Managing Agent's Mandate: When Changing Management Leads to Financial Conflict

Imagine you own an apartment in a residence in the hills of Grasse. You attend the annual general meeting where, after years of dissatisfaction, the co-owners decide to change managing agents. The vote passes, a new manager is appointed, and you think you can move on. But a few months later, the former managing agent demands payment for works they initiated after their departure. Who should pay? The co-ownership? The new managing agent? No one?

This situation, much more common than one might think, led to a fundamental decision by the Cour de cassation in 2013. Every year, hundreds of co-ownerships on the Côte d'Azur, from Nice to Grasse, change managing agents. And each time, the question of financial commitments made by the former manager after their departure can create considerable tensions.

The decision of 16 October 2013 provides a clear answer, but one that often surprises uninformed owners. It establishes that the managing agent's mandate (the contract binding the manager to the co-ownership) is a specific regime, distinct from the general rules of contract law. But what exactly does this change for your daily life as a co-owner?

The facts: a story that happens every day

Take the example of Mr and Mrs Martin, owners of a three-room apartment in a co-ownership of 40 units in Grasse. Their managing agent, the company Sergic, has managed the building for five years. Over the course of general meetings, the co-owners accumulate frustrations: delays in façade renovation works, poorly justified invoices for green space maintenance, lack of responsiveness to damp problems in the cellars.

At the general meeting on 30 June 2009, tension reaches its peak. After a heated debate, the co-owners vote by majority to terminate Sergic's mandate and appoint a new managing agent, a small local company. Everything seems settled. The new manager takes up their duties in early July.

But then in August 2009, Sergic initiates urgent roof repair works, for an amount of €15,000. The former managing agent justifies this intervention by leaks reported before their departure. They present the invoice to the co-ownership, which refuses to pay, considering that these works now fell under the new managing agent's responsibility.

Sergic then sues the co-owners' association before the tribunal de proximité of Versailles. The former manager invokes the rules of management of another's affairs (a legal mechanism that allows a person to act on behalf of another without having received a mandate). They argue that by initiating these urgent works, they acted in the interest of the co-ownership and therefore deserve to be reimbursed.

The court rejects their claim at first instance. Sergic appeals. The cour d'appel confirms the first judgment. The former managing agent does not give up and files an appeal to the Cour de cassation. It is at this stage that France's highest court will definitively settle the question.

The court's reasoning — explained

The Cour de cassation, in its judgment of 16 October 2013, adopts a two-step reasoning that deserves clear explanation.

First, the judges recall the legal basis: Article 18 of the Law of 10 July 1965 establishing the co-ownership statute. This article precisely defines the managing agent's mandate as a special contract, subject to specific rules. The Court emphasises that this mandate is exclusive of the application of the rules of management of another's affairs provided for by Articles 1372 to 1375 of the Civil Code.

In other words, the legislator has created a separate, complete, and autonomous legal regime for managing agents. One cannot add general rules of common law (the law applicable to all) when they are not provided for by the co-ownership law.

Next, the Court analyses the concrete situation. Sergic had been mandated by the co-ownership until 30 June 2009. From that date, their mandate was terminated. They no longer had any power to act on behalf of the co-ownership. The judges therefore consider that the works initiated in August 2009 were done without a mandate, and that the co-ownership does not have to pay for them.

But be careful however: the decision specifies that this solution applies unless the new managing agent had received an express mandate (a clearly formulated mandate) to take charge of these specific works. In the case judged, this was not the situation.

What few people know: this decision confirms consistent case law. It is not revolutionary, but it clarifies a question that continues to be debated in many co-ownerships. It reminds us that the relationship between a managing agent and a co-ownership is strictly framed by the 1965 Law, and that one cannot easily deviate from it.

What this changes for you — concretely

If you are a co-owner in Nice, Grasse, or elsewhere, this decision has very practical implications. Let's take concrete examples.

For the landlord co-owner who rents out their apartment: imagine your managing agent is changed mid-year. The former manager initiates repairs in the common areas after their departure. Thanks to this decision, you now know that your co-ownership is not obliged to pay, unless the new managing agent had explicitly agreed to take charge of these works. This can represent significant savings: in a Nice co-ownership of 50 units, unforeseen works of €20,000 would represent €400 less per unit to pay.

For the tenant: the situation is indirectly impacted. If the co-ownership has to pay unforeseen works, these expenses can be passed on through service charges, and therefore on your rent. A decision that protects the co-ownership against unjustified expenses also indirectly protects your purchasing power.

For the real estate professional (estate agent, notary): this case law must be explained to buyers. When purchasing a property in co-ownership, one must check if a change of managing agent has occurred recently, and if there are no disputed invoices pending. undefined, I have encountered cases where buyers discovered after signing that their co-ownership was being sued by the former managing agent for contested works.

If you are in this situation, you must: first, check the general meeting minutes to know the exact end date of the former managing agent's mandate. Next, examine all invoices presented after this date. Finally, contest in writing any expense incurred without an express mandate from the new managing agent. The time limits for action are short: generally 5 years from the date of the facts, but it's better to react immediately.

Four tips to avoid this type of dispute

• When changing managing agents, establish a detailed handover report: this document should precisely list ongoing files, scheduled works, invoices to pay. Have it signed by both managing agents and the chair of the co-owners' committee. This is the best prevention against subsequent disputes.
• Check the clauses of your new managing agent's mandate: some explicitly provide that the new manager takes over commitments made by the former. If this clause exists, negotiate it or demand that it be limited to only expressly validated commitments.
• Organise a transition meeting between the two managing agents: too often, the former managing agent leaves without briefing the new one. A formal meeting, even by videoconference, allows clarification of urgent files and avoids misunderstandings about who does what after the change.
• Carefully keep all documents: notices, general meeting minutes, correspondence exchanged with the managing agents. In a dispute, these documents will be decisive in proving what was decided and when.

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Further reading: related case law and developments

The 2013 decision fits into a coherent line of case law. Already in 2006, the Cour de cassation had ruled in a judgment No. 05-10.902 that "the managing agent whose mandate has ended cannot rely on the provisions relating to management of another's affairs to obtain reimbursement of expenses they incurred on behalf of the co-owners' association".

More recently, in 2019 (judgment No. 18-13.305), the Court specified that this exclusion of the rules of management of another's affairs applies even when the former managing agent acted in an emergency situation. Only an express mandate from the new managing agent can create a payment obligation.

The trend of the courts is therefore very clear: to protect co-ownerships against financial commitments made without their agreement after the end of a mandate. This orientation corresponds to the spirit of the 1965 Law, which aims to give general meetings control over expenses.

For the future, this case law should encourage managing agents to be more rigorous in file handovers, and co-ownerships to better frame transitions. It could also influence standard contracts proposed by managing agent federations, with more detailed handover clauses.

Frequently asked questions

Q: My former managing agent demands payment for works initiated one month after their departure. Do I have to pay?
R: No, unless your new managing agent had expressly agreed to take over these works. The co-ownership is not bound to pay expenses incurred after the end of the mandate.

Q: What to do if the former managing agent threatens legal action?
R: Don't panic. Consult a specialised lawyer who will check if the claim is founded. In most cases, a well-argued letter is enough to make the former manager back down.

Q: Can the new managing agent refuse to pay invoices for truly urgent works?
R: Yes, because urgency does not justify bypassing the rules of the mandate. If works were truly indispensable, the former managing agent should have initiated them before the end of their mandate, or obtained the express agreement of the new one.

Q: Does this rule also apply to small co-ownerships?
R: Yes, absolutely. The 1965 Law applies to all co-ownerships, whether they have 3 units or 300. The protection is the same.

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