PURCHASING A REAL ESTATE PROPERTY
AT A PUBLIC AUCTION SALE
Anybody wishing to purchase a real estate property before a First Instance Court must get in touch with a Lawyer registered at the Bar of the Court in order to be represented during the adjudication session. A Lawyer will not be able to bid for the vested debtor (article R.322-39 of the execution civil procedures code).
I - PRELIMINARY FORMALITIES FOR ADJUDICATION
Your Lawyer needs to know your complete identity and to be able to identify the property you wish to purchase. You must also justify your solvability.
A Various informations
In order to allow your Lawyer to deliver a purchaser declaration on your behalf he must have in his file a regular mandate (article R322-40 of the execution civil procedures code), with your signature and showing the following informations :
1- Adjudication date
2- Description of the property ou intend to buy : it is to be desired that you lodge the notice of sale with your Lawyer, including the useful informations necessary to the deeds.
If needs be, your Lawyer will contact the lawyer proceeding to the sale to obtain some missing informations.
3- The maximum bid you wish to make.
4- The complete identity of the physical or moral person who will purchase at auction. If several people are purchasing in co-ownership, the documents must be given for each individual purchaser.
a- Physical persons
You must give to your Lawyer a copy of your identity card or any other document fully justifying your identity (driving licence, passport, …).
You must have the civil capacity to purchase and therefore not to be charged by any protection listed in Article 488 and next of the Civil Code (justice saving clause, guardianship, tutelage).
You must neither be the object of a common procedure. If this is thecase, the purchase is only possible if the entitled persons intervene with you.
- name and surnames (maiden name eventually),
- nationality,
- occupation (If you are tradesman in your own name, you must give a K BIS extract recently delivered by the Trade Registry),
- full address,
- family status (bachelor, married, widow, divorced, under a civil partnership).
Remark: if you are married, you must indicate your type of antenuptial settlement and bring justification:
- If you are under the separation of estate settlement, you must specify if the purchase will be for yourself alone or both spouses jointly. In this case, both spouses will have to give to the lawyer the same informations and sign jointly the power of attorney to be considered as purchasers at auction.
- If you are married under another settlement than the separation of estate, the auction is consired as being done for the community and in this case the Lawyer must have the full identity of both spouses and their signatures.
If you are under a civil partnership, you must distinguish:
- The civil partnership decision is prior to january the 1st 2007, and, without convention : the adjudication will benefit to both partners (joint estate except for specific disposal).
You must then give to your Lawyer the complete identity of both partners, who will both have to sign the order to be considered as purchasers at auction.
In case of purchase by one partner alone, the other must be duly informed.
- The civil partnership decision is after January the 1st 2007, without convention : you are under the separation of estate settlement and you must specify if the purchase is for yourself alone of for both jointly. In this case both partners will have to give the same informations to the Lawyer and both sign the order to be considered as purchasers at auction.
b - Moral persons
You must supply:
- a copy of the company articles,
- a rencent KBIS extract from the Business Register,
- a document justifying the power of attorney of the signer of the deed if this person is not the legal representative of the company such as shown on the KBIS.
You must also show that the purchase of a real estate property fits with the prerogatives of the consired moral person.
c - Professional estate-agents
If you are a physical or moral person you must first give the above informations. You must also give a copy of a special existence declaration at the estate-agents Office at the Tax Office (article 852 of the CGI) and specify that you intend to benefit of the exemption from the duties and taxes of transfer of property in pursuance of Article 1115 of the CGI binding yourself to resell within four years and to maintain the building as a dwelling place for three years after the adjudication.
All these informations are necessary for both the tax office for paying the transfer taxes, and the land publicity service for the publication of your title-deed.
We strongly advise you to pay special attention to all these informations you will communicate to your Lawyer.
B - Solvability proof
Before bidding the Lawyer must receive from his mandator and against receipt an irrevocable guarantee facility or a banker's draft in the name of the sequestrator or of the depositary mentioned in the list of sale conditions, amounting to 10% of the upset price, with a minimum of 3,000.00 euros (Article R.322-41 of the execution of civil procedures code).
This disposition is prescribed against nullity of the official bid (Article R.322-48 of the execution of civil procedures code).
Moreover it often happens that the list of sale conditions request a more important deposit, corresponding to the expenses announced before the opening of the bids (pro-rata to the upset prices in case of several lots), to the fees due to the Lawyers according to the rate in force, to the judgment registry fees, to the mortgage duties and taxes and to the registry dues.
