Offence of Estate Agency: When the More Lenient Law Applies Retrospectively

Imagine: you own a beautiful apartment in Beausoleil, on the heights of Monaco. You entrust the sale to an estate agency. The agency collects a 10% deposit from a buyer even before the signing of the preliminary contract. A few months later, the sale falls through. The buyer demands his deposit back. The agency refuses to return it, citing administration fees. You wonder: did it have the right to receive this money? And if so, under what conditions?

This is precisely the question the Court of Cassation decided in a judgment of 11 October 1966 (No. 66-90.479). A case that, although several decades old, remains highly relevant for all property professionals and their clients. The principle is simple: in criminal matters, the more lenient law applies retrospectively. But what does this mean concretely for you?

This decision is a cornerstone of property law. It clarifies the regime of deposits and guarantee payments received by intermediaries. And it offers valuable protection to agencies which, unwittingly, could have been in breach under a previous, stricter law. But beware: this retroactivity is not automatic, and its conditions are strict. Let's delve into the details.

The Facts: A Story Like Any Other

Mr X, an estate agent in Beausoleil, carries on his property transaction business. In 1959, before the entry into force of the Law of 21 June 1960, he receives, in connection with several transactions, guarantee deposits and down payments from prospective buyers. At the time, the Ordinance of 16 December 1958 absolutely prohibited any person engaged in operations of sale, purchase, exchange, letting or sub-letting of apartments or dwellings for residential use from receiving or accepting deposits, sureties or registration fees, whatever their amount.

In short, an estate agency could not, on any pretext, collect a penny before the signing of a notarised deed. The rule was draconian. But the legislator soon realised it was too rigid: it paralysed the market and drove transactions underground. Hence, the Law of 21 June 1960 relaxed this prohibition. Its Article 2 now provides that payments or remittances may be made to persons and under conditions determined by a regulatory text, which will take into account the guarantees offered.

This regulatory text is the Decree of 25 March 1965, published on 30 March and due to enter into force six months later, i.e. on 30 September 1965. But in the meantime, Mr X is prosecuted criminally for having received deposits between 1959 and 1960, under the 1958 Ordinance. The Court of Appeal convicts him, refusing to apply the new, more lenient law. For the court, the facts predate the Law of 21 June 1960, and that law is not retrospective. Mr X appeals to the Court of Cassation, and the High Court rules in his favour.

The Reasoning of the Court — Analysed

The Court of Cassation relies on a fundamental principle of criminal law: the retroactivity of the more lenient criminal law. This principle, now enshrined in Article 112-1 of the Criminal Code, was already in force in 1966 under the former Article 4 of the Criminal Code. It states that if a new law mitigates the penalty, it applies to offences committed before its entry into force, provided the conviction has not become final. In other words, at the time of judgment, the judge must apply the law most favourable to the defendant, even if it postdates the facts.

In this case, the Law of 21 June 1960 is overall more lenient than the 1958 Ordinance. Admittedly, its Article 1 extends the definition of the offence in some cases, but its Article 2 introduces an exception allowing intermediaries to receive funds under certain conditions. "Considered as a whole," says the Court, the new law is more lenient. Therefore, it must apply to facts committed before its enactment, provided the implementing decree is in force at the time the judge rules.

Now, the Decree of 25 March 1965 was published and entered into force on 30 September 1965, i.e. before the Court of Appeal's judgment. The Court of Appeal should therefore have applied it. By refusing, it violated the principle of retroactivity in mitius. The Court of Cassation quashes the judgment. This reasoning is an important milestone: it confirms that the assessment of whether a law is more lenient is made globally, provision by provision, not article by article. A law may be stricter on one point but overall more lenient: it is the whole that counts.

What This Changes for You — Concretely

For an estate agent or developer, this decision means that you can, under certain conditions, receive deposits or guarantee payments before the signing of the notarised deed, without risking criminal prosecution. But beware: these conditions are strict. The Decree of 25 March 1965 (now codified in Articles R. 321-1 et seq. of the Construction and Housing Code) requires that the funds be deposited in a sequestered account or guaranteed by a bank guarantee. If you do not comply with these formalities, you remain in breach.

