Private Property Agent Denied Commission: When the Seller Must Pay Despite Substitution of Purchaser

Imagine: you own a commercial property in Paray-le-Monial. You sign a mandate with an estate agency to find a buyer. A purchaser comes forward, you sign a preliminary contract. Then this purchaser withdraws but finds someone else to take their place. The sale goes through with this new person. The agent claims their commission. The seller refuses, arguing that it is not the initial purchaser. Who is right? That is exactly the question decided by the Court of Cassation in a judgment of 7 July 1998 (No. 96-17.784). A question that regularly agitates property professionals from Montceau-les-Mines to Chalon-sur-Saône.

The judges' answer is clear: if the mandate and the preliminary contract place the commission on the seller, and the sale is ultimately concluded with the beneficiary of a right of pre-emption or a substituted purchaser, the agent is entitled to their remuneration. In short, the seller cannot circumvent payment of the commission by allowing the initial buyer to pass the deal to a third party. This decision, made over twenty-five years ago, remains a reference for all disputes concerning the right to commission of estate agents.

So, selling owner, what are the risks if you sign a mandate and the sale goes through with someone other than the purchaser introduced? And estate agent, how can you secure your commission in the face of such a substitution? Let us delve into the details of this case, and above all, what it means practically for you.

The facts: a story that happens every day

It all begins with a company, a franchisee of Status, which holds a leasehold interest (i.e. a commercial lease). It mandates Fimoren, an estate agent, to sell this interest. A mandate is signed, providing that the agent's remuneration is the responsibility of the seller (the leaseholder). The agent finds a purchaser: the company Partner? No, first an initial company, which signs a synallagmatic promise of sale (a preliminary contract binding both parties). This promise also stipulates that the commission is due by the seller.

But then: before completion of the sale, the initial purchaser withdraws but exercises a right of pre-emption (a priority right to buy) it had, and substitutes the company Partner. In other words, it transfers its place to Partner, which becomes the final purchaser. The sale is concluded with Partner. The estate agent then claims commission from the seller. Refusal: the seller argues that it is not the purchaser introduced by the agent, but a substituted third party.

The case comes before the Rennes Court of Appeal. The appeal judges rule in favour of the seller: they consider that the commission is not due because the sale did not take place with the initial purchaser. The estate agent appeals to the Court of Cassation. The Court of Cassation quashes the appeal judgment, holding that the Court of Appeal violated Article 6 of the Law of 2 January 1970 (the Hoguet Law, which governs the profession of estate agent). For the High Court, since the mandate and the promise place the commission on the seller, and the sale took place with the beneficiary of the right of pre-emption, which substituted for the initial purchaser, the agent is entitled to commission. The seller cannot avoid this obligation on the pretext that the buyer changed along the way.

The reasoning of the court — dissected

The Court of Cassation relies on Article 6 of the Law of 2 January 1970, known as the Hoguet Law. This text notably requires that the estate agent's mandate be in writing and specify the conditions of remuneration. But above all, case law derives from it that the agent is entitled to commission as soon as the sale is concluded with a purchaser introduced by them, or even with a person substituted for that purchaser, if the mandate does not exclude it.

In this case, the Court of Appeal had found that the mandate and the promise placed the commission on the seller. It also found that the sale took place with the beneficiary of the right of pre-emption, which had substituted for the initial purchaser. Yet, for the Court of Cassation, these findings should have led to ordering the seller to pay the commission. By refusing to do so, the Court of Appeal violated the law.

The reasoning is as follows: the seller undertook to pay a commission if the sale was completed with the introduced purchaser (or their substitute). The sale took place. It does not matter that the final purchaser is not the one who signed the promise: as long as the substitution is regular and the seller accepts it, they must pay the commission. This is an application of the principle that the principal (the seller) cannot defeat the agent's remuneration by unilaterally modifying the conditions of the sale.

This decision is part of consistent case law: the estate agent is entitled to commission as soon as the sale is concluded, even if the initial purchaser is replaced, unless the mandate contains a contrary clause. It is a protection for the intermediary, who has carried out their mission of bringing the parties together.

