Transfer of Accounts Between Property Managers: The Former Manager Is Not Required to Create Documents After Leaving

Imagine the scene: in Sète, in a co-ownership in the Île de Thau district, the owners have been waiting for months for the accounts from their former property manager. A new manager has been elected, but it is impossible to obtain the ledgers and financial statements. Arrears are piling up, and service charges remain unclear. Each co-owner wonders: 'What can we do? Can the former manager refuse to provide us with these documents?' Hundreds of co-ownerships ask this question every year. The decision of the French Supreme Court of 4 June 2009 (No. 08-15.737) provides a nuanced answer: the former manager is not obliged to prepare documents that were not kept during their term, even if they should have been. In short, the law organises the transfer of what exists, not the creation of missing documents after the event. But beware: this absence of obligation does not absolve the former manager of liability for faults committed during their management. Let us decipher this decision and its practical implications for you, owners in Lodève or elsewhere.

The Facts: A Story That Happens Every Day

In this case, a co-ownership was managed by the company Loiselet et Daigremont, the former manager. After the appointment of a new manager, CDB Gestion, and the appointment of a provisional administrator, the new manager and the co-owners' association demanded that the former manager hand over the accounting documents: ledgers, journals, financial statements. The problem: the former manager had not kept these documents during their term. They claimed not to have them, and therefore could not transfer them. The new manager and the association then sued the former manager to obtain these documents, arguing that Article 18-2 of the Law of 10 July 1965 obliges the former manager to hand over all documents necessary for management. The Court of Appeal dismissed their claim, holding that the former manager could not transfer what had never been prepared. The association and the new manager appealed to the Supreme Court. The case was therefore brought before the Supreme Court, which upheld the Court of Appeal's decision. In other words, the judges held that the obligation to hand over only applies to existing documents, not to those that should have been created. What few people know is that this decision does not call into question the possibility of bringing a professional liability claim against the former manager for failure to keep accounts, but it limits the obligation to transfer after their departure.

The Reasoning of the Court — Explained

The Supreme Court relies on Article 18-2 of the Law of 10 July 1965, which governs the transfer of documents between the former and new manager. It states that this article 'is intended only to organise the transfer to the new manager of administrative and accounting documents held by the former manager and is not intended to compel the latter to prepare, after being discharged, documents that they had not previously kept.' In other words, the law requires the transfer of what one has, not the manufacture of what is missing. But then, what happens if the former manager has failed in their obligation to keep proper accounts? The Court answers that this 'could give rise to professional liability.' In short, the association can sue the former manager for damages for faults committed during the term, but cannot oblige them, after the event, to prepare documents that they had not kept. This reasoning distinguishes between two obligations: the obligation to hand over (immediate, limited to what exists) and the obligation to manage (which can be sanctioned by damages). The decision is consistent with the wording of Article 18-2, which speaks of 'handing over' and not 'creating.' The arguments of the association and the new manager, who invoked an implied obligation to reconstruct the accounts, were rejected. The judges held that the law does not go that far. However, note that this decision does not mean that the former manager can neglect their accounting with impunity. Their civil liability (Article 1240 of the Civil Code) may be engaged, and they will have to repair the harm suffered by the co-ownership.

What This Means for You — Practically

If you are a co-owner, this decision directly concerns you. Suppose your co-ownership in Lodève changed manager, and the former one refuses to provide the annual accounts for the last three years. What can you do? You cannot demand that they prepare these accounts after leaving. However, you can claim damages for the harm caused by this lack of accounts (for example, the impossibility of verifying charges, or the delay in voting on the budget). If you are a landlord-owner, co-ownership accounts are essential for declaring your rental income. Without them, you risk a tax adjustment. In this case, you could ask the association to take action against the former manager. If you are a tenant, you are not directly concerned, but know that the lack of accounts can lead to unjustified increases in service charges. Finally, if you are a property professional (agent, developer), this decision reminds you that the transfer of documents must be anticipated: check from the start of the mandate whether the former manager has kept proper accounts. Practically, if you are in this situation, you should: 1) put the former manager on notice to hand over existing documents, 2) if nothing happens, file a claim with the judicial court (formerly the Tribunal de Grande Instance) to obtain damages, and 3) possibly report the manager to their insurance company. Legal costs (lawyer, bailiff) can be covered by the co-ownership's insurance. A concrete example: in Sète, a co-ownership obtained €15,000 in damages for lack of accounts for 4 years, which allowed it to fund an accountant to reconstruct the documents.

Four Tips to Avoid This Type of Dispute

• Demand an accounting inventory as soon as the new manager is elected: Before taking office, the new manager should ask the former one for a precise inventory of documents held. If there are gaps, have a bailiff record this and call an extraordinary general meeting to decide on legal action.
• Include a contractual clause in the management contract: When you sign with a new manager, include a clause obliging the former manager to hand over accounts within 15 days, subject to financial penalties (e.g., €100 per day of delay). This deterrent clause can be negotiated.
• Check the manager's accounts during the mandate: Do not wait until the end of the mandate to check. Each year, the co-owners' council should examine the accounts and demand supporting documents. If documents are missing, send an immediate notice.
• Keep a copy of all documents received: The new manager should digitally archive all documents transferred. In case of a dispute, these proofs will be crucial. Consider saving them on a secure cloud.

Further Reading: Related Case Law and Developments

This decision is part of a consistent line of the Supreme Court. In a judgment of 12 September 2007 (No. 06-19.390), the Court had already held that the former manager is not obliged to reconstruct accounting documents after being discharged. More recently, in a judgment of 27 November 2014 (No. 13-26.644), it clarified that the failure to hand over documents may justify an award of damages against the former manager, but not an order for delivery if the documents do not exist. The trend of the courts is therefore clear: they distinguish the obligation to transfer (limited) from liability for failure to keep accounts. In the future, this case law could evolve if the legislature amends Article 18-2 to impose an obligation to reconstruct, but for now, the position is stable. undefined, I have encountered cases where the new manager, faced with the absence of accounts, had to instruct an accountant to reconstruct the data at the former manager's expense after a liability action. This is a possible solution, but it takes time and costs money.

What You Absolutely Must Remember

1. The former manager cannot be compelled to create accounting documents after leaving. If the accounts were not kept, you cannot demand their delivery.
2. However, their professional liability can be engaged. You can claim damages for the harm suffered (e.g., reconstruction costs, loss of rental income, etc.).
3. Act quickly: the limitation period for a liability action against the former manager is 5 years (Article 2224 of the Civil Code). Do not delay.
4. Keep all documents you already have: they will serve as proof to establish that the former manager did not keep accounts.
5. Consult a lawyer specialising in property law to assess your chances and initiate appropriate proceedings.

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