Chapter 5: Banks and Transferring Funds

Throughout this process of looking at properties and reading  about the process of purchasing a property abroad, it seemed complex, yet not terribly different than any other venture involving mortgages, insurance policies, etc.  What we came to discover is it is quite different.  And with regard to opening bank account’s, it can be a maddening process if you are not prepared, or informed properly.  What frustrated me the most was the conflicting information regarding the process – what you can and cannot do.  Firstly, you can open a bank account prior to moving to or purchasing property in France, but you’ll need to find a bank with international affiliations like HSBC and first open an account in the United States.  You may then with assistance from the US branch, initiate opening an account in France.  The problem here is these type of banks insist on very high minimum balances starting at $10,000, so this was a deal breaker for us since we needed every dollar possible in order to purchase and then renovate our house.  Bottom line, if you don’t have deep pockets and can’t afford to leave that much money on the table, then opening an account prior to closing on your house isn’t likely to happen.  In the process of coming to this final conclusion, we would be told, “of course you can open an account prior to closing on your house and while still in the US”, only to be lead around through several branches of their organization until landing at the conclusion it really isn’t possible – and then back around again.

As I stated in an earlier post, if you are looking for financing your new house and are over 55 years of age, only 60% of your income will be factored into the equation in calculating how much money you are eligible to borrow.  The assumption here is even if you are only looking for a short term loan, your major earning years are numbered, so lenders will not be so willing to risk a mortgage on you.  My recommendation is to purchase the property with cash or if you need additional capitol, to take a small loan here in the US rather than pursuing a loan in France.  Their rates are obscenely low, (2% +/-) but they aren’t very easy to get.

You will need to also find a way to transfer your money.  Pretty much any bank or credit union will be happy to do so…for a fee.  Not a huge deal if you’re purchasing euros for a vacation, but when you’re purchasing a house, it’s a big deal.  Some banks want upwards of 14% which is outrageous.  There are also brokers in the EU, with the bulk located in the UK, but very few are licensed to transfer money from the US to the EU and what I’ve been told is this is a direct result of the Patriot Act that was signed after 9/11.  The US government wants to make quite certain you aren’t funding terrorist activity with your money, and not many brokers want to deal with the extra paperwork for licensing.  I’d have a broker working to gain my business and then discover I was American and tell me ‘sorry’.

Before closing on your house, you will also need to gain homeowners insurance.  This is where your real estate agent will be helpful.  They can recommend a number of agencies who will supply quotes based on the information in the discovery documents.  My agent recommended a very good agency that works throughout the EU called Allianz and one of the advantages of this insurance agency is they have many English speaking agents, so if you have an issue or a claim it will be much easier to facilitate a claim.  Their quotes were within the same range as others and I am told by friends of mine who are French residents here they are very good.  Be sure to include something called “Protection Juridique” in your policy.  Protection Juridique covers the cost of an advocate to represent you in the event you are taken advantage of and need legal intervention.  Say, for example, you order a tank of oil and the delivery person delivers half a tank, telling you their truck didn’t have enough, but they will return later with the balance.  You are told this after you have already paid and signed the delivery slip.   Later you realize they never returned and now you’re left with half a tank of oil but the oil company produces the delivery slip you signed as their proof the delivery happened.  You contact your insurance agency and they will first give you the verbiage for a letter you will send that basically tells the oil company they are on notice and have a defined amount of time to rectify matters or action will be initiated.  In most cases, they don’t want a problem and will resolve the conflict right away, but if needed, they will step in and represent you.  This is only one small example, but you can see how important it is to have this protection.

Prior to the final paperwork signing, you’ll need to transfer money into the account of the notaire, which must be completed with the money cleared prior to the closing date.  I had visions of putting all these thousands of dollars into an suitcase and personally taking them – but then, that would be illegal.  Not a good first impression!  There had to be a way….Two weeks to go before our scheduled closing and we still had no means of moving the funds and had wasted weeks with brokers who ultimately told us they weren’t licensed to transfer US dollars.  As I was discussing this with my investment broker, he mentioned this should be something they could facilitate.  Had I known this sooner, I never would have wasted weeks on these UK brokers so highly recommend discussing international transfers with your investment broker if you have one because I’ve found this to be the most efficient and cost effective way to move money.  The transfer fee is extremely low @only $25 per transfer, so this is how we moved our money.

Once you have transferred the money into the account of the notaire, the closing and final documents signing is pretty simple.  You will meet one on one with your notaire briefly before everyone gathers to verify you understand the documents you are about to sign, then both you and the sellers will sign the documents together.  You will have a notaire and the sellers will have their notaire.  Your real estate agent will also be present. These will be the final documents and there will be fewer than what you’ve already signed and initialed, so the process will be fairly quick.  45 minutes to an hour later you will exit a homeowner in France.

This is the point – with attestation documents in hand that verify you own property – where you can now go to the bank of your choice and open an account.  It is likely you will need to make an appointment to ensure the proper amount of time is allotted and that an English speaking representative is available.  If your French is impeccable, then perhaps this will be a faster process, but if you’re still learning, then given you’re dealing with legal documents, you might want to have someone who also speaks English working with you.  In hindsight, I would have scheduled this appointment before the closing simply to speed up the whole process.

Once you have your French bank account, you can work with your broker to link it to your brokerage account so ongoing transfers of funds can be done very simply.  Smaller amounts can be facilitated online by yourself, with larger ones by your broker.