Developer-linked managing agent: mandate limited to 1 year despite transfer of shares

You have just moved into a new development in Mérignac. Everything seems perfect: spacious apartment, high-quality fittings, friendly neighbours. But very quickly, cracks appear on the façade. The managing agent, although chosen by the developer, seems to be dragging its feet over starting repairs. You wonder: can this managing agent remain in place for years, given that it participated in the construction itself? The answer is no, and the Court of Cassation forcefully reiterated this in a judgment of 2 December 2009.

Indeed, Article L. 443-15-1 of the Code de la construction et de l'habitation (Construction and Housing Code) imposes a drastic limitation: the managing agent who was a shareholder or director of the company that built the building cannot serve for more than one year, and this applies until the expiry of the ten-year liability period (the ten-year period during which the developer is liable for serious damage). But what does this actually mean for you, as an owner in Périgueux or elsewhere?

This decision, given in a dispute between co-owners and their managing agent, clarifies a crucial point: losing the status of shareholder or director before appointment does not suffice to exclude the rule. In other words, if the managing agent was once linked to the developer, its mandate is limited to one year, full stop. Let us analyse this case and its practical implications together.

The facts: a story that happens every day

Mr X, owner of a flat in a co-ownership in Mérignac, sees his managing agent, Company Y, reappointed year after year. However, this company had been set up by the developer of the building, and one of its managers was also a shareholder of the construction company. The co-owners, dissatisfied with the management and suspecting a conflict of interest, seek the annulment of the managing agent's appointment at a general meeting.

The managing agent retorts that it had transferred its shares in the developer company on 3 November 1994, well before being appointed as managing agent. According to it, the one-year limitation no longer applies since it no longer has any interest in the construction. But the co-owners insist: the law does not provide for any exception for former shareholders. The case is brought before the Tribunal de grande instance of Bordeaux, which rules in favour of the co-owners. The managing agent appeals, then brings an appeal in cassation.

The Court of Cassation, in its judgment of 2 December 2009, dismisses the appeal. It recalls that Article L. 443-15-1 of the Construction and Housing Code (CCH) is clear: the term of office of the managing agent cannot exceed one year where the agent participated in the construction as a shareholder or director of the developer company, and this applies until the expiry of the ten-year liability period. It does not matter that it lost that status before its appointment. In other words, the managing agent's mandate is limited in time, and any reappointment beyond one year is void.

The reasoning of the court — analysed

The judges of the Court of Cassation rely on Article L. 443-15-1 of the CCH, which provides: 'The term of office of the managing agent during the period provided for in Article 1792 of the Civil Code (ten-year liability) cannot exceed one year where the managing agent participated in the construction of the building as a shareholder or director of the company which is its developer.'

The question was whether this limitation still applies when the managing agent lost its status as shareholder or director before its appointment. The managing agent argued that it did not, contending that it no longer had any link with the developer. But the Court swept aside this argument: the law does not distinguish according to when the status was lost. The legislator's objective is clear: to prevent the managing agent, who participated in the construction, from being tempted to cover up defects or to slow down co-owners' claims during the ten-year liability period. This potential conflict of interest justifies a strict limitation, irrespective of the managing agent's personal situation at the time of its appointment.

What few people know is that this rule applies even if the managing agent is unpaid. undefined, I have come across cases where unpaid managing agents, former shareholders of the developer, thought they could escape the rule. But the Court of Cassation has already held that the essential conditions of the managing agent's mandate must be notified, whether it is paid or not. Thus, the one-year limitation is a matter of public policy and cannot be circumvented.

In short, the Court's reasoning is as follows: the law protects co-owners against the risks of collusion between the managing agent and the developer. It does not matter that the managing agent transferred its shares or resigned from its management functions before being appointed: if it was once involved in the construction, its mandate is limited to one year for the entire duration of the ten-year liability period. This interpretation has been constant since this judgment and has been reaffirmed in several subsequent decisions.

