Insurance guarantee when selling a "Maison Secondaire" in France by a non resident.

[Greenok]

We purchased a cottage in France in 2001.  We are in the process of selling it and buying another house in France.  I have been told by the Notaire that, as we have made a capital gain on the sale, there is a capital gains tax of about 20,000 Euros to pay.  We have offset about 7000 Euros of allowable repairs and have submitted all the necessary paperwork which has been accepted.  I have no problem with this, as it is the same for everybody.

The Notaire now tells me that, as we are not "Resident" in France, we have to insure the work we have had done on the property and this will cost 1% of the selling price.  This is apparently only applicable to "Non Residents" selling property in France.  I have not heard of this mentioned before, can anyone enlighten me?

[woolybanana]

How to stuff Johnny Foreigner buddy. Welcome to the club.

[woolybanana]

There is some doubt about the legality of this charge, but the alternative is that they hold you money until the Tax people have finished with it. Which could take yonks frankly.

[Anton Redman]

Go and notaire shop - ideally with the notaire who is dealling with your next house purchase 

[AnOther]

I recall reading something about this in Connexions some time ago and found THIS article.

Quote:

"Renovation Insurance. It is now required that all completed renovation work be accompanied by a ten-year, insurance backed defects guarantee. What this means, in effect, is that whilst property owners may still do the work themselves, unless the renovations were carried out by a recognized professional, the insurance will likely not be available and may adversely affect the sell on value of the property."

Nothing said about residents or otherwise.

[woolybanana]

Sorry Ernie, this is a 1% fee levied by notaires on the sale of foreigner's homes to guarantee that their calculations of CGT are right.

[AnOther]

Wolly, the OP's question contained 2 elements and my reply was in respect of the latter where the Notaire said the work had to be guaranteed.

I have no idea where, or even if, the quoted figure of 1% fits into that. Is it perhaps a flat premium for such insurance if carried out by professionals ?

It would not be the first time a Notaire was wrong would it.

[woolybanana]

The notaire is being economical with the truth. It is a guarantee for their arses and no more. I had it with my notaire last month.

[BJSLIV]

The notaire is being economical with the truth. It is a guarantee for their arses

But its also required by  law!

[woolybanana]

I am not sure if it a notaires thing or a legal thing. Mine implied it was insurance for the notaires.

[woolybanana]

As it only applies to foreigners it is of dubious legality and may even be a double tax (not sure how that is, only read it somewhere).

[AnOther]

[quote user="woolybanana"]I had it with my notaire last month.[/quote]Now why I wonder do I think that these were carefully chosen words [;-)]

[Greenok]

Thanks for your reply.  My Notaire has said that there are only two Insurance Companies providing this cover, so it would seem there is not much competition.

[woolybanana]

Live dangerously and get a discount.[:D]

[AnOther]

[quote user="Greenok"]

Thanks for your reply.  My Notaire has said that there are only two Insurance Companies providing this cover, so it would seem there is not much competition.

[/quote]Might be helpful if you elaborated on that a little.

Have you now had it confirmed that you do need the 10 year insurance mentioned ?

What was the 1% initially quoted ?

 

 

[BJSLIV]

Ernie

This 1% payment has nothing to do with guaranteeing the work, its about guaranteeing that the correct CGT has been paid.

The Notaire is incorrect in saying that there are only a couple of people who offer the service of "Fiscal Representative"

This Notaire lists numerous providers, though I doubt if the charge will vary very much

http://www.camps-avocat.fr/lngfr-publication_prod3.html

[AnOther]

Yes, I know that BJSLIV, but it was the OP's statement.........

[quote user="Greenok"]we have to insure the work we have had done on the property and this will cost 1% of the selling price.[/quote]

which I was querying.

Sounds like either the Notaire misinformed him or he misunderstood. Hopefully the latter as I would hope a Notaire would know the score on something which seems to be relatively fundamental.

It does surprise me that this insurance is widely available though, if I were an insurance company I don't think I'd touch it with a barge pole, or if I did I'd be charging massive premiums. How would I know if a DIY'er was a Tommy Walsh or a Frank Spencer [:-))]

Or perhaps they survey the property and set the premium accordingly ?