What this changes for you — practically

For selling owners (landlords or sellers of real estate), this decision means that you cannot avoid paying the commission by allowing the initial buyer to be substituted by a third party. If you sign a mandate with an agent, and the sale goes through with a purchaser introduced by the agent, even if that purchaser changes name before the final signing, the commission remains due. Imagine: you sell a flat in Montceau-les-Mines. The agent introduces a couple. You sign a preliminary contract. Then the couple withdraws, but proposes their cousin. You accept and sell to the cousin. The agent claims their commission of €5,000. You cannot refuse on the grounds that it is not the same buyer.

For estate agents, this case law is a valuable weapon. It allows you to claim your commission even in case of substitution of purchaser. But beware: the mandate must still be clear that commission is due in the event of sale with any person introduced, or that substitution is provided for. A tip: have a mandate signed that expressly states that commission is due for any sale concluded with a purchaser introduced by you, or with any person substituted for that purchaser.

For purchasers (individuals or professionals), know that if you substitute for an initial buyer, the seller will still have to pay the commission to the agent. This does not affect your purchase price, but it can create tensions if the seller thought they would save this amount. Be transparent with all parties.

A worked example: in Paray-le-Monial, an estate agent introduces a commercial property at €150,000, commission of 6% inclusive of VAT (€9,000). The initial purchaser withdraws but a friend takes over the deal. The sale goes through at €150,000. The agent claims €9,000. The seller refuses. When brought before the court, the 1998 case law is applied: the seller must pay. Result: €9,000 + legal costs (approx. €1,500) = €10,500 in total. Moral: better to include a clause in the mandate.

Four tips to avoid this type of dispute

• Draft a precise mandate: The sale mandate should clearly state that commission is due in the event of sale with the introduced purchaser or any person or company that substitutes for them. This avoids any ambiguity.
• Mention the right of substitution in the preliminary contract: In the synallagmatic promise of sale, include a clause indicating that if the purchaser substitutes a third party, the seller remains liable for the commission to the estate agent.
• Keep all evidence of your involvement: As an agent, keep records of your emails, visit reports, and the introduction of the purchaser. In case of dispute, these elements will prove that the sale was indeed due to you.
• Inform the seller of the consequences: Before signing, explain to the seller that if they accept a substitution of purchaser, they will still have to pay the commission. A simple discussion can avoid later litigation.

Further reading: related case law and developments

This 1998 decision is not isolated. The Court of Cassation has rendered several judgments to the same effect. For example, in a judgment of 14 November 2012 (No. 11-23.204), it held that the estate agent is entitled to commission when the sale is concluded with a person introduced by them, even if the mandate had expired, provided the sale took place within a reasonable time after expiry (generally 1 year). This reinforces the protection of the agent.

However, beware: if the mandate contains an exclusive introduction clause (i.e. only a named person can benefit from the commission), substitution may not be covered. Hence the importance of drafting.

The trend of the courts is therefore to protect the estate agent, considered to have fulfilled their mission as soon as they have brought the parties together. This case law has been stable since the 1990s. For the future, it could be challenged if a reform of the Hoguet Law were to specify the conditions of commission, but to date, this is the applicable law.

What you absolutely need to remember

FAQ:

• Q: Can I refuse to pay the commission if the final buyer is not the one introduced by the agent? A: No, if the mandate and the preliminary contract place the commission on you, and the sale is concluded with a purchaser substituted for the one introduced, you must pay. Substitution does not discharge the seller.
• Q: What should I do if I am an estate agent and the seller refuses to pay after a substitution? A: You can send a formal notice, then bring the matter before the judicial court. The 1998 case law is in your favour. Keep all evidence of your involvement.
• Q: Is there a time limit to claim the commission? A: Yes, the limitation period is 5 years (general law period). Since the Law of 17 June 2008, it runs from the conclusion of the sale.
• Q: Must the mandate mention substitution for the commission to be due? A: Ideally yes, but case law accepts that even in the absence of an express clause, the agent is entitled to commission if the sale took place with the introduced purchaser or their substitute. But to avoid any dispute, it is better to provide for it.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →