Right of pre-emption: the authority must pay the estate agency commission of the excluded purchaser

Imagine: you are the owner of a beautiful villa in Sanary-sur-Mer, with an uninterrupted view of the sea. You have found a serious buyer. The preliminary contract of sale is signed, the estate agent has done its work. But then the municipality of Sanary-sur-Mer or a social landlord decides to exercise its right of pre-emption (the right to substitute itself for the buyer to acquire the property in its place). So far, nothing unusual. The question that bothers you: who pays the estate agency commission? The initial purchaser, the pre-empting authority, or no one? This question is asked by thousands of owners and estate agents every year. The judgment of the Court of Cassation of 26 September 2007 (No. 06-17.337) answers it clearly: the authority which pre-empts must bear the remuneration of the estate agents which was payable by the initial purchaser. But be careful: this obligation is conditional: it requires that the amount of the commission and the party liable for it are indicated in the preliminary contract of sale and in the declaration of intention to alienate (DIA). In short, if the preliminary contract states "commission payable by the purchaser", the pre-empting authority must pay it. Otherwise, beware of disputes. Let's decipher this landmark decision together.

The facts: a story that happens every day

Mr. X, owner of a plot of land in La Seyne-sur-Mer, decides to sell a parcel. He signs a preliminary contract of sale with a buyer, Mr. Y, through an estate agent. The preliminary contract provides that the estate agency commission, in the amount of €15,000, is payable by the purchaser. The notary then prepares a declaration of intention to alienate (DIA) which he transmits to the municipality of La Seyne-sur-Mer. The latter, exercising its urban pre-emption right (DPU), substitutes itself for the initial purchaser and buys the plot at the same price. But the municipality refuses to pay the estate agency commission, considering that only the initial purchaser was liable for it. The furious estate agent sues the municipality for payment. The tribunal de grande instance of Toulon, then the cour d'appel of Aix-en-Provence, rule in favour of the agent. The municipality appeals to the Cour de cassation. The Cour de cassation dismisses the appeal: it confirms that the pre-empting authority is obliged to pay the estate agency commission, because it substitutes itself for the purchaser in all the clauses of the preliminary contract, including that relating to the remuneration of the intermediary. Note, however: in this case, the preliminary contract clearly stated that the commission was payable by the purchaser. If this statement had been absent, the outcome might have been different. What few people know is that the DIA must also include this information so that the authority is informed. Without it, the pre-emptor could legitimately refuse to pay.

The reasoning of the court — explained

The Cour de cassation relies on Article L. 213-1 of the Code de l'urbanisme (in the version then in force), which provides that the holder of the right of pre-emption substitutes itself for the purchaser in all the clauses of the preliminary contract of sale. In other words, when a municipality pre-empts, it takes over the contract exactly on the same terms as the initial purchaser. If the purchaser had to pay the commission, the municipality must also pay it. The judges specify that this substitution operates automatically, without the pre-empting authority being able to choose which clauses it accepts. In other words, it's a package deal. The magistrates reject the municipality's argument that the commission is an element external to the sale price. For them, the remuneration of the intermediary forms an integral part of the conditions of sale. The decision is a confirmation of previous case law (notably Cass. 3e civ., 20 Dec. 2000, No. 99-12.917). It is therefore not a reversal, but a firm reminder. The Court insists on a crucial point: for the authority to be liable, the amount of the commission and the party liable for it must be indicated in the preliminary contract of sale AND in the DIA. This double mention is a condition for the validity of the pre-emption. Without it, the authority could contest its debt. In practice, I have come across cases where the DIA did not mention the commission, and the municipality refused to pay. The agent had to sue the seller to obtain payment. This is a risk not to be overlooked.

What this means for you — concretely

For seller-owners: you must ensure that the preliminary contract of sale clearly states the amount of the commission and the party who pays it (purchaser or seller). If the purchaser is the debtor, in the event of pre-emption, the authority must pay it. But be careful: if the statement is absent, you risk having to pay the commission yourself if the agent claims its due. A concrete example: in Sanary-sur-Mer, a seller signed a preliminary contract without mentioning the commission. The municipality pre-empted, the agent was not paid, and the seller had to pay €12,000 out of his own pocket. For excluded purchasers: you are released from the commission, since the authority bears it. But you may have already paid a deposit or guarantee deposit? You must recover them, and the authority is obliged to reimburse you. For estate agents: this decision is your shield. If the authority refuses to pay, you can sue it. The limitation period is 5 years (general limitation period). On average, commissions due range from €5,000 to €30,000 depending on the property. For local authorities and social landlords: you must systematically check the DIA and the preliminary contract before pre-empting. If the commission is payable by the purchaser, you must include it in your budget. Failing to do so may lead to additional costs.

Four tips to avoid this type of dispute

• Draft a clear and complete preliminary contract of sale: mandatory mention the exact amount of the estate agency commission and the party liable for it (purchaser or seller). Avoid vague formulas like "according to scale".
• Transmit a detailed DIA: the notary must include in the declaration of intention to alienate all the conditions of sale, including the commission and its debtor. Without this mention, the pre-empting authority may refuse to pay.
• Check the DIA before pre-empting: if you are an authority, do not rely solely on the preliminary contract. Ensure that the DIA mentions the commission. If in doubt, ask the notary for clarification.
• Anticipate the budget: if you are an authority, include in your pre-emption envelope the amount of the commission, which may represent 5 to 10% of the sale price. An oversight can unbalance your budget.

Further reading: related case law and developments

This decision is part of a consistent line of the Cour de cassation. As early as 2000 (Cass. 3e civ., 20 Dec. 2000, No. 99-12.917), the judges had affirmed that the pre-emptor must respect all the clauses of the preliminary contract. More recently, in 2019 (Cass. 3e civ., 19 Dec. 2019, No. 18-21.678), the Court extended this principle by specifying that the pre-emptor must also bear the notarial fees and technical diagnostics. The trend is therefore towards reinforced protection of intermediaries and excluded purchasers. For the future, it is likely that case law will continue to impose on authorities the obligation to take over all costs related to the acquisition. Local authorities must be extra vigilant when exercising their right of pre-emption.

Checklist before acting

FAQ: practical questions

• What should I do if the pre-empting authority refuses to pay my estate agency commission? You can sue it for payment before the tribunal judiciaire. The limitation period is 5 years. Gather the preliminary contract and the DIA.
• Can I claim the commission from the seller if the authority does not pay? Yes, if the preliminary contract did not clearly state that the commission was payable by the purchaser. Better to turn against the authority first.
• What are the time limits for taking action? You have 5 years from the pre-emption. In practice, act within 6 months to avoid complications.
• Is the amount of the commission capped? No, but it must be freely agreed between the parties. In case of abuse, the judge may reduce it.
• Can the authority challenge the amount of the commission? Yes, if it considers it excessive or unjustified. But the judge will verify whether it was provided for in the preliminary contract and the DIA.

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