If this is standard practice is there someone here who's been through it and can tell ue exactly how it works, and what it costs !

[Chancer]

This insurance, or lack of it can affect someone trying to sell a house that they have built themselves.

If they want to sell it within the first 10 (or perhaps it is 5) years then the vendor and/or mortgage lender would be looking for the constructors decenelle insurance, this does exist for self-builders but is prohibitively expensive to all but the larger buiding companies, so it is probably quite true that very few companies offer it and even fewer self builders pay for it. Most investors of this type hold on to and rent out the property for at least 10 years for this and other financial reasons.

I have a friend who has built several properties which he is waiting until they are 10 years old to sell, he could not afford or justify the decenelle assurance and tells me that if he were to sell any of them earlier he would have two problems:

He could not get the market value without the insurance

He coud quite legitamately sell at a lower price but he would remain liable for claims that would normally be covered by the assurance decennelle, he did say that it is unlikely that the purchasers would fund a court action for minor works but for subsidence, damage caused by escape of water etc??? Also their insurers may well try to recover any monies paid out from him.

[Greenok]

Well, I wrote to the Notaire (in my poor French) and implied that the charge was, as I had been briefed by a French friend, to provide the Insurance mentioned and to guard against him making an error in the CGT calculations.  I got the following reply (in French) and I have followed it with my attempt at translation.  No doubt there are others out there who can make a better fist of the translation, but I think I have got the meaning correct.

"Par ailleurs, en ce qui concerne la seconde partie de votre courrier, il s'agit en réalité d'une disposition fiscale française pour l'impôt de plus-value immobilière réalisée par les non-résidents lorsque le vendeur (non résident en France) ne possède pas le bien vendu depuis plus de 15 années, ce qui est votre cas.

Dans ce cas précis, il est absolument nécessaire que le vendeur non résident soit représenté auprès de l'administration fiscale par un représentant accrédité en France.

L'administration Française ayant délivré un agrément général à certains organismes tel que la société ACCREDITO ou SARF AZUR, l'intervention de ces organismes est payante, le coût maximum de leur intervention étant fixée à 1% du prix de vente, et est généralement sollicité et quasiment nécessaire pour permettre la transaction immobilière."

 

 

In addition, with regard to the second part of your mail, it is a provision of French Tax Law that deals with capital gains made my non-residents, when the vendor (non resident in France) has not owned the goods sold for more than 15 years, which is valid in your case.

In this precise case, it is absolutely necessary that the vendor non resident is represented to the tax authorities by a representative accredited in France. The French administration has given a general approval to certain organizations such as company ACCREDITO or SARF AZURE.  The representation of these organizations is fixed, the maximum cost of their intervention being fixed at 1% of the selling price, and is generally requested and is necessary to allow the transaction of the sale.

So there we have one Notaire's answer.  I must say that I have known him for 6 years and always found him to be a fair and honest man.

 

[Sunday Driver]

[quote user="Greenok"]

Well, I wrote to the Notaire (in my poor French) and implied that the charge was, as I had been briefed by a French friend, to provide the Insurance mentioned and to guard against him making an error in the CGT calculations. 

[/quote]

In your original post you said

"The Notaire now tells me that, as we are not "Resident" in France, we have to insure the work we have had done on the property and this will cost 1% of the selling price."

No wonder everyone's confused....

 

[Anton Redman]

Note it says maximum.

[Greenok]

[:D]Well, the post this morning from the Notaire has brought closure to this issue for me.  It is obvious that this particular Notaire has not dealt with many non-resident second home owners.  As you can see below, he has advised that he has found out that actually it does not apply to us, as the amount involved is less than 150k Euros.

"En définitive, et contrairement à ce que je vous avais précisé lors de mon dernier courrier, il n'y aura pas lieu de demander l'intervention d'une société accréditée auprès de l'administration fiscale compte tenu du fait que prix de cession convenu est inférieur à 150.000 euros, vous êtes ainsi automatiquement dispensé de présenter à l'Administration fiscale un représentant accrédité domicilié en France."

Many thanks to everyone who replied to my post.

[Will]

Glad you got it sorted out. It just proves that notaires CAN get things wrong.