SAFER pre-emption: real estate agent deprived of commission

Imagine: you own a farm in Blagnac, near Toulouse, and you wish to sell it. A real estate agent introduces a buyer, and you sign a first preliminary sale agreement (a pre-contract promising to sell) providing that the agent's commission will be your responsibility. But the buyer hesitates, and a second preliminary agreement is signed, this time with a different clause: the commission will be the buyer's responsibility. Then, a twist: the SAFER (Société d'Aménagement Foncier et d'Établissement Rural, a public body with a right of pre-emption over agricultural land) exercises its right of pre-emption and buys the property in your place. Both preliminary agreements become void (they have no further effect). The real estate agent then claims commission. Who must pay? And above all, can the agent still claim remuneration when the sale did not take place?

This question was decided by the Court of Cassation in 1974. It refused any commission to the agent, holding that by choosing to notify the second preliminary agreement (the one where the buyer was to pay the commission) to the SAFER, the agent had impliedly agreed not to claim commission from the seller. Even though the preliminary agreement became void, this agreement remains valid. A decision that may surprise, but which rests on an implacable contractual logic.

So, what lessons can be drawn from this case for today's owners, buyers and real estate agents? Let's delve into the details.

The facts: a story that happens every day

Mr. Duval, owner of a farm in the Pamiers region (Ariège), entrusts the sale to a real estate agent, Mr. Duval (the agent). The latter finds a buyer, Mr. Trottin. Together they draft a first preliminary sale agreement at a price of 450,000 francs. This preliminary agreement includes a voidness clause (automatic cancellation) if the SAFER exercises its right of pre-emption, and stipulates that the agent's commission (10,000 francs) will be the responsibility of the seller, Mr. Duval.

But the matter becomes complicated: a second preliminary agreement is drawn up, still for the same property, at the same price, and with the same voidness clause. This time, the commission is placed on the buyer, Mr. Trottin. The agent chooses to notify (formally inform) this second preliminary agreement to the SAFER, as required by law. The SAFER then exercises its right of pre-emption, which causes both preliminary agreements to become void. The sale does not take place.

The real estate agent claims his commission from the seller, Mr. Duval. The latter refuses, arguing that the second preliminary agreement placed the commission on the buyer, and that in any case the sale was not concluded. The agent then sues the seller to obtain payment of his commission. The Court of Appeal of Toulouse dismisses the agent's claim, and the agent appeals to the Court of Cassation.

The reasoning of the court — dissected

The Court of Cassation, in its judgment of 12 March 1974, dismisses the agent's appeal and upholds the decision of the Court of Appeal. The reasoning is as follows:

First, the Court of Appeal found that both preliminary agreements were void due to the exercise of the right of pre-emption by the SAFER. This means that no sale was concluded, and therefore no commission is due in principle, because the agent's mandate (the contract entrusting him with the sale) is linked to the completion of the sale. But here, the agent was not claiming his commission on the basis of the mandate, but on the basis of an allegedly separate agreement.

Next, and this is the crucial point, the Court of Appeal noted that the agent himself had chosen to notify the second preliminary agreement to the SAFER, the one that placed the commission on the buyer. In doing so, he had agreed not to claim his commission from the seller. This agreement could not be called into question by the voidness of the preliminary agreement. In other words, the agent had made a choice: by favouring the second preliminary agreement, he had renounced his right to commission against the seller.

The Court of Cassation upholds this reasoning: there is no contradiction between the finding of voidness of the preliminary agreements and the refusal of commission. The agent cannot rely on the voidness to go back on his initial choice. In short, the agent accepted the risks associated with pre-emption, and he must bear the consequences.

This decision fits within the general law of contracts: everyone is bound by their undertakings, even if the main contract (the preliminary agreement) disappears. Article 1134 of the Civil Code (now 1103) provides that agreements lawfully formed take the place of law for those who have made them. Here, the agent had, by his conduct, concluded an implied agreement with the seller: in exchange for the notification of the second preliminary agreement, he renounced claiming his commission from the seller.

