Merger by absorption of the managing agent: the general meeting must vote on the new managing agent

Imagine: you own a flat in Lunel, in a quiet block of flats subject to co-ownership. One day, you receive a summons to a general meeting (GM) signed by a company you have never heard of. Reading the agenda, you discover that the managing agent has merged with another company, and that this latter now claims to represent you without the co-owners having voted. You ask yourself: is this legal? Can a new managing agent be imposed on you without your consent?

This situation, more common than one might think, was ruled on by the French Supreme Court (Cour de cassation) in a judgment of 29 February 2012. The judges recalled a fundamental principle: the managing agent is freely chosen by the general meeting of co-owners, and no substitution can take place without an express vote. In other words, a merger by absorption does not automatically transfer the managing agent mandate to the absorbing company.

But what does this actually mean for you, as an owner or co-owner in Sète or elsewhere? Let us delve into this decision and its practical implications.

The facts: a story that happens every day

The case pitted the company Cabinet Aquitaine Gestion Immobilière (trading as "Cabinet Couture") against a co-ownership syndicate of a building in Bordeaux. Initially, the managing agent in place was Cabinet Couture. But it merged with another company, Aquitaine Gestion Immobilière. After the merger, the latter continued to manage the co-ownership, presenting itself as the new managing agent, convening general meetings and billing its fees.

A co-owner, Mr X, challenged the validity of these general meetings. He argued that the absorbing company had never been appointed as managing agent by a vote of the general meeting, and therefore all decisions taken at those GMs were void. The co-ownership syndicate, supported by the absorbing company, argued on the contrary that the merger by absorption involved a universal transfer of assets, including the managing agent contract.

The case came before the Bordeaux Court of Appeal, then the French Supreme Court. The question was simple: can a merger by absorption automatically transfer the managing agent mandate to the absorbing company, without a vote by the co-owners?

The reasoning of the court — dissected

The French Supreme Court answered in the negative. It relied on Law No. 65-557 of 10 July 1965, which governs the legal status of co-ownership of buildings. Article 18 of this Law provides that the managing agent is appointed by the general meeting of co-owners. This power of appointment is exclusive: no third party can substitute for it.

In clear terms, the legislator intended that co-owners freely choose their managing agent, because the latter manages the common parts and binds the co-ownership. A merger by absorption cannot circumvent this rule. Even if company law provides for a universal transfer of assets in the event of a merger, this transfer does not apply to contracts entered into in consideration of the person of the contracting party (intuitu personae), such as the managing agent mandate.

The judges specified that the absorbing company is a separate legal entity from the former managing agent. Therefore, it cannot rely on the initial mandate. To become the new managing agent, it must be expressly appointed by a vote at the general meeting. The Court of Appeal had ruled in favour of the absorbing company, but the French Supreme Court set aside this reasoning: the summons to GMs signed by the absorbing company are invalid, and all decisions taken at those GMs may be annulled.

What few people know is that this solution is part of consistent case law: the French Supreme Court jealously protects the co-owners' power to choose their managing agent. However, note: if the managing agent contract contains a substitution clause in the event of a merger, would that clause be valid? The Court does not say explicitly, but the answer is probably no, because it would contravene the public policy of the 1965 Law.

What this means for you — practically

For co-owners, this decision is a protection: you cannot find yourself with a managing agent imposed without a vote. If your current managing agent merges with another company, you must insist that the new company be put to a vote at the general meeting. In the meantime, the former managing agent (or the absorbing company?) must continue to manage the co-ownership, but the situation is unclear: in practice, an emergency GM must be convened to regularise the matter.

Let us take a concrete example: in Sète, a co-ownership of 30 units has as its managing agent the company "Gestion Sète". This company merges with "Immobilière du Sud". Without a vote, Immobilière du Sud convenes a GM and passes a resolution for repointing works costing €80,000. A co-owner challenges this. The decision of the French Supreme Court supports him: the GM is void, the works annulled. To avoid this, the co-owners must vote to appoint the new managing agent before any GM is convened.

For professional managing agents, this decision requires vigilance: in the event of a merger by absorption, you must not act as the new managing agent without having been duly appointed by a GM. Otherwise, the acts performed (summons, signing contracts, collecting service charges) may be annulled, exposing the managing agent to liability claims (Article 1240 of the Civil Code, formerly 1382).

If you are in this situation, you should check your co-ownership's by-laws and the managing agent contract. In the event of a merger, request an extraordinary GM to regularise the situation. Deadlines? There is no legal deadline, but act quickly to avoid paralysis of the co-ownership.

Four tips to avoid this type of dispute

• Check the managing agent contract: read the clauses relating to substitution or assignment of the contract. If a clause authorises transfer in the event of a merger, it is probably void, but it is better to challenge it at the general meeting.
• Insist on a GM as soon as you learn of a merger: convene a general meeting to vote on the appointment of the new managing agent. If the outgoing managing agent refuses, petition the judicial court (tribunal judiciaire) for the appointment of a provisional administrator.
• Keep evidence: retain letters, summons, minutes of GMs. In the event of a dispute, these documents will be essential to demonstrate the absence of a vote.
• Consult a lawyer lawyer: a property law professional can advise you on the validity of acts performed by the absorbing managing agent and on available remedies.

Further reading: related case law and developments

This decision is part of a line of rulings protecting the power of co-owners. One can cite a French Supreme Court judgment of 14 March 2001 (no. 99-11.237) which had already held that the assignment of the managing agent contract to another company was not enforceable against co-owners without their consent. More recently, a judgment of 26 January 2022 (no. 20-16.344) confirmed that the managing agent cannot delegate its management to a third party without authorisation from the GM.

The trend is therefore clear: the courts are scrupulous about respecting the will of the co-owners. In future, any attempt to circumvent the vote is likely to be severely sanctioned. Managing agents must therefore ensure they obtain an express vote at a GM before exercising their functions.

Frequently asked questions

Can I refuse to pay service charges to the new managing agent resulting from a merger? Yes, if the new managing agent has not been appointed by the GM. You can challenge the demands for payment. But be careful: you must act quickly and in writing, stating your reasons for refusal.

What should I do if my managing agent has merged without telling me? Request a copy of the minutes of the GM that appointed the new managing agent. If there is none, contact the co-owners' council or a lawyer to convene an emergency GM.

What are the time limits for challenging a GM convened by an unauthorised managing agent? The time limit is two months from notification of the minutes of the GM (Article 42 of the 1965 Law). After this period, the action is inadmissible.

Can the absorbing managing agent charge for its services? No, because it has no mandate. In practice, it may demand fees, but you can challenge them. If you have paid, you can claim reimbursement before the court.

Can a subsequent GM vote retrospectively regularise the situation? Yes, the GM can ratify the acts performed by the absorbing managing agent, provided that the ratification is passed with the required majority (simple majority under Article 24 or absolute majority under Article 25, depending on the acts).

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