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10% deposit


Angie
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Was just wondering. When you own a property in France and then want to sell and buy another (in France), how do you actually "find" the deposit without getting the money for your property first (as you would in the UK)?  Do the French generally have 20, 30 or 40,000 euros available or is it usual to borrow the money as a type of bridging loan.  Our French neighbours are doing just that at the moment but don't have any spare cash.

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[quote user="Mary W"]

Was just wondering. When you own a property in France and then want to sell and buy another (in France), how do you actually "find" the deposit without getting the money for your property first (as you would in the UK)?  Do the French generally have 20, 30 or 40,000 euros available or is it usual to borrow the money as a type of bridging loan.  Our French neighbours are doing just that at the moment but don't have any spare cash.

[/quote]

 

 "As you would in the UK" How do you work that out?  [8-)]

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Well in my experience of buying property in the UK I've never had to hand over 10% deposit for the new house before I've sold the home I'm living in. All monies are handled by the solicitor and settled on the completion date.  That's how I work that out.
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Mary W, many years ago, I did have to pay a 10% deposit but, in recent years (say, the last 20 years), there didn't seem to be any deposit required and you just get the completion of puchase where you pay the whole sum.

What really frustrated me in the UK the last time we sold was that people could just come along, agree to buy your house, you instruct your solicitors and answer a barrage of questions, you put everything in place, research removal companies (not book a date, in case anyone wants to pick me up on that), and then, they could just pull out without any penalty.

That, to me, was plain wrong.  If it was a serious problem like someone falling ill, losing their job, and similar, I would be the first to offer sympathy.  BUT, as happened to us four times, someone just said they'd changed their minds and you have lost weeks of sale time, effort, costs, etc. it HAS to be a very bad way of buying and selling houses.

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Oh, totally agree.  The system in France seems a lot fairer and as you say, wastes less time and obvious emotional upset for both the buyer and seller.  We've also lost a few houses in the UK whereby we've had surveys done, spent money on solicitors and then the seller has accepted a higher offer!    When we bought our property in France 8years ago we did have to hand over 10%, so maybe, as you say, things have changed since then.
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Absolutely agree with you Sweet.

The problem, I think, is the "Exchange of contract" - this seems to me to be a ploy by conveyancers to complicate the purchase process and justify charging more. An offer to buy, and a consequent acceptance, should be binding.

There is nothing to stop anyone from doing their own conveyancing. In reality, it is not difficult and there are plenty of guides/handbooks to help you. I have done it twice - you can download the necessary forms from the internet - and if the property you are buying is registered, just about all the decisions you need to take have already been taken. The Land Registry will require little more than change in details of ownership.

However, if you are requiring a mortgage, the lender can complicate matters ....

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[quote user="Mary W"]Well in my experience of buying property in the UK I've never had to hand over 10% deposit for the new house before I've sold the home I'm living in. All monies are handled by the solicitor and settled on the completion date.  That's how I work that out.[/quote]

Well you wouldn't have got away with that if buying from me. I've bought and sold in the UK and have always paid a deposit; a percentage of the agreed price, and when selling, my solicitor has always insisted on; and received a deposit of an agreed amount from the buyer. When we bought in France we sent a deposit to the Notaire. Nothing unusual, different countries same system. A deposit will always be paid on exchange of contracts,  I can't imagine a solicitor allowing you to exchange without a deposit, remember houses are sold on completion not on exchange. Thats why I asked how do you work that out?

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[quote user="NickP"] A deposit will always be paid on exchange of contracts,  I can't imagine a solicitor allowing you to exchange without a deposit, remember houses are sold on completion not on exchange. [/quote]

The difference is that in England exchange often comes only a few weeks before completion, and until then, nothing is secure.  And so, in England, you have time to sort out the money both for deposit and completion.  In France, the need for a deposit all happens very quickly, often with not much time to arrange money.

Having said that, surely most people don't begin the buying process in either country until they have at least made a start on how they are going to afford the purchase?

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In France (and for that matter, the UK), it's best to have a buyer signed up before committing to a new house or you may end up with a bridging loan. It's hard to co-ordinate sale and purchase and it's not uncommon for French people to stay with parents etc in the gap between selling and buying. The 10% deposit isn't obligatory and especially if it's the same notaire dealing with sale and purchase, it may not be requested.
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[quote user="Judith"][quote user="NickP"] A deposit will always be paid on exchange of contracts,  I can't imagine a solicitor allowing you to exchange without a deposit, remember houses are sold on completion not on exchange. [/quote]

The difference is that in England exchange often comes only a few weeks before completion, and until then, nothing is secure.  And so, in England, you have time to sort out the money both for deposit and completion.  In France, the need for a deposit all happens very quickly, often with not much time to arrange money.

