Buying a Business Property

ImageExcerpted from “Buying a Home in France”
The procedure for buying business premises is essentially the same as for buying private property in France. This is generally a straightforward process, although there are certain precautions to be taken and regulations to be observed. You can obtain a mortgage of up to 80 per cent on a commercial property, but you must fund the business yourself.Before buying any business property, you must do your homework thoroughly, particularly regarding the history and viability of the business.

You must also be certain that you have or can acquire the skills necessary to run the business successfully. Note that, when taking over an existing company, French labour law requires new owners to respect existing employment contracts.As when buying any property, many people wear (thick) rose-tinted spectacles when seeking a business property in France and only really investigate the pros and cons after they’ve committed themselves.

Buying a business in France is a complicated undertaking that should be concluded only after taking expert legal and professional advice.

A number of companies are only too willing to help you through the jungle, but you should bear in mind that they’re usually trying to sell you a business and aren’t necessarily interested in whether you get a good deal or can make a success of it.

The cost of business premises varies enormously, not only according to whether you’re buying or renting only the premises, whether you’re buying an existing business plus the premises or buying a business and renting the premises, or buying the right to a lease and renting a premises, but also according to the size, condition and (above all) location of the premises. Premises Only
Commercial premises are rarely sold ‘empty’ (local vide), although you may find empty premises to let, which usually cost between €2 and €10 per m2 per month.

Premises & Lease
The cost of a lease (bail) can be between €500 and €2,000 (€650-4,000 or more in Paris) per m2. In addition, you must then pay a monthly rental (loyer) for the use of the premises, which can be from €4 to €25 per m2 (€10- 30 in Paris).Premises & Business

The cost of a business or ‘going concern’ (fonds de commerce) varies between around €300 and €2,000 per m2 (€650-3,500 in Paris and up to €6,500 per m2 in the most salubrious areas) according to a number of factors. Sometimes the building itself (murs) is included in the price, although rarely in Paris. Otherwise, you must rent the premises, which can cost between €5 and €150 per m2 per month (€25-400 in Paris).

Equipment & Stock
Business equipment (matériel) and stock (marchandises) are usually sold separately and aren’t included in the price of the premises or the fonds de commerce.

Inspections & Surveys
When you’ve found a property that you like, you should not only make a close inspection of its condition, even if it’s a fairly new building, but also ensure that ‘what you see is what you get’. In many rural areas, boundaries aren’t always clearly drawn – often because title deeds haven’t been changed to match recent changes in local topography, e.g. the growth or clearance of woodland. If you’re shown a property with a large amount of land included, the vendor or agent may wave his arms and declare airily: ‘This is all yours; it’s included in the price’. The truth may be rather more complicated!

There are various ways you can carry out an inspection, and which one you choose will depend largely on whether the property is a ruin in need of complete restoration, partly or totally renovated, or a modern home. You should ensure that a property over ten years old is structurally sound, as it will no longer be covered by a warranty (warranties are transferable if a property is sold within ten years of construction).

Although France is noted for its high building standards, you should never assume that a building is sound, as even relatively new buildings can have serious faults (although rare).
Although a vendor must certify that a property is free from ‘hidden defects’, this provides little assurance, as he can usually plead ignorance and it’s usually difficult or expensive to prove otherwise if a defect is discovered after purchase.

Excerpted from “Buying a Home in France 2006” It can be purchased from Survival Books.