What this means for you — concretely

If you are the owner of a rural property (or even urban, by analogy) and you sign several preliminary agreements with different commission clauses, be vigilant: if the agent chooses to notify a preliminary agreement that places the commission on the buyer, you could be released from your obligation to pay the commission, even if the sale fails. But be careful, this depends on the circumstances. For example, if you are an owner in Pamiers and you sign a first preliminary agreement with commission payable by you, then a second with commission payable by the buyer, and the SAFER pre-empts, the agent cannot claim his commission from you, as in the Duval case.

If you are a buyer, know that if you agree to take the commission on yourself in the preliminary agreement, you could be liable to pay it even if the sale does not go through because of the pre-emption. But in the judgment, the buyer was not pursued because the commission was only due upon completion of the sale, which did not happen. In practice, commission clauses are often conditional on the completion of the sale, so voidness renders them ineffective.

If you are a real estate agent, this decision is a warning: when you draft several preliminary agreements, make sure the commission clause is consistent and that you do not impliedly waive your rights. Notifying the wrong preliminary agreement can cost you your commission. undefined, I have come across cases where agents signed amendments modifying the burden of the commission without realising it, and found themselves without remuneration after a pre-emption.

A concrete example: imagine a sale at €300,000 with a commission of €15,000. If the first preliminary agreement places the commission on the seller, and the second on the buyer, and the SAFER pre-empts, the agent loses his commission if he notified the second. He cannot turn against the seller.

Four tips to avoid this type of dispute

• One preliminary agreement at a time: Avoid signing several preliminary agreements for the same property. If modifications are necessary, prefer an amendment (a modifying deed) instead of a new preliminary agreement, to clarify the parties' intentions.
• Precise commission clause: In the preliminary agreement, clearly indicate who pays the commission and when. Specify that the commission is only due upon completion of the sale, and that in case of pre-emption, no commission is due.
• Thoughtful notification: If you must notify the preliminary agreement to the SAFER (or any other holder of a right of pre-emption), choose the one that best suits your interests. The agent must be aware that his choice may have consequences on his remuneration.
• Record agreements in writing: Any agreement modifying the burden of the commission must be formalised in writing and signed by all parties. Do not rely on verbal or implied agreements.

Further reading: related case law and developments

This 1974 decision has remained a reference in matters of SAFER pre-emption and agency commission. It has been confirmed by other judgments, for example a Court of Cassation judgment of 28 June 2000 (appeal no. 98-16.123) which held that, where the real estate agent had agreed to reduce his commission in the event of pre-emption, he cannot go back on that undertaking after the exercise of the right of pre-emption.

The trend of the courts is to protect the seller and the buyer against abusive claims for commission after a pre-emption. The judges consider that the agent, as a professional, must know the risks and bear them. However, if the agent can demonstrate that he did not waive his commission, he can claim it on the basis of the mandate, but only if the sale was concluded (which is not the case in the event of pre-emption).

For the future, with the multiplication of rights of pre-emption (SAFER, municipalities, etc.), agents must be doubly cautious in drafting preliminary agreements and mandates. A standard clause could be: "In the event of the exercise of a right of pre-emption, no commission shall be payable by any party."

What you absolutely must remember

• Q: Can the agent claim his commission if the SAFER pre-empts? A: In principle no, because the sale is not completed. But everything depends on the clauses of the preliminary agreement and the agent's conduct.
• Q: What should I do if I have signed two preliminary agreements? A: Cancel the first and keep only one preliminary agreement amended by a deed of amendment, to avoid any ambiguity.
• Q: Can I be sued by the agent after a pre-emption? A: If the preliminary agreement placed the commission on you and the sale did not take place, you are generally not liable. But if the agent proves a separate agreement, he could take action.
• Q: What is the lesson for real estate agents? A: Never agree to modify the burden of the commission without written consideration, and always provide for a voidness clause releasing from liability in the event of pre-emption.
• Q: Does this case law apply to urban sales? A: Yes, by analogy, if a right of urban pre-emption is exercised. The reasoning on implied waiver remains valid.

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