The sequestrator or consignee is appointed in the list of the sale conditions. The check must be to the order of Monsieur le Trésorier de l'Ordre.
Your Lawyer could also request a certificate of non over indebtedness or personal restoration.
C - Signature of the mandate to be declared as purchaser at auction
Your Lawyer will ask you to sign before the adjudication the mandate to be declared purchaser at auction established according to the informations he received from you.
II. - FORMALITIES AFTER THE ADJUDICATION
Your Lawyer will ask you to sign before the adjudication the mandate to be declared purchaser at auction established according to the informations he received from you.
If you are not declared as purchaser as someone has covered your last bid, the Lawyer will give back to you all documents you have given him, as well as the banker's draft, the certified cheque or the letter of guarantee facility.
The Lawyer is entitled to ask you some fees, especially if he attends the hearing only for you.
If you are declared purchaser, the Lawyer keeps the documents you gave him and your proof of solvability. You will have to wait ten days when any interested person can make a higher bid of ten percent.
Should there be an outbidding, the Lawyer keeps the documents you gave him until the validation of the higher bid. In this case you are no longer considered as purchaser and you can request from your Lawyer all the documents you gave him as well as the banker's draft or the letter of guarantee facility.
But, if you are in one of the three following cases:
- no higher bid has been made within ten days following your purchase,
- the higher bid has been cancelled,
- the purchase you have made was already following a higher bid,
you are considered as purchaser.
In this case you must pay the following amounts:
1- The main price of the adjudication
This isthe amount of the bid that your Lawyer made on your behalf and which has been accepted by the Judge.
2- The interests
The consignation of the price of the adjudication in pursuance of Article R.322-41 of the execution of civil procedures code must be made within two months as from the final adjudication date, leading to feedback of the bids (formerly « irresponsible bid »)
After this period of time the sale price in increased in full right by interests at the legal rate until full payment of the price (Article R.322-56 of the execution of civil procedures code).
The legal interest rate is increased by five points four month after the adjudication judgement date ( Article L.313-3 of the Monetary and Financial Code).
Your Lawyer will be able to advise you usefully on this point.
The main adjudication price and eventual interests must be paid by a cheque at the same name as the deposit one except for legal exceptions applicable to special types of sale (winding-up by decision of court, sale of state property, sale of properties belonging to a minor, sale by auction of property held indivisum, …).
3- Preliminary expenses
When the adjudication is definite for you, and without delay, you must pay the preliminary expenses of the sale. These are the taxed fees mentioned by the Lawyer when he was bidding for the adjucation.
These expenses, of variable amount, are the fixed charges and the fees mentioned by the Lawyer to obtain the sale (especially publicity expenses, bailiff's fees, mortgage research expenses , …).
The taxed expenses for proceedings are paid by the purchaser in priority on top of the price. A relevant document is supplied to the registry before the two months delay following the final adjudication, against renewal of the auction sale. Any opposite stipulation is considered as non written (Article R.322-58 of the execution of civil procedures code)
In case of a pre-emption right achieved with success, the paid amounts will be paid back to you in the shortest possible time.
4- Tranfer fees, taxes and charges
You must pay the transfer fees.
These fees vary with:
– your qualification of estate-agent or not ;
– the nature of the building
– the completion date of the works.
Your Lawyer will give you all information about the transfer fees you will have to pay.
In case of increment value, and for an owner with no fiscal residence in France, all the expenses linked to the designation of the accreditad representative as well as all taxes and charges linked to the specific fiscal situation of the seller having his fiscal residence or his registered office out of France, which would be due by him for the tranfer, will be paid by the purchaser on top of the price ; according to the cases, they will be recovered or not within the distribution procedure.
5- Remunerations
The sale remunerations, made without the help of the holder of the right, are computed on the basis of the notaries' rate. They remain lower than the negociated registration fees charged by notaries. They do not include real-estate agency fees, except for separate contractual provisions. In fact, the intervention of your Lawyer and of the Judge replace the intervention of the notary and of the real-estate agent.
6- Fees
On top of the remunerations your Lawyer has the right to ask for fees. These fees are freely negociated. In case of disagreement, the President of the Bar is able to solve the dispute.
7- Miscellaneous
On top of above mentioned amounts your Lawyer may ask you to pay various amounts : pleading fee, statement, act extract, state requisition, land publicity, publication fee, notification to the property managing office, (Article 20 of the Law dated July 20th 1965) , …
Your Lawyer can calculate an estimate of the amount you'll have to pay for your real estate purchase for a given adjudication price.