Sale of Real Estate Between Traders: A Civil Act That Changes Everything

Imagine: you own a commercial premises in Bobigny. You lease it to a company which operates a business there. One day, this company offers to buy the premises. You shake hands, you agree on a price, you even start preparing the paperwork. But when it comes time to sign the notarial deed at the notary's office, nothing. Silence. The company denies any verbal agreement. What can you do? This question is asked by hundreds of owners and traders every year in the commercial courts and courts of appeal in Pontoise, Bobigny or Paris. The answer is in one sentence: the sale of real estate, even between traders, is a civil act. And this classification changes everything, especially in matters of proof.

This decision of the Court of Cassation of 14 June 1989 (no. 87-14.088) is a pillar of property law. It reminds us that, with the exception of a very limited exception introduced by the law of 1967, the sale of a building can never be considered a commercial act. In other words, even if you are a trader, even if the building is intended for your commercial activity, the sale remains subject to civil rules. And civil law is very strict on proof: without a written document, there is no valid contract.

But what does this actually change for you? Everything. If you are an owner, it protects you against verbal claims. If you are a buyer, it requires you to formalise each stage in writing. undefined, I have come across cases where traders thought they had concluded a sale "on a scrap of paper" and found themselves with no legal recourse. This decision is their nightmare, and your shield.

The facts: a story that happens every day

In 1987, the Court of Appeal of Chambéry hears a dispute that could take place today in Pontoise or Marseille. A property company (a SNC, partnership limited by shares) had sold a commercial premises to a trader. The problem? The parties disagreed on the exact terms of the sale. The seller claimed that the buyer had undertaken not to carry out a specific commercial activity on the premises. The buyer disputed this clause.

The seller, to prove the existence of this restriction, produced witness statements, letters, affidavits. But he had no notarial deed mentioning this clause. The Court of Appeal ruled in favour of the seller, holding that the evidence provided constituted a "commencement of proof in writing" sufficient to admit witness evidence.

The SNC, dissatisfied, appealed to the Court of Cassation. Its argument: the sale of real estate is a civil act, so proof must be made in writing, in accordance with Articles 1341 and 1347 of the Civil Code. A commencement of proof in writing was not sufficient, in its view. The Court of Cassation agreed, quashing the judgment of the Court of Appeal.

In short, the trial judges had considered that, since both parties were traders, the sale was a commercial act, for which proof is free. But the Court of Cassation reminded that the sale of real estate is "by its nature" a civil act, even between traders. Only a very precise legal exception (law of 1967, amended in 1970) can make it commercial, and this exception did not apply here. Result: witness evidence was inadmissible.

The reasoning of the court - broken down

The decision of the Court of Cassation is based on a strict reading of Article 632 of the Commercial Code. This article lists the acts considered as commercial acts: purchases for resale, banking operations, etc. The sale of real estate is not part of it, except for one exception: since the law of 13 July 1967 (amended on 9 July 1970), sales of buildings made by property dealers (professionals in the purchase and resale of real estate) are commercial. But apart from this particular case, the sale of a building remains a civil act, whatever the status of the parties.

The Court states: "Except for the exception introduced into Article 632 of the Commercial Code by the law of 13 July 1967, amended by the law of 9 July 1970, the sale of real estate, even concluded between traders, remains a civil act."

This classification has a direct consequence on the rules of proof. Article 1341 of the Civil Code (in its version then in force) requires a writing for contracts whose object exceeds a certain sum (today €1,500). Article 1347 allows this rule to be set aside if there is a "commencement of proof in writing" (a document emanating from the person contesting the act, which makes the alleged fact plausible).

The Court of Appeal had considered that the affidavits and correspondence produced constituted a commencement of proof in writing. But the Court of Cassation did not agree: a simple commencement of proof is not sufficient to prove a notarial deed. Indeed, the notarial deed is conclusive evidence unless challenged as a forgery. To prove the contrary of what is written in the deed requires written proof, not mere witness statements.

However, note: the decision does not completely prohibit witness evidence. It merely requires that, to contradict a notarial deed, there must be convincing written evidence. A commencement of proof in writing may suffice if the notarial deed is not in question (for example, to prove a verbal agreement on a point not mentioned in the deed). But here, the disputed clause was supposed to be part of the deed, so only written proof could establish it.

