Headdon Consulting is a French registered company offering independent legal advice and assistance to English speaking people around the world who are purchasing, selling or own real estate property in France, whether it be a holiday home, a principal residence or in connection with a small business.

Part I - An introduction to estate agents in France

Who can be an estate agent in France?
In order to be an estate agent, it is necessary to obtain authorisation from the local government administration. Access to the profession is regulated and only individuals who have a certain level of qualification (a law degree for example) or experience (ten years salaried experience in an estate agency) can obtain the authority to practice as an estate agent. This authorisation is renewed on an annual basis.

In addition to the estate agent’s employees, there are also what are known as commercial agents (‘agent commercial’). A commercial agent has a contract with an estate agent to market and sell property on his or her behalf. He or she is registered as working in this capacity with the local government administration.

How is the industry regulated?
There are two organisations which regulate the estate agency profession: FNAIM and SNPI. Most estate agents are members of one of these industry regulators and these bodies will hear complaints against members and sanction them if necessary.

Are they covered by professional indemnity insurance?
Cover by professional indemnity insurance is a pre-requisite to obtaining authorisation to be an estate agent. The nature of the insurance will depend upon whether the estate agent deals solely with real estate transactions or also becomes involved in management (rental e.t.c.). It is this insurance which will compensate an individual in the event that the estate agent has been negligent or otherwise not complied with his or her professional obligations. A commercial agent will be covered by the estate agent’s professional indemnity insurance. Additional insurance cover is required where the agent is able to act as an escrow (séquestre) and hold client’s money.

How can the status of an estate agent be checked?
You are entitled to see proof of their registration as an estate agent and their insurance cover (this should in any event be displayed on the premises). If you have doubts about the validity of an agent’s registration you can contact the local prefect’s office (préfecture), chamber of commerce (chambre du commerce) or the regulatory body of which the agent purports to be a member.

Part II - The remuneration of estate agents

How are estate agents remunerated?
When a vendor approaches an estate agent for the sale of a property, he or she will sign a mandate (‘mandat de vente’) to allow the agent to sell the property on his or her behalf. The agent may be the sole agent able to sell the particular property (an exclusive mandate) or there may be multiple agents (a non-exclusive mandate). The mandate will provide details in relation to the property, the task that the agent will accomplish, time period of validity and the amount that is payable to the agent in remuneration (‘frais d’agence’). This amount should be given inclusive of all taxes and it should be specified whether it is the vendor or the purchaser who is responsible for paying the fee. You are entitled to see the sale’s mandate.

What is the amount of the remuneration?
The agent’s fee can be up to 10% of the purchase price of the property (much higher than in many other countries). The fees can vary below this amount and can drop to around 5% to 7% for more expensive properties. The agent should display his or her fee scale upon the premises.

Who pays the agent’s fee?
As mentioned above, the person responsible for paying the fee is specified in the sale’s mandate (sometimes an agent will ask a purchaser to sign a search mandate (‘mandat de recherche’) which provides the agent with authorisation to find a property corresponding to certain criteria. This document may also govern the issue of the fee and who is responsible for paying it). If it is for the purchaser to pay then it will be added on to the net purchase price. If the vendor is to pay the fee then in reality it will have been factored into the overall purchase price. This information will be reproduced in the first contract (‘compromis’ or ‘sous-seing privé) and the exact method of paying the fee will depend upon these terms. When a property is advertised, it must specify whether the price given includes the agent’s fees (‘fai’ or ‘frais d’agence inclus’).

What happens if I view a property through an agent and then deal with the vendor directly?
The mandate will govern what is to occur in this situation. When a purchaser views with an agent, he or she is normally required to sign a ‘bon de visite’ which records the fact that the purchaser viewed this particular property on a given date. It is this document which will enable the agent to pursue the purchaser if he or she deals directly with the vendor (alternatively, the agent may pursue the vendor depending on the conditions of the original mandate). You should always make sure you understand these documents prior to signing or perusing them due to the consequences if their terms are breached.

Part III - The role of estate agents

What is the role of the estate agent?
An estate agent will seek out properties to market. Their essential role involves the marketing of the property and the showing of it to interested purchasers. They act as an intermediary between the parties in order to conclude a sale.

Are they responsible for any of the contractual documents ?
Sometimes they will take on the responsibility of drawing up the first contract (‘compromis’ or ‘sous-seing privé’) and this will include commissioning any obligatory surveys that are required, obtaining full details from the parties and information concerning the property. Once the contract has been signed by the parties and the purchaser’s seven day cooling off period has elapsed, the file is then passed to the notaire who will commence his own role in the transaction.

If they do not draft the first contract then it will be a notaire who will do so and the agent will instruct him or her to this effect.

In any event, they must be aware of the law and regulations applicable to the property so that they can fulfill their role of advising the parties on the transaction. In this regard, their role is not to be assimilated with that of the notaire who has far more extensive advisory duties.

Can they hold clients’ money?
They can hold clients’ money (the deposit) provided that they have subscribed to an additional insurance policy guaranteeing the return of deposited funds. If they do not benefit from this insurance then they are not able to hold clients’ money and all sums should be sent to the notaire.

Do they have to help with the reconnection of services and insurance?
In principle, once the parties have reached a preliminary agreement on the property to be sold and the price, the estate agent’s role is concluded (it would effectively end following the signing of the first contract if the agent is responsible for this). The agent is not legally obliged to help with the reconnection of services and insurance but should at the very least remain available to assist with the conclusion of the transaction e.g. answering questions on the property, showing the property to the purchaser prior to completion e.t.c.

Do they have to provide me with translations of the documents?
As an estate agent, it is not their role to act as a translator. However, they should ensure that you understand the documents properly as this is part of their role as a professional intermediary. They should thus not object to you seeking a translation and/or separate advice in your own language and if they pressurise you into not doing so they are, at the very least, acting unprofessionally.

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Headdon Consulting Sarl
Le Moulié, 32190 Rozès (Gers), France
Tel: 0033-(0)5-62.68.00.81
Fax: 0033-(0)5-62.68.01.49

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