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Estate Agent Failed to Disclose Proposed Bypass

Thursday 07 February 2019

An estate agent who agreed with a seller to conceal important information about a property for sale from a buyer has been obliged to pay damages to the seller. 

In an extraordinary case that was recently heard in the French Supreme Court, the Cour de Cassation, the owner of a property concealed from a buyer the plans for a ring road that would pass within 50 metres of the property.

The buyers, who lived overseas, were able to bring a legal action to annul the sale, obliging the seller to later sell it to another buyer at a substantially reduced price.

As a result, the sellers sought damages against the estate agent they had engaged to sell the property for a failure to disclose the proposed development to the first buyer, despite the fact that they had agreed between them to conceal it.

When the case was heard in the lower courts the claim against the agents was rejected, on the grounds that the seller had no need of the agent's advice to realise that their deliberate silence was misleading their buyer, and that the agent could not act against the interests of their client by disclosing information they wished to hide. The agent was, therefore, exonerated.

That was not a view shared the the Cour de Cassation, who stated that the estate agent was bound by an obligation to provide information and advice to his client, and as such they should have informed them of the risk of concealing the bypass project from the seller.

The court also considered that the agent had an obligation to disclose to the notaire the existence of the bypass project in order to ensure due regularity of the transaction.

Accordingly, the court ruled that the case should be referred back to the appeal court and that the estate agents pay costs to the seller.

It is unclear from the details of the case that have been made public the position of the notaire in this transaction, as it is their responsibility to undertake legal searches prior to signing of the deed of sale, and the existence of the bypass plans would have almost certainly been known as part of those searches.
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