What this changes for you - concretely

This decision has major practical implications for all real estate actors.

For landlord owners: if you sell a building to your trader tenant, any verbal agreement is worthless. For example, if you promise him a right of first refusal to buy the neighbouring premises, without writing it in the lease or in a separate deed, you will not be able to invoke it later. Conversely, if the buyer had made you a verbal promise (e.g., not to open a competing business), you will not be able to enforce it without a signed writing.

For buyers: you must insist that everything be recorded in the notarial deed. If the seller promises you renovation works or a price reduction, have it written down. Otherwise, you will have no recourse.

For real estate professionals (agents, property dealers): be careful not to rely on verbal agreements. Even between traders, the sale of real estate remains civil. If you are a property dealer, you benefit from the commercial exception, but only for sales made in the course of your professional activity. For a personal sale, you are treated like an ordinary individual.

Example with figures: in Pontoise, a trader buys a premises for €200,000. The seller verbally promises to lease him the adjoining car park for €100/month. A year later, the seller leases the car park to a third party. The trader can do nothing, because the promise is not written in the sale deed. He should have required a lease clause or a promise of lease in the notarial deed.

If you are in this situation, you must act quickly. The limitation period for an action for nullity for lack of writing is 5 years. But the best is to prevent: never sign a notarial deed without having checked that it contains all your promises.

Four tips to avoid this type of dispute

• Have a written preliminary sale agreement drawn up before any notarial deed. Even between close relations, a written document signed by both parties (even under private seal) is better than a verbal agreement. This preliminary agreement will serve as written proof.
• Insist that all special clauses be mentioned in the notarial deed: easements, restrictions on use, promises of works, etc. If the notary refuses, ask for an addendum or a separate deed.
• Keep all written exchanges: letters, emails, text messages. Even an email can constitute a commencement of proof in writing. But be careful: it must emanate from the person you wish to oppose (e.g., an email from the seller promising a reduction).
• Consult a lawyer before signing if the amount is significant or if complex clauses are involved. A lawyer specialising in property law will prevent you from relying on verbal promises that are worthless before a court.

Further reading: related case law and developments

This 1989 decision is part of a consistent line of case law. Already in 1978, the Court of Cassation had held that the sale of a building by one trader to another trader is a civil act (Cass. civ. 3e, 11 October 1978). More recently, in a judgment of 13 January 2021 (no. 19-22.809), the Court reminded that the activity of a property dealer is commercial, but that the sale of a building by a non-dealer remains civil, even if the buyer is a trader.

The trend is therefore clear: judges protect the legal certainty of real estate transactions by requiring a writing. The exception for property dealers is strictly interpreted. For the future, this rule could be strengthened by the digitalisation of notarial deeds, which makes written proof even more reliable.

What few people know is that the rule also applies to commercial leases. Even though the commercial lease is a commercial act (because it relates to a business), the assignment of lease or the sale of the leasehold interest may be reclassified as a civil act if it is ancillary to a sale of real estate. So be careful with complex structures.

Frequently asked questions

Is a verbal agreement for a sale of real estate valid?
No, it is legally non-existent if disputed. Without a writing, you cannot prove the agreement before a court. The sale of real estate must be evidenced by a notarial deed or, failing that, by a private writing.

Can I prove a verbal agreement with witnesses?
In principle, no, because the sale of real estate is a civil act. Witness evidence is only admissible if there is a commencement of proof in writing (a written document emanating from the other party). Without it, witnesses are not enough.

What are the time limits to act if I have no writing?
You have 5 years from the signing of the deed to seek nullity of the sale for lack of writing. But it is best to consult a lawyer at the first signs of a dispute.

What if the notarial deed contains an error or omission?
You can request an amicable correction from the notary. If the seller refuses, you will have to go to the judicial court. Proof of the error must be provided in writing (letters, earlier draft deeds).

Does this rule apply to sales between individuals?
Yes, and even more strictly. Between individuals, the sale of real estate is always a civil act. The rules of proof are the same.

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