WHEN looking for a property in France (like any property search elsewhere in the world), the estate agent is often the first person to be contacted, writes Guillaume Barlet.
Whether you have seen an advertisement in an estate agency window or browsing the web, l’agent immobilier will be, most of the time, your first contact in the purchasing process.
All estate agencies in France must be registered with the French trade authorities. The activity of estate agent is regulated by French law (Loi Hoguet) which applies as soon as an individual or any corporate entity carry out or assist in an operation, on a regular basis, relating to someone else’s property.
In that respect, all estate agents must have a carte professionnelle that allows them to carry out this activity.
Purchasing property in France is a potential minefield. It is important to understand the documents required between you, whether a vendor or a buyer, and the estate agent.
This article explains the documents which should help you have a clearer idea of what to expect.
Agency agreement (Mandat)
Before any negotiation or commitment, a mandat between either a vendor looking to sell a property or a buyer looking for a property must be signed with the agent.
The mandat is the agreement that determines the rules between the vendor/buyer and the estate agent.
It must comply with the strict legal requirements of the loi Hoguet and any non compliance or breach of this mandat would render it void which would prevent the agent from being entitled to a commission.
The mandat and the main sale agreement (often called compromis) are two different agreements and as a result breach of the mandat does not render the compromis void. Therefore, the compromis signed between a vendor and a buyer is still enforceable.
It is however important to note that if a mandat between an agent and a vendor makes the commission payable by the latter, the buyer cannot be asked to pay it, even if the compromis indicates that the commission is payable by the buyer.
The mandat may include an exclusivity clause which must clearly appear in the agreement.
Exclusivity forbids the client to deal with another professional to sell the property or to sell it himself, failing which compensation (usually equal to the amount of the commission) would be payable to the agent.
If the agent agrees to it, the exclusivity clause can be modified to allow the sale by the vendor himself but not through another professional.
Bon de visite
A potential buyer who has visited a property may have to sign a bon de visite to acknowledge said visit. This document is not an agreement and can be safely signed by a buyer.
Although a bon de visite is useful to the agent to prove his involvement, it does not replace a mandat and as such, on its own, cannot entitle the agent to any payment.
Estate agent’s liability
If the mandat entitles the agent to a right to receive a commission, he can also be held liable by this agreement or the legal requirements of his activity for any losses that may be borne by the parties in the sale.
For instance, an agent may be held liable towards a potential buyer whose offer is accepted in the first place and who has been gazumped by a second one.
The agent also has a duty to check the characteristics of the sale (property and parties), to inform and to advise, failing which his liability may be called into question.
This could be the case where an agent does not reveal, misrepresents or conceals facts that would influence the decision to purchase.
The level of commission is not subject to any limitation and there is therefore no 'fixed rate' which means that commission can always be negotiated with the agent at the outset.
In that regard, if the price includes the commission, it must be clearly stated in the compromis.
When completion does not take place, an agent cannot claim any commission. A clause mentioning that commission is due even if the completion deed is not signed is considered null and void.
However, the agent may be able to claim compensation which is different from the commission and usually cannot be the same amount.
It is advisable in practice to agree a compensation amount that would be payable by the party who prevented the completion or refused to complete. This reduces the chance of a dispute and possible litigation procedure.
In any case, it must be pointed out that the estate agent does not replace the benefits of seeking independent legal advice to help you through the purchase or sale procedure and prevent potential pitfalls.
Guillaume Barlet is a French lawyer specialising in French assets and wealth management issues.
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In my experience, keep well clear of agents. They tend to be a bunch of uneducated 'wide boys', on the make (much as in the UK).
Much better to do things the old fashioned way; approach the local Mayor. He, or she, knows exactly what's going on, and will tell you if there is anything for sale. After that the local 'Notaires' are all the same; they are basically state employees, and have to abide by strict processes.
Posted by: J Roger Clifford-Banks | 28 April 2010 at 19:21
A well presented and useful overview. A shame that the same cannot be said about the rather ill-informed and predudiced opinions provided in the first comments to this post.
Estate agents, like all professionals and trades are represented by both the good and the bad. The trick is to identify the professional agents and it is a simple fact of life that many excellent properties are offered for sale via real estate agents.
The chances are that if you go bothering your local Maire about properties for sale in his region he will simply tell you... "have you asked the local estate agents?".....
Posted by: French Property Agency | 29 April 2010 at 10:16
As a Founder member of the Association of International Property Professionals (www.aipp.org.uk), I agree wholeheartedly with the above comment - and disagree with the first comment. The article by Guillaume Barlet is spot on and very informative - just what we need. It is vital that we look to improve the professionalism and process of purchasing property overseas and it's the responsibility of everyone involved in the process to encourage and insist on good quality ,transparent services from those professionals involved. Calling names and 'dissing' property agents does nothing to aid this improvement.
Posted by: jeannie lumb | 04 May 2010 at 12:16
Its always a good idea to start negotiations in French, and is often a good idea to bring a translator to show the effort and commitment (if you dont speak french). We deal with some french property from our Brighton and Hove offices in the UK, and this is the main issue.
Posted by: brighton property agents | 05 November 2010 at 14:29