For a buyer or tenant, this decision also protects you. If an agency has received a deposit without complying with the legal conditions, you can demand the restitution of the sums paid, or even bring an action for liability. Let's take a concrete example: in Saint-Laurent-du-Var, a buyer pays a €15,000 deposit to an agency for an apartment worth €150,000. The agency cashes the money without placing it in a sequestered account. The sale falls through. The buyer can demand full reimbursement, and if the agency refuses, he can sue it for abuse of confidence or violation of Article L. 321-1 of the Construction and Housing Code.

For a landlord, the principle also applies to lettings: you cannot demand a security deposit exceeding one month's rent (excluding charges) for unfurnished lettings, and agency fees are capped. If you have paid an excessive deposit, you can demand reimbursement of the surplus.

Four Tips to Avoid This Type of Dispute

• Never cash a deposit or guarantee payment without immediately placing it in a sequestered account opened for that purpose. Use a dedicated bank account, separate from your business account, and inform the client in writing of the account number and the conditions for release.
• Draft a reservation contract or preliminary sale agreement compliant with the provisions of the Construction and Housing Code. Mention the conditions of payment, restitution and the guarantees offered (e.g. bank guarantee).
• Keep yourself regularly informed of legislative and regulatory developments. The Law of 21 June 1960 has been amended several times; today, the Hoguet Law (No. 70-9 of 2 January 1970) and its implementing decrees set the rules. Attend professional training to stay up to date.
• If in doubt, consult a lawyer specialising in property law before cashing funds. An initial 30-minute consultation can save you from a criminal conviction and much higher legal costs. For example, for a deposit of €10,000, the cost of a consultation (€45) is negligible compared to the risks incurred (fine, reimbursement, damages).

Further Reading: Related Case Law and Developments

This 1966 decision is part of a consistent line of the Court of Cassation: the retroactivity of the more lenient criminal law is an absolute principle, even for continuing offences or habitual offences. The same logic is found in the judgment Cass. crim., 4 March 1964 (Bull. crim. No. 89) where the Court applied a new law that abolished an offence. More recently, Cass. crim., 27 March 2007 (No. 06-85.716) recalls that the judge must compare the penalties incurred under the old law and the new law, and retain the most favourable.

Note however: the principle does not apply if the new law is stricter. For example, the Law of 6 July 1989 on lettings reinforced the obligations of landlords; it does not apply to leases concluded before its entry into force. Similarly, the ALUR Law of 2014 introduced new prohibitions for estate agencies, but they are not retrospective for prior acts.

What few people know is that the legislator can sometimes expressly exclude retroactivity for reasons of public policy. But in the absence of a contrary provision, the benefit of the more lenient law is automatic. undefined, I have encountered cases where estate agencies were prosecuted for acts committed under an old law, while a new, more lenient law was already in force at the time of judgment. In these cases, a simple defence based on retroactivity sufficed to have the charges dropped.

Summary and Next Steps

FAQ

1. Can I demand the reimbursement of a deposit paid to an agency before the signing of a preliminary contract? Yes, if the agency did not comply with the legal conditions (sequestered account, bank guarantee). You can also claim damages if the agency wrongfully retained the funds.
2. What should I do if I am prosecuted criminally for having received deposits without complying with the law? Consult a lawyer immediately. Check whether a more lenient law came into force between the facts and the judgment. If so, your lawyer can invoke retroactivity to obtain a dismissal or acquittal.
3. What are the time limits for claiming reimbursement of a deposit? In criminal matters, the public action is time-barred after 6 years (for an offence) or 3 years (for a contravention) from the commission of the facts. The civil action for restitution is time-barred after 5 years from the date of payment.
4. Does this decision apply to lettings? Yes, the same principle applies to security deposits and agency fees collected in connection with a letting. The Law of 6 July 1989 sets strict rules; any excessive collection can be challenged.
5. Can I be convicted for acts committed before the entry into force of a law that prohibits them? No, by virtue of the principle of non-retroactivity of stricter criminal laws. But if the new law is more lenient, it applies retrospectively.

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