In both France and the United States, buying real estate follows a standard process, but the roles of the parties involved, the legal procedures, and the process vary significantly.
ROLES OF PROFESSIONALS
Real Estate Agent
The profession is regulated by the Hoguet Law. Passed on January 2, 1970, and implemented on July 20, 1972, Law No. 70-9, known as the“Loi Hoguet”, governs the activities of real estate professionals who, according to these regulations, must hold a “Carte professionnelle” (professional license) delivered by the government every 3 years.
However, there is an exception: Article 2 of the Hoguet Law, effective since 2009, also allows lawyers to practice in this field (the latter do not need to hold this “carte professionnelle” but must comply with the regulations of their Bar association re this matter).
Unlike in the United States, where there are two types of agents—the seller’s agent (listing agent) and the buyer’s agent (who protects the buyer’s interests and drafts the offer contract)—France generally has only one intermediary, who in most cases represents the seller (and there is no culture of commission sharing between real estate agents).
The agent’s commission is typically between 4 and 7% of the sale price and is paid by the seller (since the agent usually represents the seller). The listed sale price of the property includes the agency commission.
Because the real estate agent works on behalf of the seller by marketing the property, the buyer is not truly represented. Therefore, it is important, especially for foreign buyers, to be assisted, both in their search and throughout the transaction, by a lawyer specializing in real estate law (since lawyers can also act as real estate agents).
Notaire
The notary does not exist in the United States (their role is shared by the closing agent and the title company).
In France, the notaire is a public officer who is mandatory for any property transaction.
They play a key legal role and are responsible for the legal security of the transaction. The notaire drafts the deed of sale and registers it with the Land Registry Office. They are also responsible for collecting transaction taxes (droits de mutation) on behalf of the governement.
Lawyer
Even though a notaire is a legal professional and even though a real estate transaction may involve two notaires (one representing the seller and the other the buyer), the main role of the notaires is not to defend the interests of any party, but to ensure the security of the transaction.
It is therefore strongly recommended, especially for foreign buyers, to use the services of an English-speaking French lawyer who can advise and assist them throughout the property purchase process.
PURCHASE PROCESS
Property Search
Unlike the United States, which has a centralized system for property listings (MLS or Multiple Listing Service), France does not have a central database for listings.
In France, property ads are published on agents’ websites or specialized platforms (such as SeLoger or Leboncoin). As such, sellers often appoint several real estate agents (with different commissions), and the same property can appear in various places (sometimes with differing prices).
Purchase Offer and Preliminary Sale Agreement (Compromis de Vente)
Unlike in the United States, the purchase offer is not very detailed in France in terms of contingency clauses.
However, once the offer is accepted, a pre-contract (there are several types, but the most common is the “Compromis de Vente”) is drafted, and this document seals the agreement and sets the terms of the transaction.
In practice, this contract is prepared by the notaire, but no special formality is required by law (it can therefore be drafted by anyone, such as the real estate agent, which often happens, or even by the parties themselves).
Caution: This contract is very important because, once signed, the sale between the parties is finalized. The parties are bound by the terms of this pre-contract, and the notarized deed of sale will simply reproduce these terms without any changes.
Therefore, it is crucial, especially for the buyer, not to sign this contract lightly and to seek advice from a professional (such as a lawyer) before signing.
In practice, to protect the buyer’s interests, it is wise to include several contingency clauses to allow them to withdraw from the sale without penalty.
Notarized Deed of Sale
Once the pre-contract is signed, the notaire is responsible for drafting the notarized deed of sale, after carrying out all the necessary legal checks regarding the title of ownership (whereas in the USA, title insurance protects the buyer against hidden defects in the property title).
Likewise, it is the notaire who ensures that the buyer transfers the funds to their escrow account a few days before the signing of the notarized deed of sale (while in the USA, the closing agent manages the escrow account for payment and title transfer).
The notarized deed of sale serves as the title of ownership, and a copy is registered with the land registry office.
Costs and Timelines
Transaction fees (commonly called “frais de notaires” (notary fees but include in fact transaction taxes) are very significant because they represent between 7 to 9% of the sale price (while closing costs are much lower in the USA, typically around 1 to 3%).
These notary fees are paid by the buyer.
As for the timeline: it is very long in France, since it takes between 3 to 6 months (especially if the buyer wants to take out a mortgage) between signing the preliminary contract and the notarized deed of sale. In contrast, the average timeline in the United States is about 30 to 45 days (after the offer is accepted).
Other Differences
- Legislation: The French legal system is centralized and the purchase process is standardized. In the United States, legislation varies across the 50 states.
- Property taxes: Unlike the United States, where property taxes are very high (1 to 3% of the sale price per year), property taxes in France represent only about 0.3 to 0.08% of the sale price.
- HOA and other cost: Homeowners’ association fees, insurance, and other costs (utility bills) are very low in France—for example, HOA fees are about 100 to 200 euros per month, 40 euros per month for an internet package (which include TV channels) for an entire house, etc.
These costs are much higher in USA.
So even though notary fees are very high, they are largely balanced once the buyer owns the property.