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Real Estate

The real estate agent acts as an intermediary between two or more parties for the realization of a purchase, sale or lease of real estate, goodwill or company shares.

The consumer must be vigilant in his choice of the real estate agent and in his decision making.


The conditions for the exercise of the activity

The real estate agent's activities are governed by Law No. 70-9 of 2 January 1970, known as the "Hoguet Law" and its Decree No. 72-678 of 20 July 1972.

The activity of real estate agent can be exercised either individually or without the framework of a company structure, or even through an association governed by the law of 1 July 1901. However, it can not be Exercised under the status of self-contractor.
The practice of the profession of real estate agent requires the execution of two specific administrative formalities:

  • the real estate agent must hold a professional card, subject to conditions of professional competence and morality, issued by the President of the Chamber of Commerce and Industry for 3 years;

  • he must also have a financial guarantee with a bank or a professional organization (an exception is made for agencies that have pledged themselves to receive other sums than their remuneration) ;

  • And have professional liability insurance (ROE).


Real estate negotiators (employees or commercial agents) authorized to negotiate, enter into or commit themselves on behalf of the holder of the professional card must prove their quality and the extent of their powers by means of a certificate.
This certificate is issued by the cardholder and must be stamped by the competent ICC president.
Since the promulgation of the Law of 24 March 2014, real estate negotiators must also prove their professional competence. In addition, a declaration of activity must be signed with the ICC for each secondary establishment by the person who is in charge of it. Finally, the real estate agent must have a written mandate authorizing him to negotiate or commit on behalf of the owner or lessor. This mandate must therefore be held prior to any act of mediation or negotiation.

Obligations concerning consumer information

Advertising rules

Advertising related to the quality of real estate agent

Under Article 92 of the Decree of 20 July 1972 the real estate agent must:

  • include on all documents, contracts and correspondence for professional use: the number and place of issue of the business card, the name or business name and address of the business and the business carried on and, The name and address of the guarantor,

  • display, in all places where customers are received, a sign indicating the number of their business card and the name, address of the guarantor and the amount of the guarantee. Where applicable, the statement that the professional must not receive or hold any funds for the activity concerned, except those corresponding to his remuneration or commission.

Advertising about rates

Real estate agents are subject to the general consumer information provisions of the Consumer Code and specified in the decree of 29 June 1990 on the advertising of prices charged by professionals involved in real estate transactions:

  • the real estate intermediaries concerned are obliged to display the prices of the services they provide, in particular those related to the sale or rental of goods, at the entrance to their establishment in a visible and legible manner , Indicating for each of those benefits to which the payment of that remuneration is made;

  • the prices of the services must be indicated including all taxes. Where these prices are fixed in proportion to the value of the goods sold or to the amount of the rent, the external and internal display must indicate the percentage (s) taken, specifying the relevant price brackets where applicable and showing all the elements To which these percentages relate.

Failure to comply with the advertising rules is punishable by an administrative fine, the amount of which can not exceed EUR 3000 for a natural person and EUR 15 000 for a legal person (Article L.113-3-2 of the Consumer Code).


Ads

The real estate agent disseminates information in the form of advertisements for a property to be sold or rented. It is therefore subject to the provisions of ordinary law, in particular as regards misleading commercial practices (Article L. 121-1 of the Consumer Code). In particular, such a qualification may include:

  • offering for sale a property already sold;

  • the distribution of advertisements without a warrant for this purpose;

  • the presentation of goods as exclusive when they are subject to a simple mandate;

  • the difference between the sale price indicated on the mandate and the price indicated on the advertisement;

  • a difference between the surface shown on the advertisement and the surface shown on the mandate;

The same rules apply to ads advertised by the real estate agent on the internet.
Additionally, advertisements relating to sales or rental transactions issued by independent agents (non-salaried real estate traders) must include a statement informing consumers that they are acting as commercial agents. This information obligation is also extended to any document of a real estate transaction (mandates, etc.). Failure to comply with these rules is punishable by criminal penalties.
As regards fees, they must be mentioned on the advertisements when they are paid by the purchaser (as a percentage of the net selling price) or by the lessee (in absolute terms and whether the condition of the Places is included or not).

The mandate

Characteristics of the mandate

To the extent that it acts on behalf of others, the real estate agent acts as an agent of its clients. It can then only validly carry out its activity as an intermediary if it has a written, signed and valid mandate for this purpose.

The mandate given to a real estate agent must imperatively include:

  • the duration of the mandate (it is limited in time generally to three months),

  • the remuneration of the agent, as well as the name of the person responsible (principal or contracting party),

  • the scope of the mission,

  • conditions for the use of funds and accountability,

  • the registration number in the register of constituents.

