Top 10 Mistakes Not to Make When Buying a Property in France!
Volume XXI, Issue 16
When you make a property purchase in France, it’s pretty easy to make mistakes. And those mistakes can be very costly indeed. Our goal is to ensure that our clients don’t make them, even though some of them we’ve learned the hard way—by making them ourselves! (Yes, I admit to making a mistake or two along the way!)
These “DON’TS” are not necessarily in any special order…
1. Don’t buy a property that has only one toilet in which that one toilet isn’t a “real” toilet, but a “sanibroyeur”—a macerating toilet that needs a pump and an electrical outlet to operate. I could write an entire tome about this subject because the reason it’s number one here is that I made this mistake myself. Not only will I never do it again, but it will NEVER happen to one of our clients if I can help it.
A sanibroyeur is a domestic appliance that allows waste to transform into liquid, then to be sent directly into sanitary drain pipes of a small diameter, the water coming from toilets, washbasins, sinks, showers, washing machines and other household appliances with water discharge, even if they are below the level of the sewerage pipes. (Source, translated)
The shortened version of the story is that it was impossible to discern this particular sanibroyeur from a real toilet in the apartment I purchased in Nice in 2011 (it looks, sounds, and behaves like a real toilet). The seller of the property, a “marchand de biens” (developer), failed to disclose it in the deed, an illegal act. If I had known about the toilet, I certainly would not have purchased the apartment, because if and when it’s not operating, in effect, I do not have an apartment—I have a VERY BIG CLOSET!
The bottom line is that now 12 years later, I still have the sanibroyeur. Fortunately, it functions, as long as I maintain it properly. Immediately following the discovery, I sued the seller. After eight years in litigation, I won the case (including an appeal), but never collected the settlement money because his company had been dissolved by then. Now, my downstairs neighbors are suing ME to install a real toilet, yet won’t give me permission to plumb it using the common parts of the building! My next-door neighbors won’t give me permission to plumb it by going under their bedroom floor (the only other alternative, and the solution both the expert and the plumbers recommend), and so now I am suing them in order to get the toilet plumbed and absolve the other neighbor’s suit against me. I swear this is true.
As a result of this, now every one of our Notaire’s contracts makes special mention that the toilet in the property IS NOT a sanibroyeur, and I will not allow a client to purchase an apartment where the only toilet is one. My own case is sure to take many more years before it is resolved and meanwhile, the properties cannot be sold as long as there are lawsuits in progress…even if I wanted to sell!
2. Don’t transfer a large sum of money into your French bank account in readiness to purchase a property. Sure, it seems like the right thing to do, but it could seriously backfire on you.
One of our clients did exactly this, then the lending bank with which she was applying for a loan saw all that money in a competitive bank and denied her the mortgage! Worse than that, it takes an Act of God to get the money out of the bank and transferred to the Notaire—you will not be able to do this long distance by phone, if that’s what you were thinking you would do from your North American home. They want to see you in person so you can sign in blood. (Joke.)
On top of that, the French bank will surely want to know what you’re doing with so much money in their bank and the US authorities will want it reported on an FBAR form.
The right way to make payment for the property you are purchasing is by transferring it directly from the account held in the name of the purchaser to the Notaire’s escrow account. This is required by French law—the money cannot come from an account owned by someone other than the purchaser on the title. If the money is not already in euro currency, and needs to be converted to euros, then before you do this, go to Number Three of this list…
3. Do not have the money converted from dollars (or other currency) to euros by your commercial bank. Use a qualified currency broker who is in the business of converting and transferring currency at a much lower rate than commercial banks. This will save you tons of money. The commercial banks take about 3% in what’s known as the “spread”—the difference between the amount a dealer is willing to sell a currency for versus how much they will buy it for. The currency brokers take about 1%. That’s a big difference! And don’t be fooled by the bank that tells you they don’t add commissions. They don’t, but they get their money via the spread.
For example, if you are purchasing a property at 500,000€ at today’s rate of exchange of $1.10, your bank will charge you $1.133, but the currency broker will charge you $1.111. That little difference will cost you $11,000 in bank fees ($555,500 vs $566,500)!!! Why give the bank all that money?
The transaction is simple. Your bank wires the money to the broker and in turn, the broker converts the currency and wires it to your Notaire. They act as the middleman, so the money still comes from the purchaser’s account. Everyone is happy. And you’ll be even happier if you use one of our tried and true brokers! See our Currency and Exchange Services page. And be sure to tell them the Adrian Leeds Group referred you!
4. Don’t believe everything the seller’s agent tells you. Remember, they want to sell the property. This doesn’t mean they lie. It just means they might not tell you the entire truth. You have to ask the right questions to get the right answers and they expect you to do your own due diligence (which we do for our clients to eliminate any risk).
