The role of the agent is to mediate between two or more parties in order for the acquisition or sale of a property to go through.
The process is regulated by the ‘Loi Hoguet’ of 2nd January 1970. The agent must comply with several obligations, notably:
- Subscribe to a professional liability insurance
- Hold a ‘Carte Professionnelle’, delivered by the Préfet and renewable each year
- Have at his disposal a financial guarantee (bond) through a bank or financial organisation (article 17 of the decree dated 20 July1972)
- Be in possession of a written mandate authorising him to act on behalf of the owner
Furthermore, the agent must display a number of legal documents in order to exercise his activity: the number of his Carte Professionelle; the sum of his financial guarantee as well as the name and address of the company providing it; the name of the financial establishment and the account number into which payments are made.
The mandate guarantees the agent’s obligations to the vendor, as the following explains.
The mandate is obligatory, and must be signed by both the seller and the agent. Once signed, the agent may represent the vendor and is charged with finding a buyer in order to bring the transaction to a successful conclusion.
The mandate defines the limits of the agent’s duty, as well as the sum of the remuneration in the event of a sale.
The mandate states the conditions under which the property is sold, and specifies the asking price which has been determined through consultation between the vendor and the agent. The agent’s fees will not be asked for from the buyer or the vendor until the sale completes.
Each mandate must meet certain requirements, and must be registered and numbered.
Different mandat exist:
- The basic mandate (mandat simple) allows the seller to give mandates to several agents or to sell by his own means.
- The exclusive mandate (mandat exclusive) limits the instruction to a sole agent. Even if the vendor find a buyer himself, he will be required to pay the agency commission, unless otherwise stated in the mandate.
The mandate must have a time limit stated in the document, often 6 or 12 months, and is renewable thereafter. The contract also states the fees related to the transaction and who will pay them in the event of a sale.
The agent is regulated by other measures, among them the decree of 29th June 1990 relating to the publication of the commission charged by the agent in a real estate transaction.
Real estate agency fees are unrestricted, and this obligation to inform the client requires that the applied fees as a percentage, and the means by which these are calculated, be displayed at the entrance to the agency.
Agency commission rates in France vary on average between 4% and 10% depending on the selling price. A client with Zénith benefits from incomparable marketing tools and a unique international showplace that we alone can offer, yet at around 5% on average, our fees are in check.
The Promesse d’Achat is very often the first stage in the purchase process. This is a written offer from the potential buyer, and is submitted when the asking price is not offered. Should the buyer’s offer be at the asking price, this is not required.
At the next stage, a Compromis de Vente is signed. This document is considered by French law as a contract which legally binds the buyer and seller, subject to certain standard conditions, and it also specifies any particular conditions of the sale.
At the signing of the Compromis de Vente, the buyer pays a deposit of approximately 10% of the sales price, the indemnité d’immobilisation. The conditions of the ‘SRU’ law brought in in December 2000 gives the buyer a 7 day ‘cooling-off’ period, during which he/she may withdraw from the Compromis de Vente with no requirement to justify his/her decision. The potential buyer must send the notification of retraction by registered mail with recorded delivery.
The buyer is informed in writing, by recorded delivery, of this cooling-off period and the 7 days run from the day following the receipt of this letter. The seller, however, does not have the same rights and can not withdraw from the Compromis de Vente that he/she has signed without a valid reason.
There are a number of standard suspensive clauses which are be defined in the Compromis de Vente. An example would be a suspensive clause which states that if the acquisition proves impossible owing to the refusal of financing or of planning permission, the potential buyer may pull out with no contractual penalty being applied.
If the Compromis de Vente proceeds normally, the final stage comes with the signature at a notary’s office of the Acte Authentique. The French Notaire is a public official with the responsibility of formalising all the Actes and contracts. Under the authority of the Minister of Justice, the notary is appointed by decree. Completely impartial, he/she advises both the buyer and seller and ensures that the sale conforms to all relevant legal requirements.
The law requires that the results of certain inspections be provided during the conveyancing of a property sale.
The vendor of a property built before the 1st January 1949 and located in what is known as a zone à risque (a risk zone) must submit a report concerning the possible presence of lead. The decree 99-471 of 8th June 1999 requires an investigative search for termites dating from less than six months before the date of the signing of the Acte Authentique. This requirement is compulsory in all property sales.
Similarly, before the Acte Authentique can be signed, the decree 96-97 of 7th February 1996 stipulates that an investigative search for asbestos must be carried out in any building for which planning permission was granted before the 1st July 1997.
A comprehensive report on all gas installations over fifteen years old must be provided.
The DPE (Energy Rating Report) is now obligatory for all buildings of over 50m² and fitted with a heating system.
The seller of a property must also provide the relevant documents to prove his/her ownership, as well as other documents such as the charges paid over the last quarter, the property tax or the minutes from the last general assembly of the residents’ association.
Though traditionally the buyer ensures that these and other conditions are respected, the real estate agent is competent to advise in the majority of cases. Should further expertise be required, the agent can put the parties in touch with a professional expert in the relevant field (architect, lawyer etc.).