The mandate may be simple or exclusive. The simple mandate allows the client to entrust the case to other professionals or to carry out the search itself of a possible buyer. If the mandate is exclusive, the negotiation is entrusted to a single real estate agent. The exclusivity clause must be mentioned in very apparent characters. After a period of three months, the exclusive mandate may be denounced at any time by either party subject to a minimum of 15 days notice. A penalty clause may also be stipulated but it can not be higher than the amount of the fees initially foreseen.
The "voucher" signed by the persons interested in a property, does not have the value of a mandate. There is no commission. It is a document that the real estate agent makes to sign to the prospective tenant (tenant) or the prospective buyer to prove that the visit took place with his assistance. In its drafting, the visitor often suggests to the buyer that he will have to pay the real estate agent an indemnity if he dispenses with his services for the conclusion of the case. In the light of the case-law, such a reference is not legally effective because the real estate agent can not ask the buyer for a commission on the basis of a visiting certificate, but only for a mandate.

Special case of off-premises contracts

The provisions of the Consumer Code relating to contracts concluded outside premises apply to real estate professionals. This is the case when a real estate agent contracts a real estate intermediary (signing a sales contract) outside the commercial establishment (domicile, work place of the consumer, etc.).
Contracts for the creation, acquisition or transfer of immovable property or rights in immovable property, the construction of new buildings, the substantial transformation of existing buildings or the rental of a dwelling for residential purposes ( Ie non-seasonal or tourist rental) do not benefit from these protective provisions (Article L. 121-16-1 12 °).
The professional's obligations relate to:

  • issuing the pre-contractual information listed in Article L. 121-17 of the Consumer Code, and in particular the existence of a right of withdrawal (standard form);

  • giving the consumer a 14-day cooling-off period allowing him to exercise his right of renunciation. In no case may it renounce it but may expressly request that the proposed service

  • giving the consumer a 14-day cooling-off period allowing him to exercise his right of renunciation. In no case may it waive it but may expressly request that the service offered by the real estate agent begin immediately.


The remuneration of real estate agents

The Commission

The real estate agent's commission is subject to compliance with several conditions:

  • the real estate agent must hold the business card (the real estate negotiator must hold a professional certificate issued by the holder of the business card after the ICC visa);

  • he must have a written and regular mandate held prior to any act of mediation or negotiation;

  • he must have fulfilled his mission, that is to say that he must have accomplished all the necessary steps to find a counterparty to the principal (announcements, visits, meetings, etc.). If it is a negotiating mission, its intervention must be decisive in the conclusion of the sale. If its role has been incomplete, the commission will be lower than that indicated in the mandate;

  • a clause in the deed acknowledging the undertaking of the parties must in fact recall this commission right in accordance with the mandate authorizing the real estate agent to negotiate or to enter into a contract.


If the seller has signed several non-exclusive orders for the sale of an asset to several real estate agents, the right to commission can only be granted to the agents through whom the transaction was actually concluded.

No amount of money may be required or given to the real estate agent before the transaction (sale, lease, etc.) has actually been concluded and recorded in a deed containing the undertaking of the parties.

Thus, for a sale, the commission is paid after the signature of the final contract before the notary.
Similarly, for a rental, the real estate agent can not require the tenant candidate to deposit a "reservation" check.
The collection of a sum of money in violation of Article 6 of the "Hoguet" law is an offense punishable by two years imprisonment and a maximum fine of 30,000 euros.


Special case of residential lease

In the case of residential leases, the principle is that the remuneration of the intermediary is the exclusive responsibility of the lessor, with exceptions. Only costs related to visits, file preparation, lease writing and inventory should be shared between the lessor and the tenant.
The tenant's share must be less than or equal to a ceiling per m² defined by the Decree of 1 August 2014:

  • "very tight" areas: 12 € TTC per square meter of living space;

  • "stretched" areas 10 € TTC per square meter of living space;

  • out of "taut" areas: 8 € TTC per square meter of living space.

When the intermediary has been mandated by the lessor to carry out the inventory, his remuneration must imperatively be less than or equal to 3 € TTC per square meter of habitable surface (tenant's share).
In any event, the lessor must pay at least the same amount as that actually paid by the lessee.
These fees are due on the day of the signing of the residential lease, with the exception of the costs related to the inventory of premises that are due on the day of its realization.
Research and negotiation costs are borne by the lessor.


The duty of advice of the real estate agent

The real estate agent is duty-bound counsel. He must ensure the regularity of the transaction and thus transmit all necessary technical information to the parties.

The professional intermediary, negotiator and drafter of the act, is required to ensure that all the conditions necessary for the legal effectiveness of the agreement are met.

The real estate agent is responsible for the mentions that appear in the act that he makes to sign. In terms of sales, for example, it verifies that the customer owns the property for sale or that it has the capacity to sell it. It verifies the property title of the seller, the surface of the property, the existence of easements, the reality of the mandatory real estate diagnoses that fall on the property owner (asbestos, termites, energy balance, etc.).

In the case of hidden defects, his responsibility is only committed if he had knowledge of the information or if the examination of the premises had shown the presence of these defects.

The above elements are given for information purposes only. They are not necessarily exhaustive and do not replace the applicable regulations.


For more information, please refer to the relevant texts or contact the prefecture of your department, specifically the Departmental Directorate for Population Protection (DDPP) or the Departmental Directorate for Social Cohesion and Protection of Populations ( DDCSPP).

Source : http://www.economie.gouv.fr/dgccrf/Agent-immobilier