I just love it when I hear an agent boast how the renovation of the property will only cost 20,000€ when I know oh too well that it will take 10 times that to get it up to the standard our client would want, for example. Unlike in the US, the seller’s agent only represents the seller, not the buyer. Most often, they work well with our agents to determine the best offering price, etc., because they want to sell the property, so the safest situation for you is to let our agents work magic with them, and protect you along the way.
5. Please don’t buy a château! I know you might dream of owning a big beautiful château or manor house and see yourself as the “châtelain” or “châtelaine” (squire). That’s your ego getting in the way of your good sense.
If you’ve been surfing the net looking for one, have you noticed how many there are for sale and how inexpensive they are? There are plenty of good reasons for that! First off, you can plan on spending at least three times what you paid for it to renovate and maintain it and often, much more than that. Secondly, your entire existence will be devoted to the upkeep of the house. Forget having time for much else. Thirdly, most châteaux are located remotely with a lot of land around them, which also needs upkeep—you may need a full-time gardener on the grounds, adding to the expense. Fourthly, if you’re that remote, then you’ll be getting in your car for everything…even your morning baguette. Fifthly, the French government promises to help château owners by reducing taxes and other benefits, but the truth is that the savings/benefits aren’t worth it.
Instead, opt for a lovely, large country house—it will still be plenty of work, and I know lots of country home owners who sold for these same reasons, but it won’t be quite as onerous as a château. (If you’ve been surfing the net looking for one, have you noticed how many there are for sale and how inexpensive they are? There’s a good reason for that!)
6. Don’t buy a property in the wrong location. What’s the right location? That depends on you, but be practical rather than emotional. If you’ve been dreaming of that country home à la Peter Mayle, think again. There’s a lot of France to love…but you have to determine what location checks off all or most of the boxes.
I have a special list of what I believe makes for a truly happy life in France. Here they are:
• A thriving American community—ease of making friends
• Fast and easy access to transportation—an international airport, TGV hub, local transport
• Climate—where are you most comfortable?
• Urban vs rural environment—apartment living vs village house or house in the countryside? (Necessity or not of having a car at your disposal, French Driving License)
• Cost of living—mainly cost of housing, for rent or purchase
• Access to good healthcare and hospitals
• Language level—do you need or want to speak English?
• Business opportunities or cultural activities? Which is more important or are both?
My top towns or regions for North American expats, who aren’t fluent in French and wish to travel in Europe and the rest of the world are: 1) Paris, 2) Nice, 3) Provence, 4) Lille, 5) Strasbourg.
7. Don’t assume you can readily visit a lot of properties in a short amount of time, or on nights, weekends, or holidays. Very often, our clients are traveling when it’s convenient for them, which could be during the holidays or on weekends. But, guess what? The agents don’t work nights and weekends; especially not on holidays.
There are no “lockboxes” that enable access by anyone who has the code or key. Every rendez-vous must be set up in advance with the agent and/or owner. It takes time. July and August are the toughest months to visit properties, for rent or for purchase, since everyone is on vacation—the sellers, the agents, and all of the support staff and services.
8. Don’t underestimate the costs and timing of renovation. Sure, maybe only one bathroom needs an update and maybe you think you can live in it while you’re having the work done. Think again. Bathrooms and kitchens cost the most amount of money. The plumbing work is essential and takes time and money to be done correctly. When you touch one thing, everything else can be affected…the plumbing, the electrical system, the flooring, etc. Expect it to always take more time and more money than anyone estimated to begin with. In the end, the changes you make will be well worth it…so just keep that in mind.
I love properties that haven’t been touched in years. They can be like blank slates in which just about anything is possible. But, that costs money, so just be prepared!
9. Don’t opt to use the seller’s Notaire. You want the Notaire to represent your interests, so hire your own Notaire. (We provide these trusted resources to our clients.) If the seller wants to use your Notaire…fine! They share commissions, so it doesn’t cost you a penny extra.
And don’t expect the Notaire to advise you on personal choices, especially those regarding inheritance taxes and the structure of the purchase. It’s simply not their role. (See the Notaire’s site for more info on the role of the Notaire.)
10. If you have hired property consultants like us, then don’t hire an attorney to do the work we do on your behalf. This is “belt and suspenders” thinking that just complicates everything and costs you too much money. You’ll end up confused, as will the professionals you’ve hired.
If you can’t trust your property consultants, then don’t hire them. But if you can, then they will do the best job for you…if you just let them! However, if you need professional advice on how to structure the purchase to minimize taxes, etc., that’s another story, and that’s a different kind of professional—that’s a tax expert!
We’re here to protect you from making the mistakes…so learn more by visiting our website.
The Adrian Leeds Group®
P.S. The Federation of Alliances Françaises USA will be hosting another webinar with us sometime in June (the date TBD). This may be the topic—how to avoid the most common mistakes when purchasing a property in France. So, stay tuned for an announcement coming soon!