation, so there’s no need for an inspection. The transaction takes months, but you have no title insurance to purchase because the Notaire is culpable for producing a clean title with every i dotted and every t crossed. Plus, imagine when you decide to stay longer in your property and acquire a long stay visa in France, 90 days later you’re entitled to universal health care—up to 70 percent coverage free of charge without ever having paid into the system. Then, when you’re tax resident in France, you won’t pay a penny on your retirement income or your dividends and interest from your U.S. investments.

Wow! Aren’t these all such democratically socialist ideas and aren’t they all so terrible!? (You know, I jest, right?)

I explained the following to someone yesterday who’s been living in France more years than me, but hadn’t fully grasped the difference between English Law (U.S.) and Napoleonic Code (France), so I reiterate it here for your benefit. I learned this after living here 20 years, but it opened my eyes to every situation that was puzzling to my American default mode. Take this to heart, as I believe every cultural shock you encounter in France has this concept as its foundation:

NAPOLEONIC CODE: “Everything which is not allowed is forbidden.”

ENGLISH LAW: “Everything which is not forbidden is allowed.”

The legal system in Anglo Saxon countries is based on what is forbidden while the legal system in France is based on what’s allowed. In America, you can’t do this, and you can’t do that, and everything else is allowed. In France, you are supposed to do this and you are supposed to do that and everything else is not allowed. This means that English law engenders open-minded, out-of-the-box thinking, while Napoleonic code is about following the rules and thinking within the box.

If you can think the way the French think, you can avoid making some of the biggest mistakes. We can help you through that, but it starts with being open-minded, just like our legal system allows us to be.

A bientôt