Notaire holding on to the money

[Matchless]

My step-son sold his house in France last Tuesday 24 July 2007. We live in France and are fairly au fait with most things. However, the notaire told him that his money for the sale would be available at the end of last week (perhaps 27th) or  the beginning of this week (perhaps 31st, today). When I speak to the notaire I am told 'It will happen', possibly the end of this week (3rd August).

When we bought our French house 6 years ago, the seller was paid minutes after the final signing. This also happened to a couple of friends of mine.  Has the system changed? Can anyone tell me if the notaire can legally hold on to the money for all this time? I am worried that this notaire may be taking advantage of him because he is English.

Any answers please!

Frustrated!!!

[Panda]

Hello

It happened when we bought recently, the seller was told to come back to the notaires office and collect the cheque in a weeks time.  I thought it really odd at the time as when I sold we were handed a cheque.  I think it can depend on things like clearing any debts (mortgages, bridging loans etc) but if he has none of these I can't imagine what reason they are giving for holding on to the money unless the funds from the buyer have not cleared.

Panda

[Matchless]

Thank you for your reply. I don't think there are any outstanding debts.

[Will]

Unfortunately the notarial profession in France is not always known for its speed. It is perfectly possible to get a cheque immediately after the signing, but if this is important to you, you should make it known to the notaire well in advance so the amount due to you can be calculated before the signing.

If it is a second home, there may be capital gains tax issues, but again it should be possible to calculate liability in advance.

Don't worry, it's not likely to be discrimation against British. Notaires can be just as tardy when dealing with the French. But the French tend to expect it.

[Matchless]

Thank you everybody. Yes, I know about the notaires being slow but it was just the legality and whether it had changed.

I think we can put this one 'en lit maintenant'.

[jc]

Just remember France "closes" mid July to mid August.

[woolybanana (ex tag)]

By holding the money even for a few days the notaire makes an extra bit I guess too

[Will]

Unfortunately (for the notaire) not. Their accounts are normally at the local tresorie rather than at a bank, so do not pay interest. The same goes for the secure accounts used by agents immobiliers for holding clients' deposits.

[P-D de Rouffignac]

There are a number of quite legitimate reasons why a notaire handling a sale may not be in a position to hand over the money immediately to the seller. These have nothing to do with nonsensical suggestions that notaires are 'slow', biased towards the British, earn interest on amounts deposited with them (as pointed out, they don't) or that 'France closes down in August'. The simple solution is to ask the notaire why there is a delay (we are talking days here not weeks or months) instead of posting near-libellous generalisations that have no foundation in fact and which appear so frequently on this and other forums. This is not helpful to other forum readers perhaps in the process of learning about the French system.

If it is a second home there may be a question of capital gains tax, outstanding mortage or charges, apportionment of taxes between the parties, funds not cleared etc etc. If in doubt, ask!

P-D de Rouffignac

[Poppy]

This is a definite fact. It took four months for us to get our money. The notaire said the Impot would not let him release the money, the Impot said they were investigating our tax liability. We were french tax resident and it was our only house.

[Will]

P de R sounds very fortunate if all the notaires he deals with are fast and efficient. Unfortunately in our part of France there are some who just will not be hurried, though if asked in advance will do what they can to release funds immediately. He is right in that there are legitimate reasons for delays, and although people have been known to wait weeks, it should be possible to sort things out, nearly enough, within days (an adjustment can always be made later, as with buyers). The notaire should keep all parties informed in case of delays, but it is true that many will nor tell you anything unless asked specific questions.

In the case of uncleared funds (which we find happens quite frequently when buyers do not allow enough time for currency brokers to transfer the money, but usually gets sorted out at the last minute after many panic phone calls by the agent) or serious taxation issues, notaires round here will generally delay the signing - completing the transfer before confirmed funds are in place is rare and rather perilous.

It is also true that there are many myths about notaires and agents put about on forums though it is no worse than the many adverse commemnts about, say, English tradesmen in France.

[AnOther]

Our lady Notaire handed a cheque (minus outstanding mortgage) to the seller, who in turn handed the keys to us.

Because we had over paid on the fee she also handed us a cheque which we conveniently used the following day to open our bank account [:)]

All very quick and clean.