What this means for you — practically

If you are a co-owner in a new building, particularly in Mérignac, this decision gives you a powerful tool. You can challenge the appointment or reappointment of a managing agent that was linked to the developer, as long as the ten-year liability period is still running. Concretely, how should you react?

For a landlord owner in Périgueux: you rent out a flat in a development built five years ago. The managing agent is the former shareholder of the developer. You are experiencing unjustified increases in service charges and poorly managed remedial works. Based on this judgment, you can request the annulment of the managing agent's appointment at the next general meeting and demand a new independent managing agent. However, be aware: the time limit for action is two months from notification of the minutes of the general meeting (Article 42 of the Law of 10 July 1965). Do not delay!

For a buyer of a new property: before signing, check who the provisional managing agent is. If it is a subsidiary of the developer or an individual who was a shareholder, know that its mandate cannot exceed one year. You can demand that a new managing agent be appointed after the first year, failing which decisions taken beyond that time may be void. Concrete example: a co-ownership of 30 units in Bordeaux, with annual service charges of €60,000. A pro-developer managing agent could delay roof repairs estimated at €80,000 for years. By limiting its mandate, you avoid this blockage.

If you are a tenant: you are not directly concerned by the appointment of the managing agent, but you can alert the co-owners that the current managing agent may be illegally in office. This could explain delays in works or excessive charges.

Four tips to avoid this type of dispute

• Check the managing agent's history before voting on its appointment. At the inaugural general meeting or an ordinary AG, ask the candidate managing agent for a declaration on honour stating whether it has been a shareholder or director of the developer company. Demand the articles of association of the developer company if necessary.
• If the managing agent is a former shareholder, do not vote for its reappointment beyond one year. Even if its services are good, the law prohibits a longer mandate during the ten-year period. A contrary vote would be void and could be challenged.
• Keep all documents relating to the construction safe. The development contract, the developer's articles of association, the AG minutes. In case of a dispute, these documents will prove the link between the managing agent and the developer.
• If in doubt, consult a lawyer specialising in property law before the AG. Expert advice can prevent you from voting on an irregular appointment and save you time (and money).

Besoin d'un conseil personnalisé ? Contactez Maître Zakine — première consultation 30 min à 45€.

Further reading: related case law and developments

The judgment of 2 December 2009 is part of a line of cases protecting co-owners. Already, the Court of Cassation had held, in a judgment of 11 March 1997 (No. 94-22.037), that the one-year limitation applies even if the managing agent was appointed before the sale of the units. More recently, a judgment of 8 September 2016 (No. 15-19.094) extended this rule to a managing agent that is a legal entity, one of whose directors was a shareholder of the developer. The trend is therefore towards a broad interpretation of the concept of participation in construction.

However, note: the rule only applies during the ten-year liability period, i.e. ten years from the acceptance of the works (Article 1792-4-1 of the Civil Code). After this period, the managing agent can be appointed without time limit, even if it participated in the construction. But beware: hidden defects or non-apparent disorders may extend the period. undefined, I have seen co-ownerships where defects were only discovered after 8 years, which revived the ten-year liability.

This case law is now well established. It provides legal certainty for co-owners, but also imposes increased vigilance at general meetings. Professional managing agents must now be transparent about their past.

Summary and next steps

To help you see clearly, here is a checklist of actions to take if you are affected:

1. Identify the current managing agent: its name, legal form, directors.
2. Search for the link with the developer: consult the development contract, the developer's articles of association, the AG minutes from the first year.
3. Check the date of acceptance of the works: the ten-year liability period runs from this date (usually indicated in the acceptance report).
4. If the managing agent is a former shareholder and its mandate exceeds one year: gather evidence (K-bis extract, articles of association) and bring the matter before the tribunal judiciaire to have its appointment annulled (time limit of two months from the AG minutes).
5. Propose a new independent managing agent at the next AG, complying with the majority rules of Article 25 of the Law of 1965.

In summary, the Court of Cassation put an end to an abusive practice: the developer-linked managing agent cannot stay in office indefinitely. You have rights, and remedies. Do not let them expire.

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