When is the deposit due?

[virginia.c]

I hope someone can clear something up for me.  When exactly is the 10% deposit due on a French house purchase?   I know that there is a 7 day cooling off period after the signing of the compromis and my understanding was that it became due immediately after this. I am being given conflicting advice now, hence my question.

Clarification would be appreciated please.  Many thanks

[woolybananasbrother]

My notaire expected it at the signing of the compromis. By the way, it can be less than 10%

A deposit is not usually paid on signature of a promesse de vente.

[virginia.c]

thank you wooly and how are you?  I didn't realise it could be less than 10% but as that was what I was expecting I'm ok with it.  It does seem odd though that you have to pay it during the cooling off period.  What if my seller pulls out during this time?

Which region are you Wooly if you don't mind me enquiring?

[Will]

If the seller pulls out after signing the compromis, the seller is liable to pay 10% penalty. The so-called cooling off period applies only to buyers.

The deposit becomes payable at the end of this period. So you need to arrange for it to transferred to the notaire's account in time for it to appear there by the due date. It is usually recommended to pay it to the notaire rather than the agent. Although agents have 'secure' accounts, and most people have no problems when using these, deposit money has been known to go walkabout in a very few cases, and all money should go through the notaire anyway. So better to be safe. A good agent will have no objection; in fact many would rather you paid the notaire than them having to take responsibility for the money, with no reward for them. If you do pay an agent, make sure you have a receipt, and you should never be expected to pay him anything before signing the compromis de vente.

[virginia.c]

Many thanks for this Will.  So, do I understand you correctly that the deposit is due on (effectively) the eighth day after signing the compromis?  It is going directly to the Notaire by the way.

[woolybananasbrother]

Will, I am a little confused. I understood the compromis signing required part performance on both sides which means a cheque of up to 10% at least, in the notaires hands. Otherwise it is not valid. I am not talking of agents here, or promesse.

[mint]

Hi everybody

There were 2 posts, one from Rob Roy and one from P-D de Roufignac (might have got his name slightly wrong) recently that said that no deposit was needed.

Mind you, I don't think that applies to someone like Virginia.  Both RR and P-D were living in France.  One of them used the same notaire for buying and selling and one used the same immobilier for the two.  I am hoping to quote them when my time comes cos' there's no way I want to bring more euros into france en ce moment!

If that doesn't help, Virginia, I would add that we paid the 10% deposit at the same time (thereabouts) that we signed the compromis so I hope that is helpful to you.

[virginia.c]

hmmm.  I just thought it seemed illogical to pay a deposit before the end of the cooling off period - whoever that applied to.  From all that I have heard Sweet17 I am sure that a deposit must be paid.  Of course I'm also trying to put off the horrible day when monies have to be paid!

[woolybananasbrother]

No deposit, no contract, even if it is subsequently scrapped.

[virginia.c]

that's what I understand Wooly.  I've been at compromis stage a couple of times before this one (which I very much hope is the last).  Both previous times I was told that the 10% became due on the 8th day.  This time the agent told me it needs to be "during" the 7 days, so I just wanted to find out which was legally correct.

To be honest I'm hoping the whole thing goes through as quickly as possible as I've spent 2 years looking and daren't think how many hours have been devoted to the process.  I've bought a pair of rose tinted specially and am coming out again next week to sign the compromis - I know I don't need to be there but I can't resist another look!

[mint]

Just had to sign back in but here I am.  But, Wooly, that definitely wasn't what RR and P-D said.  For them, they paid the full amount on the signing of the acte de vente.

Apparently in their cases, the notaire and the immobilier knew their houses were being sold and knew that the money would be forthcoming.

RR and P-D, if you are reading this, please confirm that I have understood you correctly!

[P-D de Rouffignac]

Just to clarify a few points, in response to posting by sweet17, re payment of a deposit when buying French property. The system is surpisingly flexible and there seem to be no hard and fast rules about when and how much deposit is paid over by the prospective purchaser.

When I worked in a French estate agency, buyers are asked to pay 10% as soon as they made an offer on a property (which was then withdrawn from the market, and listed on the computer linking all the branch offices as "under offer"). This was before a notaire was asked to prepare the compromis de vente. French buyers usually pulled out their cheque books without being asked, at the moment they made an offer, in order to be sure of securing a property, which might have been on sale through several different agencies, and as a sign of their serious intent. They were also more familiar with the system.

