You can secure an off plan property (new build) that you have chosen with our real estate agency by signing a preliminary contract called "reservation contract" or in french "contrat de reservation". This contract will include details such as the floor area, number of rooms and outbuildings, property price along with an approximate date to sign the deed of sale, and in the case of a 'leaseback' programme, the lease contract.
The first payment towards a leaseback purchase is the 5 % deposit ('dépôt de garantie') the investor makes in order to secure a reservation on the property. These funds are deposited in the notaire's bank account at the time of reservation and are included in the final closing costs.
The role of the Notaire
The notaire is a qualified public official whose role is to ensure that deed contracts are drawn up properly and taxes collected on behalf of the French fiscal authorities. The notaire represents the law, not the client, and is therefore impartial in the transaction process.
Ownership of the Property
The investor becomes the owner of the property once the 'deed of sale' has been signed in the presence of a notaire. At this stage the seller transfers ownership of the property, irrespective of the stage of construction of the property.
On completion of the 'deed of sale' the buyer will pay into the notaire's bank account a down payment of circa 30 % of the purchase price including notaire fees that amount to approximately 6-7 % of the purchase price. The buyer officially becomes the owner of the property under construction when both the down payment and a secured mortgage have been put in place.
Leaseback Payment Schedule
French Property Invest. Consultants assist clients in securing mortgages for 'Leaseback Schemes' in France. When purchasing properties 'off-plan' investors are requested to make payment in stages as the construction progresses. The bank will hold mortgage funds until the developer calls for the next stage payments; interest will only be charged on funds released by the bank.
The payment schedule is normally as follows:
- Reservation – 5% due
- Completion of foundation – 30% due
- Completion of walls – 30% due
- Waterproofing and air sealing – 20%
- Property ready for use – 15% due
A buyer can request that the bank pay the developer directly as invoices are received. In most cases French banks will allow deferment of the repayment of a mortgage until construction is complete and rental income starts.
Delivery of the keys
The property keys are delivered once the 'deed of sale' had been signed and the construction of the property completed by the developers. At this stage investors are advised to take out building and contents insurance on the property.