Buying a Ski Chalet – Case Study

 

Charlotte Macdonald, an associate solicitor in Stone King’s international and cross border team, sets out a number of scenarios that a British owner of French property may encounter.

Over a 12-part series of articles Charlotte covers topics such as how to buy your property as a couple (jointly or not), the different legal implications for a married couple and a civil partnership, and what happens to the property on your death, including who it will pass to and what succession tax consequences there might be.

Scenario 10 – Buying a ski chalet

James and Jo are English and live in Birmingham. They have been ski enthusiasts for years and after another fantastic holiday at Christmas, they have finally decided to buy a property in a mountain resort. They, and their children, can use it as a base for future ski holidays.

Practical Concerns

When looking at their dream home it is likely that Jo and James will consider important practical concerns such as: location, accessibility/travel time, use throughout the year, rental potential and resale potential.

James and Jo need to make sure that they also consider the legal aspect of buying a ski home.

Don’t Rush

Although it can be tempting, James and Jo shouldn’t rush into their purchase. In particular they shouldn’t sign the preliminary sale contract, usually the compromis de vente, without careful consideration. Signing the compromis is similar in many ways to exchanging contracts in England. Most buyers would not exchange contracts on a property in England without having first carefully checked all the search results, having a survey and thoroughly researched the property – so why should it be any different when buying in France?

Once the compromis has been signed, a buyer only has 10 days in which to back out of the sale. After that the buyer is legally bound to buy the property.

Unlike a contract for sale in England, which are almost exclusively prepared by solicitors, in France the compromis can be prepared by an estate agent or a notaire.

James and Jo should make sure that the compromis they sign is prepared by a notaire. The notaire will be a highly trained legal professional and will be independent of the sale; the notaire will not be receiving a commission when the sale goes through.

James and Jo should sign the compromis only after they have satisfied themselves that all is in order with the property and that there are no nasty surprises hiding amongst the paperwork.

Issues to Consider

James and Jo should consider what they want from their mountain home. It would be sensible for them to check the following points (amongst others):

• Is there parking at the property? If so, is the parking included in the purchase price or does the space need to be purchased separately?
• If the property is an apartment, is there a ski locker? If so, where is it in relation to the apartment?
• Communal areas – if the property is an apartment, what are the costs in relation to the communal areas? What does the service charge include? Service charges should carefully be considered before buying the property; the upkeep costs on ski apartments can be considerable.
• If James and Jo want to rent out the property when they are not using it, they need to consider if there are any restrictions on how it can be rented out. Do they need to get permission from the owner of the building (if their property is an apartment)? Can they ‘Airbnb’ the apartment etc.
• If the property can be rented, James and Jo need to be aware that any rental income will be French income – they therefore need to get advice on French taxation, and the Anglo/French double taxation treaty.

Finally James and Jo should make sure that they have wills in place which cover their French property. As they are British nationals, most closely associated with England, they should consider whether electing English law to apply to their French wills is appropriate for them.

Previous scenarios;

Scenario 9 – Buying property in France as a couple

Scenario 8 – Selling property in France – do I need to worry about Capital Gains Tax in the UK?

Scenario 7 – Selling property in France and some important differences compared to the process in the UK

Scenario 6 – Can I leave my French home to an English Charity and will Brexit change this?

Scenario 5 – Inheritance tax in France – I’ve inherited French assets but I live in England

Scenario 4 – There is a trust in my will, can this be subject to Inheritance Tax in France?

Scenario 3 – I have property in England and France. I don’t want to leave anything to my children in my will. Can I do this?

Scenario 2 – Leaving French Assets to Step-Children

Scenario 1 – Will French Law Prevent me from Leaving all my Assets to my Spouse?

For more information please contact Charlotte Macdonald, Dan Harris or Raquel Ugalde at Stone King LLP either by calling +44(0)1225 337599, or by emailing: [email protected]