Estate agent and mandate
You can complete the purchase of property privately or directly. This can be done directly by the property owner or through the intermediate role of an estate agent. When you purchase through an estate agent, you must pay a commission to the agent for their work. Estate agents will act on behalf of their clients, either the vendor or purchaser, who will be required to sign a mandate determining the scope of their work.
They will require remuneration for their work throughout the property sale, including any penalty clauses. The mandate often takes the form of a standard pdf document relating to the conditions of the mandate.
Following 1st July 2020, the rules regarding commission fees have changed. This includes any indemnity to an agent should their client default on a payment. It also applies if the client fails to comply with the mandate terms and conditions.
A property vendor gave an exclusive mandate to their estate agent to sell an apartment. The estate agent carried out their half of the contract and showed the apartment to potential buyers over 50 times. Despite the estate agent's efforts, the vendor suddenly terminated the mandate after receiving an offer at the specified asking price. Unsure what to do in this situation, the estate agent summoned the vendor for the payment of the contractual penalty clause.
The estate agent was unsuccessful, so they took the case further. The matter went to the High Court of Justice (Cour de Cassation). However, the Court rejected the Estate agent's claim, reminding him of 3 crucial points:
1. Article 6, I, paragraph 3 of the Hoguet Law 1972: In their opinion, this applied to this particular case. It indicates that no sum is due in any capacity whatsoever to the real estate agent before the transaction has been concluded. The rule applies when they have received a written mandate in a single contract showing the parties' commitments.
2. Such mandates do 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 as a fault to justify the order for him to pay damages.
3. The vendor remains free to conclude the transaction or not. The estate agent was only instructed to facilitate and negotiate.
It is crucial 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. The estate agent may have the authority to represent their client upon signing any contract, providing that the clause is part of the mandate. If this isn't the case, the 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.
They will require remuneration for their work throughout the property sale, including any penalty clauses. The mandate often takes the form of a standard pdf document relating to the conditions of the mandate.
New Commission Rules
Following 1st July 2020, the rules regarding commission fees have changed. This includes any indemnity to an agent should their client default on a payment. It also applies if the client fails to comply with the mandate terms and conditions.
An Example Case:
A property vendor gave an exclusive mandate to their estate agent to sell an apartment. The estate agent carried out their half of the contract and showed the apartment to potential buyers over 50 times. Despite the estate agent's efforts, the vendor suddenly terminated the mandate after receiving an offer at the specified asking price. Unsure what to do in this situation, the estate agent summoned the vendor for the payment of the contractual penalty clause.
The estate agent was unsuccessful, so they took the case further. The matter went to the High Court of Justice (Cour de Cassation). However, the Court rejected the Estate agent's claim, reminding him of 3 crucial points:
1. Article 6, I, paragraph 3 of the Hoguet Law 1972: In their opinion, this applied to this particular case. It indicates that no sum is due in any capacity whatsoever to the real estate agent before the transaction has been concluded. The rule applies when they have received a written mandate in a single contract showing the parties' commitments.
2. Such mandates do 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 as a fault to justify the order for him to pay damages.
3. The vendor remains free to conclude the transaction or not. The estate agent was only instructed to facilitate and negotiate.
The Outcome
The Cour de cassation concluded that the clause under which the vendor undertook could not be applied. Otherwise referred to as a 'Promesse de Vente or Compromis'. Charges and conditions with any purchaser presented by the estate agent were void. This is per the conclusion of the Court of Appeal.Checking Mandate Terms & Conditions
It is crucial 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. The estate agent may have the authority to represent their client upon signing any contract, providing that the clause is part of the mandate. If this isn't the case, the 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.