Buying Property
Buying a second home in France is as popular as ever. British buyers have always tended to favour the regions of the south of the country, which offers much better weather. With the advent of cheaper flights even more regions are becoming easily accessible, including the lot and the Dordogne. The ski regions of the Alps are also increasingly sought after – as well as the winter snows they also offer good summer weather that is attractive for walking and climbing. Now even the north, which offers wonderful coastline and easy accessibility to England, has considerable attraction.Prospective buyers will experience a quite different system of conveyancing in France then that with which they may have some across in England. A little research will also tell them that they will need to give careful thought to the rules of French succession law and inheritance tax, prior to entering into the purchase contract.
The purchase transaction is different in several ways. For example:
One lawyer (the “notaire”) can act for both seller and buyer. He is an independent party whose main objective is to ensure that the transaction is completed correctly and that all duties and taxes are paid. But he is not obliged to advise the buyer on the most suitable purchase structure.
Searches are not necessarily carried out prior to signature of the first contract. Indeed the contract is often drawn up by the selling agents, who may bbe very persuasive about having the buyers signup straight away. Searches are carried out after signature of the contract, which will be conditional upon satisfactory results. It is important to ensure that these conditions do cover all potential issues and also that there are no hidden exclusions in the “small print”.
The period after exchange is typically much longer in France and will normally be at least two months.
Under French succession law, there are strict rights of inheritance that can take effect when a French property owner dies. The children of a deceased person will usually take precedence in heritance. In the absence of children the deceased’s parents mat take an interest.
Inheritance tax is calculated differently in France where the deceased’s estate is divided between the beneficiaries with tax being payable by each beneficiary personally, subject to a personal allowance. Different rates of allowance exist, depending on the beneficiary’s relationship with the deceased.
Serious consideration needs to be given to the implications of succession law and inheritance tax. The possible solutions include preparation of French and English wills, insertion of specific survivorship clauses in the property purchase deed, changing matrimonial regimes, completion of co – habitation agreements and forming a company to buy the property.
The International Property Law Centre LLP
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(Telephone from abroad: +44 (0)1482 224 900. Fax from abroad: +44 (0)1482 240 192.)
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