Having said that, surely most people don't begin the buying process in either country until they have at least made a start on how they are going to afford the purchase?
[/quote]

Judith, I don't think the exchange before completion "a few weeks" in advance applies anymore.  They seem to be foregoing the exchange of contract step and going straight for completion.

Our English neighbours bought in England only last month and they paid the whole amount straight-off and were in their house within a couple of weeks as all the paperwork was done before they left France and they rented a place for a week in England before moving into their new property.

That was the point I was making though I maybe didn't get it across very well.  That people nowadays (in England and Wales) do not seem to have to pay a deposit and, even if they do, it's not a non-returnable deposit.  If they just pulled out, they got all their money back.

As for your other point about people making sure beforehand if they are going to afford the purchase, you'd be surprised how many people there are out there who live in cloud cuckoo land and thinking that wishing for something will somehow (by fairy dust perhaps) make it come true.

Have you never met anyone who tried to inflate their income, etc to get a mortgage or told you they were cash buyers only later to say that, no, they needed to sell their own house first![:'(]

Peter Mandelson, the former Labour whatever he was, was found out, wasn't he, for "mis-filling" his mortgage application and had to resign?

And the system in which people could "self-certify" whereby they could simply take a stab at their own income figures was found to be one of the causes of bad debt and deemed to be irresponsible lending by banks.

You might sense that I feel quite strongly about all of this and you would be right!  As said previously, we were let down four times when selling and once in France, buying.  We'd just got to the compromis stage and waiting for the papers from the notaire when an email came out of the blue from the seller saying he'd changed his mind.

So, it's not that there aren't any glitches because there is certainly "many a slip between cup and lip" but people deliberately giving their word in bad faith should be made to compensate the injured party.

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"I don't think the exchange before completion "a few weeks" in advance applies anymore. They seem to be foregoing the exchange of contract step and going straight for completion.

Our English neighbours bought in England only last month and they paid the whole amount straight-off and were in their house within a couple of weeks as all the paperwork was done before they left France"

Yes but they were cash buyers so no problem, most people in the real world go for exchange, deposit and then completion. Remember we're talking here about buying houses for a lot of money; not a bag of sweets or a run down hovel in France for 30.000 Euros, anybody in the UK today who wants to buy a home has to have their financial requirements in place and that takes planning. As I said previously I have bought and sold several houses in the UK. Therefore for me at least It 'aint difficult to spot the Sunday time wasters and tyre kickers. So  my legal advisor and I make 'em pay a deposit or they can carry on looking.

 

 

www.adviceguide.org.uk/england/family_parent/housing/buying_a_home.htm

Exchange of contracts

The final contract between you and the seller is prepared when:-

the solicitor (or licensed conveyancer) and you are satisfied with the final outcome of all the enquiries

any surveyor’s report has been received and any necessary action taken

the formal mortgage offer has been received

arrangements about the payment of the 10% deposit have been made

the date of completion has been agreed.

You and the seller each have a copy of the final contract which you must sign. These signed contracts are then exchanged. At exchange of contracts both you and the seller are legally bound by the contract and the sale of the house has to go ahead. If you drop out, you are likely to lose your deposit.

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"remember houses are sold on completion not on exchange" - that's exactly what I said!

Well I have never, ever paid or received a deposit in the UK and have been buying and selling houses since 1974 up until recently. I have used different solicitors and again, no-one has ever asked.

Blimey, ever wished you'd never asked the question!

 

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Well, Mary W, I think you must be unique as I have never met anyone who has not paid a deposit.

How this usually works is that the person at the start of the chain pays a deposit to their solicitor and this deposit is passed up the chain.

As for people exchanging, then pulling out and getting their deposit back I have never heard of - I think legally someone who has exchanged can be forced by the courts to complete the purchase (the signing of the exchange documents is a legally binding process). In practice then they forfeit their 10% deposit (or other percentage as agreed between the parties).

And yes, solicitors who are not on a fixed fee do seem to like dragging things out so that they can add another £50 to send you a letter confirming the telephone conversation that you had about something trivial.

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  • 1 month later...
I will have exactly this problem, and the only way I can see to do it, since my income is insufficient for a mortgage, is to rent while finalising the short list of properties. Then you have the money in the bank from the old one, ready to put down on the next.

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[quote user="vanessa"]I will have exactly this problem, and the only way I can see to do it is to rent while finalising the short list of properties. Then you have the money in the bank from the old one, ready to put down on the next. [/quote]

Which is what we did and it worked a treat. Sold in the UK, rented here and then bought here paying a deposit of about 3.25%.

In fact I think it was not technically a deposit per se as it was the exact amount of the estate agents fees, though it was paid to the Notaire.

Balance payable on the day of the Acte was the exact bare cost of the house + the legal fees.

Sue

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