A loan or mortgage can be put in place when purchasing a French property or even when undertaking renovation work.The bank would usually ask for a charge to be taken over the property as a guarantee (in French “privilège de prêteur de deniers” or “hypothèque”).
If the creditor were not to be reimbursed on time he/she would be entitled to obtain the seizure of the property over which the charge was taken.
In such a scenario, the creditor would be reimbursed, in part or in full, thanks to the fruit of the sale (amount due to him/her deducted from the fruit of the sale).
The charge is usually taken for the duration of the mortgage/loan + 1 year.
It is registered by a French Notaire with the French Land and Mortgage Registry.
The various costs and fees attached to the taking of said charge are paid by the borrower.
If the property were to be sold within the period described above, the creditor would be informed of the sale and would have to agree to lift the charge with a counter-part (i.e. being reimbursed of the amount due to him/her – financial breakdown to be provided).
The lifting of the charge engenders costs and fees to be paid by the borrower.
The lifting (mainlevée) would be registered with the French Land and Mortgage Registry.
NB: charges may be taken over a French property by the French Tax Authorities if for example the local land taxes were not to be paid. It could also be the same if the charges were not paid to the building manager in the event the property is part of a “co-ownership” (“co-propriété” in French).
For further information on charges taken over real property please click here.