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buying property subject to a mortgage


Yvonne

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We have just agreed a sale on our property.

The purchasers need to secure a mortgage in order to buy.

Apparently we must sign the compromis de vente with a clause suspensive 'subject to loan'. As the seller this concerns us a lot as, if they dont get a mortgage they pull out and take their 10% deposit with them!

Apparently they have a loan in 'principle' and it is simply subject to a valuation which, apparently, the banks won't do without compromis being signed (?)

Is it reasonable to request written proof from the bank / lender that this loan is agreed in principle? The notaire has asked the purchasers to state name of lender, amount, duration etc but we'd feel happier if this came directly from the bank?

We're very nervous about this situation... is it 'normal'??
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I am not absolutely certain, but I think french law dictates that a buyer has the right to include a 'clause suspensive' in the contract if they are reliant on a mortgage to proceed with the purchase. I also think however that if they withdraw and want their deposit back under such a clause, they must prove that they submitted an application for a mortgage within 14 days of signing the Compromis de Vente, and there is usually a deadline for getting a refusal from the bank (I read somewhere that this was 3 months). All these conditions should be included in the contract but I think are enshrined in french property contract law. Perhaps your notaire might be able to provide further reassurance and information.

When all is said and done, it is little different to what happens in the UK, in that buyers cannot usually proceed to any form of contract until they have their mortgage in place. The benefit of the french system is that buyers cannot just withdraw on a whim, leaving the seller in the lurch, except under specific and tightly defined conditions.

I am sure other, wiser forum members will have a wealth of knowledge on the subject, but that is my understanding of things.
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It is normal to proceed in this way and you normally can state the date at which the mortgage has to be fully agreed, from memory for me this was 30 days from date of compromis.  The application is time limited too as DD wrote above.

One thing that troubles me slightly on your behalf is the valuation you mention., this is not normal practice for a straight french mortgage.  This is something the hybrid english/french banks do and in my experience their valuations have been madly incorrect it being they don't have a wealth of surveyors in one area so send someone in from miles away without a clue of local prices.  The nightmare I had as a buyer was with UCB (they are in some way connected to Abbey in the UK), I had the same nightmare when selling to a Brit who used them and it took 2 months to get a mortgage offer out of them and the buyer had to jump through loads of hoops and produce just about their life story to get the money, this was way before things got tight in the mortage world and so now I imagine it's even worse.

I pulled out with them [UCB] and went down the high street and was offered a mortgage on the spot by CIC so my advice find out who the lender is and try and enforce some tight timelines for getting the actual mortage offer, otherwise you are in limbo waiting to find out.

At the end of the day though you have someone who wants your house, this is rare so best not to put them off toooo much by being too awkward, who knows when the next one will turn up, could be a very long time in the current market.

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