"Foreign" buyers - notably the British - seemed unhappy with this idea and sometimes preferred to wait until they signed the compromis, after they have exercised their seven-day cooling-off option. The problem here is that a potential buyer might not be regarded as "serious" in this case, and if another buyer came along during this period of limbo - say, from a rival agency handling the same property - our buyer could lose out. Even if they had signed an "offer" the rival agent could claim they had an offer-plus-deposit ahead of our buyer but had forgotten to tell us.......When properties could also be sold directly by their owners (ie where we did not have an exclusive mandate) this was a recurring problem, and there was nothing we could do.

In a personal transaction I referred to recently, when I sold one apartment (privately) and bought a second one through an agent, using the same firm of notaires, I had made it clear that one transactions depended on the other, and that they had to take place the same day, in order that the proceeds from the sale could pay for the new apartment. In the end, there was a two week gap, but the buyers of my apartment allowed me to say there a few extra days and the agents let me move my stuff into the new apartment a few days ahead of the final signature. The proceeds of the sale stayed in the notaires' account until I completed the purchase, and to save time we went direct to the "acte finale" (without a compromis), as in this case everyone knew everyone else and it was all based on trust.

Whether this type of situation arises often I don't know, except that I did witness one sale being forced through even though the owners changed their minds and did not counter-sign the compromis (but - reluctantly - signed the "acte finale"); and recently a "buyer" optioned a new-build property, disappeared back to the UK, suddenly became uncontactable and still owes me 350 euros translation fees! More often were cases where a "buyer" made an offer and then after several weeks announced "Sorry, didn't I tell you we have to sell our house in Britain first"! So you can see why, generally speaking, if buyers are serious, owners and their agents like to see the colour of their money fairly early on in the proceedings. This generally applies as much in a competitive market (as before) as in today's slower market but for different reasons.

I hope this rather long post helps, in response to the questions raised.

P-D de Rouffignac

www.francemediterraneanproperty.com  

[Sunday Driver]

A deposit is not a legal requirement - it's normally asked for to cover the eventuality of the buyer withdrawing from the deal (after the cooling of period, of course).  The buyer is liable to a financial penalty for this and the deposit makes it easy to enforce it.

In our case, we signed the compromis at the agent's office and she asked me for a cheque for the notaire in the amount of 5%.  I said I'd need a few days to arrange a bank transfer from the UK, so she asked the sellers what they thought and they said they weren't bothered, so it was shrugs all round and no deposit paid.

I must have a trustworthy face.....[;-)]

 

[virginia.c]

thank you  Pierre.  I'm happy to pay a deposit - I know it's customary in France.   As to whether it is payable upon the signing of the compromis or after the cooling off period, this now seems to be whatever is negotiated at the time, which is also fine by me.  I will just be happy when the compromis is signed so that the seller cannot sell it to anyone else via another agent (which has crossed my mind and worried me for the past couple of weeks).

Thanks to everyone who has given their advice on this matter - appreciated.

[:)]

[Will]

Yes, our experiences reflect what has already been said. The decision on deposits is basically negotiable, but obviously buyer, seller, and, most importantly, the notaire, have to be happy with the arrangement. When we first bought in France we paid a 10% deposit, and this was before the European contract law came in which required the so-called 'cooling off period'. Before this, the sale contract became firm as soon as it was agreed (verbally - though as is often said verbal contracts aren't worth the paper they are written on) and it was customary, but not compulsory, to pay a deposit on agreement to give things a formal basis. 10% was usual, as this equated to the basic penalty for dropping out.

The 7-day thing effectively makes the whole affair less secure and more complicated, and more open to abuse and misunderstanding. Buyers, particularly those used to the English system, have come to regard the 7 days as a licence to change their minds about what they have signed, and sellers have looked on the post-agreement, pre-signature stage as an opportunity to continue to seek higher offers. Though in such cases this often happens because sellers omit to tell other agents that a sale has been agreed, and sod's law says that as soon as you have sold through one agent you will get a better offer through another.

I have never heard of a seller being asked to pay a deposit, but if a notaire has reason to expect them to default, he could, I suppose, insist on it.

In other house sales we have not paid a deposit - but then we are known to the local notaires (Mrs Will - Judie - works for a French agency and is a local councillor).

[virginia.c]

I must admit when I was ignorant of the French system an agent slapped a compromis on me the day I made an offer on a house.  I returned to England and then found out that I would be committed to the purchase after 7 days.  I panicked when I couldn't get any information about the renovation works that had been done on the house and pulled out.  I am sure the sellers were furious (I know the agent was) but now that I know better it has been over two weeks since my offer was accepted and will be another week before the compromis gets signed.  In the intervening time period I have been able to ask all the questions I wanted to ask (and get the answers/paperwork back), get building quotes in and get plans drawn up for the CU.  Of course ***ds law that you quote Will may well come and slap me hard across the face when I realise I have forgotten something critical!

