French News Archive

French Property

Estate Agents Duty of Care

Tuesday 01 March 2011

An estate agent has been found liable in a French court for failing to at least ask a buyer how the purchase would be funded.

In a case that recently came before the court of appeal in Bourges, a buyer and seller had signed a contract for the unconditional sale and purchase of a property for €225,000.

The buyer stipulated that they would not be seeking a mortgage to fund the purchase, so the sale was not made conditional on this basis.

Neither did the seller demand a deposit from the buyer, as the latter (a 77 year old man) refused to agree to a deposit being paid.

It seems the seller was willing to agree to sell on this somewhat unusual basis as their property had been on the market for some time, and they did not wish to risk losing the purchaser they had found.

While this alone should have set alarm bells ringing, the estate agent failed to warn the sellers of the risks of not insisting that a deposit be paid.

Neither did the agent make any enquiries as to whether the buyer actually had the means to buy the property.

When the time came for sale completion, the buyer was obliged to withdraw, as they had no purchase funds.

The court decided that the estate agent should have made a 'minimum level of verification' that the buyer had the means to buy the property.

They did not define precisely what they considered the agent should have done, other than to have actually asked the buyer how they were going to fund the purchase.

On this basis, the ruling does not seem to impose a major new obligation on agents.

Nevertheless, in failing to make any enquiries at all, the court decided that the estate agent had been negligent, and that they had failed in their contractual obligation to their client.

As a result, both the agent and the buyer were ordered to pay damages of €11,750, being the penalty stipulated in the compromis de vente  if either party declined to proceed to sale completion.


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