This is an insurance that covers a new property against structural fault or defects for a period of 10 years following the end of its construction. It must also include a liability insurance subscribed by the architect, the contractor and the developer.

The borrower’s deposit is held either by the estate agent (when authorised) or a notary public until completion. This amount will then be deducted from the total cost to calculate the outstanding amount due by the buyer on completion.

Fee paid to the estate agent for taking care of the sell of a property. It is a percentage of the selling price of this property. Most lenders consider that it is part of the purchase price and take it into account when calculating the Loan-To-Value.

This is the type of contract you have to sign when you have a house built. Deposit required as guarantee is 5% of the total costs. There is a 7 day withdrawal clause before the contract because binding.

This is the type of contract you have to sign when you buy an ‘off plan’ property, i.e. the building does not exist yet or it is under construction. Deposit required as guarantee is 5% of the total costs. There is a 7 day withdrawal clause before the contract because binding.

This is the initial sum of money (usually 10% of the purchase price) a buyer needs to put down as evidence of his/her intention to buy the property and to protect the seller in the event that the contract is not completed.

The builder/contractor/developer must provide the buyer of a new property with an insurance that guarantees that either the property is going to be completed or all funds reimbursed should the building company goes bankrupt.

This is an insurance that covers any defect/default that may affect the property during the 1st year after its completion.

As a property buyer you may make a formal offer either at the asking price or at the price you estimate the property. If this offer is made at the asking price it can not be turned down by the seller, unless another buyer has already made a better previous offer.

It is agreed and issued by the local Mayor’s Office.

Provisional preliminary contract used for the purchase of an existing property or a building ground. This document lists names and addresses of both seller and buyer, a description of the property, its surface area, registration number and purchase price. There is a compulsory 7 day withdrawal clause before parties are bound. The buyer will then be asked to pay a deposit held into escrow, usually 10% of the purchase price. This contract then becomes binding. This agreement to sell may be subject to conditions and contingency clauses (for e.g. subject to obtaining a mortgage), including the possibility for the buyer to pull out if any of those clauses is not met. If this happens, the agreement will be declared null and void with all deposit refund immediately.

This is a term life insurance tied up to a loan and written for its term. It requires the policy holder to pay only for the cost of protection against death and for the amount borrowed. Unlike whole life insurance there is no cash value built up.

This refers to the borrower’s maximum commitment to repay a loan using an ‘income rule’ and a ‘debt rule’. As centralised credit ratings do not exist in France, lenders need to do a formal evaluation of the borrower’s current income and outgoing to calculate his/her ability to meet principal and interest payments during the term of the loan. This includes going through proof of income and tax returns but also bank, credit cards, loan, mortgage statements and in other regular outgoing (including rent paid). This allows the lender to calculate the borrower’s exact borrowing capacity i.e. the maximum loan amount a borrower can afford according to his/her credit worthiness expressed as a percentage of the borrower’s income minus existing outgoing.

This is a form sent to a borrower that requires information on all aspects of a borrower’s credit history and state all obligations for both parties (lender and borrower) as well as inform the borrower of the terms and conditions of the loan.

This is a fee due by the borrower to the lender right after completion for arranging the mortgage. This fee must be included in the APR/TEG, expressed as a percentage.

This is the difference between the purchase price, including Estate Agent’s fees, and the loan amount, either expressed in Euros or as a percentage of the purchase price. Lenders requirements are always expressed in terms of Loan-To-Value or LTV.

This refers to the amount borrowed or the amount a lender is willing to lend, expressed as a percentage of the purchase price (or the appraised value of the property).

It refers to the reduction of debt by regular payments of interest and principal to pay off a a laon by maturity.

Lender’s fee and interest charged for contracting to hold credit available in case of stage payments/disbursement of funds (construction, off plan or renovation loans).

There is a partial exemption when repayment of capital is deferred for a specific duration to reduce monthly installments. During this period, only the interest is due by the borrower. This is stated within the contract.

This type of loan offers repayments more evenly with each payment composed of a fraction of the debt capital, interest payments, and future insurance premiums.