Now I've just got the small matter of the compromis (in French of course) to wade through before coming out next week.  Now that's what I've forgotten to do!!  book the French lessons!!

[AnOther]

Don't know about a trustworthy face but my experience was the same as SD's.

We agreed to buy and signed the compromis but needed time to arrange a transfer of the 10% deposit from UK which was not a problem at all. I kept the notaire informed by email along the way as I did when transferring the balance later on.

There was no competiton for our house but if there had been I could probably have found a way to put something down to cement the deal before returning to UK.

Ultimately I don't think there are any hard and fast rules and as long as it is agreed between buyer and seller then most things are possible.

 

[Will]

Any agent worth his salt will provide a translation of the compromis (and translate for you at the final Acte stage). Some use a standard biligual form for the compromis, but at the very least you should have explanations in plain English of what each clause means. If not using an agent then it's worth paying a bilingual lawyer to look over the document, just in case of any anomalies, accidental as well as intended.

[AnOther]

I hope it all goes well for you this time round but I have to say that it bothers me a teeny bit about how much you appear to have got sorted by proxy in what seems an uncommonly short space of time, and with a public holiday in there somewhere too, I do hope you're not relying on the agent to do all this for you, he is working for the seller and himself and you are third on the list [:'(]

The notair has a duty to ensure that you understand exactly what you are signing so if he/she doesn't speak English and you don't speak/read French then you will need someone with you to translate and call me a suspicious cynical old git but I would not neccessarily rely on the agent for this either but would try and get a French speaking friend or someone completely independant to be with you. Pay special attention to your 'clause suspensives' and that they say what you want them to say.

Bon chance !

Note: Took too long scribbling and didn't see Wills reply [;-)]

 

[woolybananasbrother]

Years ago I did a little Law and one thing I understood was that a contract had to have two sides. If there is not deposit, then how can there be a contract as there is only one side of the bargain. However slack the system may be at times, I just don't think you have a legal contract unless that deposit is in the hands of the notaire (or some agents who are allowed to hold deposits)? The seven days cooling off period is a red herring here, surely?

[virginia.c]

I agree Wooly.  I don't see how it works without some form of deposit.  With regard to Ernie's post I am using someone to translate (and I do speak and understand a fair bit).  And I have been through the process before - using an English law firm with a French born solicitor, so I've got a mountain of previous paperwork to refer to.  The past two years of intensive searching for a home (and negotiating on a few to various stages) has taught me an enormous amount.  I'm not claiming to be an expert - far from it - but I'm not green either.  I had a structural survey on the last house I nearly bought and the solicitor was very instructional.  A very good friend moved out to the Dordogne five years ago and I've spent a lot of time with her, thereby getting to know and understand more and more.  And lastly, don't underestimate the value of this forum as a learning tool.  I've looked at it every day for 2 years - and I've gained much from it.  It is invaluable for people considering a purchase in France.

[AnOther]

Well you seem to have it firmly under control Virginia so again, bon chance [;-)]

Wooly, unlike you I've never had the benefit of 'doing a little law' but UK-wise at least what happened to the traditional handshake and 'my word is my bond'? Surely a deal (contract if you will) so struck can be enforceable in law, many moons ago for instance a jilted bride could sue for breach of promise could she not - has the law changed in this regard.

Obviously having a financial commitment is more likely to ensure performance of the contract but is a pre-requisit for a contract to exist, I suspect not ?

[quote user="woolybananasbrother"]The seven days cooling off period is a red herring here, surely?[/quote]

Absolutely, all house transactions should be clear of fish [:P]

 

[virginia.c]

I can now feel something big and unexpected lurking somewhere ready to pounce!  May well be the 5ft western whip snake I saw in my friend's garden a couple of weeks ago.  Now, that was something I had never seen before in the Dordogne.  Do I need another suspensive clause do you reckon?

[Sunday Driver]

Just to clarify the 'law' query that has arisen here.

The compromis de vente is a legal contract, the signing of which by both parties commits them to the sale/purchase of the house.  The consideration is that the property will be made available with clear title to the purchaser in exchange for a sum of money paid to the seller.   Both parties have remedy in law in the event of breach of contract.  Payment of a deposit neither adds to nor detracts from its validity in law.  

 

[Sunday Driver]

Edit:  double post