Total transaction costs are high in French Polynesia
January 11, 2013
How high are realtors' and lawyers' fees in French Polynesia? What about other property purchase costs?
|Registration Tax||9% - 11%||buyer|
|Notary's Fees||3% inc VAT||buyer|
|Real Estate Agent's Fee||5% - 10% (+ 10% VAT)||seller|
|Costs paid by buyer||12% - 14%|
|Costs paid by seller||5.5% - 11%|
|ROUNDTRIP TRANSACTION COSTS||17.55% - 25%|
| See Footnotes
Source: Global Property Guide
How difficult is the property purchase process in French Polynesia?
French Polynesia is subject to much of normal French law, but has many local peculiarities. The autonomy law restricts the right to buy landed property to those residing in French Pacific territory. How long they must have resided is not yet clear, but it is likely to be between 5 and 10 years.
Each foreign investment requires an authorization permit (issued by a "notary") from the government of French Polynesia. In most cases, the government is more likely to approve an investment if the project is business related and creates good employment possibilities for locals. The most obvious example of this is for a large hotel or resort. Smaller projects and private investments undergo a much more intense approval process due to the fact that most of them will never create jobs or add to the local economy. These projects are notoriously difficult to obtain the necessary authorization permits, as it often seems each project is based on a different set of criteria.
Once the parties have agreed on the price and what the sale relates to, the parties will be required to sign a preliminary agreement.
- The preliminary agreement usually takes the form of an option (promesse unilatÃ©rale de vente), with a 5% to 10% penalty if the option is not exercised, usually secured by a deposit held by the notaire.
- There is a 7-day cooling-off period, in which the buyer can change his mind.
- If a mortgage is being sought, the compromise de vente must contain a clause confirming that mortgage financing is being sought, then, if the mortgage is declined, the purchaser will not lose his deposit.
- Once preliminary contracts have been exchanged, there are pre-completion searches: land registry searches, local authority searches, planning permission searches, etc. If the dwelling has been sold by a "property professional" or is less than ten years old, the seller has a statutory liability to all future owners within the ten year period for defects.
- On completion, the purchaser and vendor sign the Acte authentique de vente at the Notaire's office. The notaire will see that the account is settled, will accept his fee, and land registry fees, if they are not included in the notaire's fees.