A loan in which the borrower pays only the interest i.e. monthly installments are made of interest and there is no monthly repayment towards principal. The outstanding principal is paid on maturity or at the end of the Interest-Only period.

Period of time provided in a loan contract, usually at its beginning, during which repayment of principal and/or interest does not begin until some point into the life of the loan.

It refers to the cost of using money, expressed as a rate per year (I.e. annually rate of interest).

Period required by law during which a property buyer or a borrower is prohibited from accepting and signing a contract. There is a 7 day cooling-off period for a preliminary purchase contract (see Loi SRU). There is a 10 day cooling-off period for all Mortgage offers from the day the borrower receives the loan offer (see Loi Scrivener).

The Loan offer is regulated by the Consumer Act. It is a written document sent by mail by the lender to the borrower listing all the terms and conditions of the loan including the APR, the type of charge or security used and a repayment schedule. There is a compulsory 10 day-cooling off period offer starting from the day the loan offer is received by the borrower. Conditions must be maintained by the lender for a period of 30 days starting the same day.

On completion the buyer will be required by the notary public to pay by certified cheque the difference between the purchase price (including fees, taxes and stamp duty but minus deposit) and the amount borrowed and for which the buyer’s bank guarantees payment. Funding the loan is the final conclusion of the process of getting a loan. That is when GE Money Bank send a certified check to the notary to complete both the purchase and the mortgage.

In France all the business of conveyancing (i.e. the buying and selling of property) is handled by a notary public (le notaire) who will act on behalf of the buyer as a solicitor. A notary is a public official who is responsible for ensuring that all deeds are authentic (notarised instruments) with competence in all tax and legal matters. The same ‘notaire’ may act for both vendor and purchaser, as he is personally responsible for the contracts drawn up and also must be objective in the advice given. However, both parties may employ their own notaries at no extra cost since the fees (always paid by the purchaser) are fixed by law and will be split between the respective notaries.

It is the legal document that conveys the title to a property. The notary must ensure that all the necessary legal work requirements are complete, and that the mortgage to finance the purchase has been granted as well as having been accepted for term life assurance and building and contents insurance, before the deed of sale is finally signed.

On completion all mortgages are registered at the Mortgage Registry which is managed by the French Inland Revenue. This guarantees the buyer that the Title is clear and free of encumbrances on completion. The borrower must pay a registration fee which is used to keep this service up and running.

This is a private contract between parties. Parties are bound although it is not legally registered (as it name indicates in French). For example, the ‘promesse de vente’ is an ‘acte sous seing privé’ and so is the mortgage insurance contract.

A French home insurance not only covers the building and its contents but also includes a liability insurance that covers the household. You will be required by your Notaire to provide a copy of your home insurance policy on completion

Process by which a homeowner who has not made timely payments of principal and interest on a mortgage loses title to his home. The lender can then go to court to repossess the property which may then sold to satisfy the claims of the mortgage.

Failure of a borrower to make timely payments of interest and principal as they come due. In case of default, the lender may make claims against the assets of the borrower in order to recoup the principal.

This is the interest due by a borrower between the time funds are transferred for completion and the ‘official’ settlement date of the loan.

Fee paid by a borrower to a lender when a loan or mortgage that does not have a prepayment clause is repaid before its scheduled maturity.

Property loan borrowers can always repay loans in advance, totally or partially. However, the loan contract may disclose that repayments, equal to or greater than 10% of the initial loan payment, are forbidden, unless the repayment seals the debt. The initial loan contract can, however, specify compensation, in which the payment is specified by the loaner’s decree to guard against advanced repayment.

Landmark French legislation establishing rules of disclosure and consumer protection that lenders must follow in dealings with individual borrowers for residential loans. This regulation ties in the purchase contract with the loan contract. It also improves information given to borrowers and stipulates that borrowers be told Annual Percentage Rate, potential total cost and any special loan terms. It also imposes a compulsory 10 day cooling-off period to the borrower after receiving a loan offer. It finally limits penalties in case of default or advanced loan repayment.

