06/09/2020 0 Comments
ESTATE AGENT AND MANDATE
The purchase of a property can be done privately directly
with the property owner or through the intermediate role of an estate agent.
When you purchase through an estate agent, you know that there will be a
commission in order to pay the agent for his work.
The purchase of a property can be done privately directly with the property owner or through the intermediate role of an estate agent.
When you purchase through an estate agent, you know that there will be a commission in order to pay the agent for his work. Estate agents will act on
behalf of their clients, who will be either the vendor or purchaser upon the signing of a mandate that will determine the scope of their work. The remuneration for their work will be indicated throughout the property sale and inclusive of any penalty clauses. The mandate often takes the form of a standard pdf document relating to the conditions of the mandate.
A recent Judgment dated 1st July 2020 confirmed the recent precedents regarding the payment of the commission or any indemnity to be paid to an agent if his client defaults and fails to comply with the terms of the mandate.
In this particular case, a vendor gave an exclusive mandate to an estate agent to sell an apartment. Despite the showing of the apartment over 50 times by the estate agent without a problem, the vendor suddenly terminated the mandate after receiving an offer at the asking price specified in the mandate. The estate agent summoned the vendor for the payment of the contractual penalty clause.
This matter went to the High Court of Justice (Cour de Cassation). The Court rejected the Estate agent’s claim, reminding him of 3 very important points:
- First is articles 6, I, paragraph 3 of the Hoguet law and 72 of decree n ° 72-678 of July 20th, 1972 where, in their wording applicable to the case, indicate that no sum is due in any capacity whatsoever to the real estate agent before the transaction for which he has received a written mandate has actually been concluded in a single contract containing the commitment of the parties.
- Secondly, when such a mandate does not allow the intermediary who received it to engage the vendor for the proposed transaction, the latter's refusal to carry out the transaction under the conditions agreed in the mandate cannot be attributed to him as a fault in order to justify the order for him to pay damages.
- Finally, the vendor remains free to conclude the transaction or not for which the estate agent was only instructed to facilitate and negotiate.
The Cour de cassation concluded that the clause under which the vendor undertook to sign any contract (promesse de vente or compromis) at the agreed price, charges and conditions with any purchaser presented by the estate agent could not be applied. This is in accordance with the conclusion of the Court of Appeal.
It is important for any party wishing to sell or purchase a property to be advised of the terms of any mandate that they sign with an estate agent. Unless the estate agent has the authority to represent their client, most often the vendor, upon the signing of any contract and providing that the clause is inserted into the mandate, the Court makes it quite clear that the estate agent would not be entitled to any remuneration should the vendor refuse to sell at the agreed terms of the mandate. The vendor is free to decide to sell or not, regardless of any potential penalty clause in the mandate.