Obligation to Deliver a Flat in Payment: A Lesson from the Court of Cassation

Imagine: you sell land in Landivisiau for 260,000 francs, but part of the price is to be paid in the form of a flat, delivered within 30 months of obtaining planning permission. The buyer, after failing to obtain planning permission, resells the land to a developer. The developer obtains planning permission but builds an office block, not a flat. You, the seller, are left without a flat and without money. What can you do?

This is exactly the issue that came before the Court of Cassation in 1972. The seller, Dame Centre, had agreed to receive a flat in kind. The initial buyer, the company Moulin de Cajarc, having failed to obtain planning permission, resold the land. The sub-purchaser built offices. The Court of Appeal ordered him to pay damages. The Court of Cassation upheld this decision. Why? Because the sub-purchaser had the ability to build the promised flat.

This decision, although old, remains highly relevant for any owner or developer who accepts payment in kind. It illustrates a fundamental principle: the obligation to deliver does not disappear with a change of owner. And whether you are in Brest or elsewhere, the same rules apply. So, how can you anticipate this type of dispute?

The facts: a story that happens every day

In 1967, Dame Centre sold land to the company Moulin de Cajarc for 260,000 francs. But the payment was not entirely in cash: part of the price consisted of the delivery, within 30 months of obtaining planning permission, of a flat in the building that the company was to erect. A clause provided that if planning permission was not obtained, the sale would be void, without compensation.

Unfortunately, the company Moulin de Cajarc did not obtain planning permission. Instead of giving up, it resold the land to a sub-purchaser, who did obtain planning permission. But instead of building a residential building, he built a building exclusively for offices. Result: Dame Centre never received the promised flat. She then sued the sub-purchaser for damages.

The Court of Appeal ruled in favour of Dame Centre: it ordered the sub-purchaser to pay her damages equivalent to the value of the flat. The sub-purchaser appealed to the Court of Cassation. He argued that he was not a party to the original contract and that the obligation to deliver a flat was not enforceable against him. The Court of Cassation dismissed the appeal: it held that the lower court had legally justified its decision by finding that the sub-purchaser, who had the ability to build a flat (since he had obtained planning permission), had failed in his obligation.

The reasoning of the court — analysed

The core of the reasoning lies in Article 1240 of the Civil Code (formerly Article 1382), which provides that “any act of a person which causes harm to another obliges the person by whose fault it occurred to make reparation”. The judges considered that the sub-purchaser, by failing to deliver the flat when he could have done so, had committed a fault giving rise to liability.

But how can an obligation be imposed on someone who did not sign the contract? Here, the Court of Cassation shows realism. It notes that the sub-purchaser knew or ought to have known of the obligation to deliver a flat. By acquiring the land, he agreed to take the place of the initial buyer in his rights and obligations. This is the mechanism of the transfer of real obligations: the obligation to build a flat was attached to the land itself, not to the person of the buyer.

A crucial point: the clause which provided for the nullity of the sale if planning permission was not obtained was considered inapplicable, because planning permission had ultimately been obtained. The sub-purchaser could not therefore hide behind this clause. Furthermore, the fact that he chose to build offices rather than a flat was seen as a deliberate fault.

This decision confirms the tendency of the Court of Cassation to protect the seller who accepts payment in kind. It is part of a broader body of case law on the liability of the sub-purchaser when he is aware of the obligations affecting the property. No change of direction here, but a classic application of tortious liability (fault, damage, causal link).

What this means for you — practically

For the seller: You can now bring a claim directly against the sub-purchaser, even if you have no contractual relationship with him. In our example, if you sell land in Landivisiau in exchange for a flat, and the buyer resells, the new owner can be ordered to deliver the flat or compensate you. Caution: you must prove that he had the ability to build (planning permission obtained).

For the initial buyer: You are not off the hook by reselling. You could be sued on a warranty basis by the sub-purchaser. It is better to include an express substitution clause in the resale deed.

For the sub-purchaser: You must check the obligations attached to the land before buying. A simple glance at the original contract can avoid a lawsuit. For example, a developer in Brest who buys land must ensure that no promise to build a flat has been made to the seller.

A numerical example: if the promised flat was worth €100,000 in 1972 (adjusted value), damages could reach that amount, plus interest. Today, with rising property prices, the stakes can be huge.

Four tips to avoid this type of dispute

• Require a clear substitution clause: In the original sale deed, provide that if the buyer resells, he remains jointly liable for the obligation to deliver, or that the sub-purchaser expressly undertakes to do so.
• Check real obligations before buying: Any buyer must consult previous deeds (title deeds) to detect any easements or obligations to do something.
• Insert a penalty clause: If the obligation to deliver a thing in kind is not fulfilled, provide for a fixed sum (for example, 10% of the value of the thing) to avoid lengthy court proceedings.
• Obtain a bank guarantee: When payment is in kind, ask for a bank guarantee or a demand guarantee covering the value of the promised item.

Further reading: related case law and developments

This 1972 decision is part of a consistent line of authority. One can cite the judgment of the 3rd Civil Chamber of 21 February 1973 (No. 71-14.132), which held that a sub-purchaser of a building must respect conventional easements recorded in the title deed, even if they are not published. More recently, the Court of Cassation extended this logic to obligations to do something: judgment of 8 September 2016 (No. 15-21.131), where the sub-purchaser of a business was ordered to comply with a non-competition clause.

The trend is clear: courts are increasingly strict about the transfer of real obligations. They consider that the buyer of a property must bear the charges attached to it, even if they are not mentioned in his acquisition deed, as long as he knew or ought to have known of them. For the future, one can expect this case law to extend to environmental obligations (decontamination) or planning obligations (contribution to public facilities).

Summary and next steps

FAQ:

• Can I sue the sub-purchaser even if I did not sign with him? Yes, on the basis of tortious liability (Article 1240 of the Civil Code). You must prove his fault, your damage and the causal link between them.
• What is the time limit for bringing a claim? The limitation period is 5 years from the date you became aware of the damage. In the case of construction, it is often the completion of the works.
• What are the costs of such proceedings? Expect between €2,000 and €5,000 for an interim application, and €5,000 to €15,000 for a full trial, depending on complexity.
• What if the sub-purchaser is insolvent? You can claim against the initial buyer on the basis of the warranty against eviction (Article 1626 of the Civil Code).
• Can I demand the construction of the flat rather than damages? Yes, if construction is still possible. The court can order specific performance (Article 1221 of the Civil Code).

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