This law’s main goal is to regulate and prevent borrowers over indebtedness by setting up a limit to mortgage commitments and credit worthiness calculated by lenders to determine the borrower’s maximum ability and capability to repay a loan.

This law refers to the purchase of an existing residential property by an individual buyer via a preliminary contract (agreement to sell). It states that there is a compulsory 7 day withdrawal clause (art. 271-1 of the Construction and Urban Code) before this contract becomes binding. It means that a buyer has the possibility to pull out of a property purchase with no penalty during the first 7 days after an offer was made. This 7 day withdrawal period starts from the day after the preliminary contract is received by mail by the buyer (and not acknowledged). The buyer has then 7 days to pull out of the purchase by notifying the seller/the Estate Agent by certified mail with acknowledgement of receipt.

This rate represents the ‘true’ cost of credit paid by a borrower and expressed as an annual percentage. It is made of the base rate plus all additional fees, commissions and life insurance associated with the loan. Every Loan offer and mortgage deeds must disclose the APR.

Legal right or lien on property used as security for a loan and given by the borrower to the lender to guaranty the repayment of this loan. A homeowner owns and has the use of his mortgaged property but the lender has a security interesting it as long s the mortgage loan is outstanding. The charge is removed when the obligation is fully paid. “1er rang” means that the lender has a primary lien against a specified property and has precedence over all other mortgages in case of default.

Same type of charge on a property as an ‘hypothèque’ but only used for the purchase of an existing property when this property is used as security for a loan (i.e. it can not be used for construction, ‘off plan’, renovation and refinance).

Order removing a first charge/lien on a property from the Mortgage Registry after the mortgage loan has been fully repaid and the originating legal claim satisfied.

Assigning credit ratings to existing and potential customers is not legal in France. There is no formal organized evaluation of an individual’s credit history and capability of repaying obligations. It is not possible for banks and lenders to investigate, compile and maintain records on the credit responsibility of customers. The only record available in France to banks and lenders are 2 black lists (one for current accounts, the other one for loans) maintained by the Banque De France which only lists customers with serious issues with a bank or lender (unauthorized overdrafts, personal bankruptcy, litigation, arrears, foreclosure etc.). The customer’s name is removed once the issue is cleared . No record of this issue is kept whatsoever after it has been cleared.

Banking benchmark often used as a Tracker for loans offered within the Euroland. Mortgage payments are tied to this index outside the control of the lender with predetermined adjustments of the interest rates at specified intervals.

This can be either an individual or a company acting as surety for a borrower. A guarator takes the responsibility for repayment or payment of the loan if the case the borrower defaults. This type of surety is a potential contingent liability of the guarantor.

A guarantee may also be given by an insurance company to secure the amount borrowed in lieu of a 1st charge over the property. As there is no charge over the property, there is also no Mortgage deed. The loan contract is a ‘Contrat Sous Seing Privé’ (Private Contract) between the borrower(s), the Lender and the Mortgage Insurance Company. It case of default, the outstanding amount due to the Lender is fully repaid by the Insurance Company which then can repossess the property.

This refers to the difference between a property purchase price and selling price when this difference is positive.

This refers to a tax on profits from the sale of a property. There is currently no capital gain tax on main properties in France. For all other types of properties French tax law has specified a minimum holding period after which capital gain is taxed at a more favourable rate. This tax is waived in full after a 15 year holding period.

This is an annual tax due by the person who has the use of a property as of 1st January of the year, whether homeowner or tenant. It is a source of income collected locally to help pay for local and department services and development of public facilities. As for the ‘taxe foncière’, it is calculated upon the estimated annual rental value of the property. Unlike the ‘taxe foncière’, you have to pay this tax in full even you have moved out during the year.

This is an annual tax due by and as a homeowner. It is a source of income collected locally to help pay for local, department and regional services and development of public facilities. Its calculation is rather complex but broadly speaking it is based on the estimated annual rental value of the property compared to other properties within the same area. A 50% discount is then applied to this estimated rental value to take into account maintenance, insurance, renovation and depreciation. It is split pro-rata if the property is sold during the year.

French state agency charged with collecting taxes in France.