[maureen]

PD from rouffignac has it in one. The Notaire cannot pay you out until the cheque has been cleared by the Bank, even though it may be in his account ( non interest making ). If you look at your paying in slips from foreign cheques you will see that there is always a waiver in the delay of payment. The person who sold me my house insisted he had the money for it on the day of the signing of that Acte de Vente. This meant  that I had to transfer my money to the Notaire's account at least a full 7 days before hand, so the cheque had time to clear. This I was quite happy to do, as I was entirely serious about buying the house, and I knew that if the boot was on the other fault, I would have liked the cheque on the day of signing myself.

France is NOT closed mid July - to mid August, there are always people working in Banks and Government offices, albeit fewer staff, so longer processing.

Please get it right all you posters!

[AnOther]

Good point and I wonder how many Acte de Vente's have stalled on the day because a penny pinching buyer has waited until the very last minute to transfer the funds only to find they haven't arrived in time.

I sent mine a full 3 weeks before the due date and as it happened I got a slightly better deal on the rate because of it but I wouldn't have cried if it had gone against me. The savings you might make by clinging on to the money until the last second are massively outweighed by the potential cost's of having to postpone the signing, i.e. rearranged flights and unplanned extra days accommodation for instance.

[Judith]

ErnieY

I couldn't agree more - we sent ours well in advance also.  Don't spoil the ship for a ha'porth of tar, as the saying goes.  If you are too pennypinching you may loose all.

[allanb]

[quote user="Will"]Unfortunately (for the notaire) not. Their accounts are normally at the local tresorie rather than at a bank, so do not pay interest. [/quote]Will, I don't think that's quite true.  There is an institution called the Caisse de Dépôts et Consignations (CDC) which is a publicly owned bank, in which notaries are obliged to deposit any clients' money that they hold for more than three months.  It has its own website, in case anyone wants to follow it up. 

CDC does pay interest, although at a fairly miserly rate.  According to its own statement, in the last reporting year (2006, I think) it contributed €1.2 billion in distributions to the state coffers, as well as paying €0.9 billion in taxes, so it's making good money somewhere - perhaps from the difference between interest paid and interest earned.

I can't find anything about what a notary can do with clients' money held for less than three months.

I think there are two questions here:

(1)  Is the notary's client entitled to the interest paid by CDC on his money?

(2)  Can the notary earn interest on money held for up to three months and not deposited with CDC?

I don't know the answer to either of these.  I do know that this was something of a scandal in the UK many years ago, until the Law Society got it under some kind of control.  I once knew a country solicitor, long since retired and died, who made about half of his total income from interest on clients' money - and he lived comfortably.

[Will]

Allanb, I think you will find that everyday transactions for notaires are carried out via the non-interest paying local tresorie accounts. At least that is what happens in Normandy. As to when and how they decide that money should be transferred to the other accounts you mention, I have no idea. I would imagine that any interest would go to the government, not the clients, nor the notaires (notaires are, effectively, government officials). I don't doubt what you say, but it seems rather strange that notaires themselves would be able to profit from clients' money. Paying interest on current accounts is a pretty recent concept in France - up to just a few years ago it was not permitted. And the secure accounts some agences immobilières use to hold clients' deposits do not pay interest.

Of course some notaires are very good at, how can I put it, maximising their fees. Not doing anything underhand, but using the system to their advantage.

[allanb]

The thing that intrigues me about this is that it's apparently so hard to find the answer.   The power of the internet normally lets you find ten times as much information as you need about practically anything: when it's difficult for no apparent reason, I get sceptical.

I understand what you say about interest on current accounts.  But if you have a constant flow of money in and out of a current account, it's quite possible to put some of it into a semi-permanent deposit account.  The balance may "belong" to individual clients for only a few weeks or days at a time, but the account can still earn continuous interest.

[PaulT]

Certainly, our deposit and balance for a house in 31 was paid into a tresorie account. Plus we were informed that the balance must be in the account prior to signing.

Paul

[Tony F Dordogne]

Alanb, why not visit or email a notaire or enquire through the Notaires de France web site if you really need the answer to this - or if you're in France, nip along to the local tresoirie and ask them?

[allanb]

Both the Caisse de Dépôts website and the Notaires de France website state the rule about clients' funds still held by a notary after 3 months (i.e. they must be placed with the CDC, and any interest earned belongs to the client).

Neither of them says anything about clients' funds during the first 3 months or less - or, at least, I can't find anything.

It's not that I actually need the answer, but somebody asked, and it's an interesting and justified question.