Sale by Lots of More than 10 Dwellings: Failure to Comply with Formalities Invalidates Notices to Quit (Cass. 3e civ., 24 June 2009)

You are the owner of a building in Voiron or Saint-Martin-d'Hères, and you are considering selling the flats one by one. You think you can serve notices to quit on your tenants without any special formalities, since the decision to sell was taken before a new collective agreement came into force? Think again. The Court of Cassation, in a judgment of 24 June 2009, recalled that the mandatory formalities provided for by the collective agreement of 9 June 1998 (made mandatory by the decree of 22 July 1999) apply even to operations in progress. In short, a landlord who does not comply with these formalities before giving notice to his tenants will have his notices annulled, regardless of whether his decision to sell was taken earlier. A lesson for every landlord to ponder.

The facts: a story like any other

The City of Paris, owner of a flat located in the Rue des Nonnains d'Hyères, leases a dwelling to Ms X. In 2005, it decides to sell the entire building by lots, which contains more than ten dwellings. As part of this operation, it serves a notice to quit for sale on its tenant. But the tenant challenges the validity of the notice, arguing that the City did not comply with the formalities required by the collective agreement of 9 June 1998. This agreement, made mandatory by a decree of 22 July 1999, notably requires prior information of tenants and a reflection period. The tenant brings the matter before the Tribunal d'Instance of Paris, which rules in her favour. The City appeals. The Paris Court of Appeal upholds the nullity of the notice, on the ground that the landlord did not observe the formalities provided for by the collective agreement, even though the decision to sell was taken before the agreement came into force. The City appeals to the Court of Cassation. It argues that the collective agreement does not apply to operations in progress, and that the decree of 22 July 1999 has no retroactive effect. But the Court of Cassation dismisses its appeal: the collective agreement is of mandatory public policy, and the formalities must be completed before each notice is served, regardless of the date of the decision to sell. A stinging defeat for the City of Paris.

The reasoning of the court — dissected

To understand this decision, one must first grasp the mechanism of the collective agreement. The agreement of 9 June 1998, extended by decree of 22 July 1999, was concluded between organisations of landlords and tenants. It provides, for sales by lots of more than ten dwellings in the same building, protective formalities for tenants: written information, extended notice period, right of pre-emption, etc. These formalities are said to be of mandatory public policy, meaning they are binding on everyone, even if the landlord is not a signatory to the agreement. The question was whether these formalities apply to sale operations already underway when the decree came into force. The Court of Cassation answers in the affirmative. Its reasoning is as follows: the decree making the agreement mandatory does not provide for transitional provisions, but the formalities are attached to the service of the notice to quit, not to the decision to sell. However, the notices were served after the decree came into force. Therefore, they must comply with the formalities. It does not matter that the decision to sell was taken earlier: what matters is the date of the notice. The Court relies on Article 1 of the Law of 6 July 1989 (which governs landlord-tenant relations) and on the principle of immediate application of laws of mandatory public policy. It dismisses the City's argument, which invoked the absence of retroactivity: it is not a matter of making the decree retroactive, but of applying the law in force at the time of the notice. An irrefutable reasoning.

What this means for you — concretely

If you are a landlord-owner of a building with more than ten dwellings, and you are considering a sale by lots, this decision directly concerns you. You must scrupulously comply with the formalities of the collective agreement, even if you made the decision to sell before 22 July 1999 (the date of the decree). Concretely, this means: informing your tenants in writing of your intention to sell (stating the price and conditions), respecting a notice period of at least six months for notices to quit, and offering a right of pre-emption. If you do not, the notice is void and the tenant may remain in the premises. Imagine a landlord in Saint-Martin-d'Hères who owns a building of 15 dwellings. He decides in 1998 to sell the lots, but only serves the notices in 2000. If he has not complied with the formalities, his notices are void. He will have to restart the procedure, losing time and money. For tenants, this is additional protection: they benefit from time to find accommodation and a priority to purchase. For buyers, it is a guarantee that the sale is regular. In practice, if you are in this situation, check that your notices mention the formalities and respect the deadlines.

Four tips to avoid this type of dispute

• Find out about the applicable collective agreement: Before any sale by lots of more than ten dwellings, consult the collective agreement of 9 June 1998 (or any amendments). It is available on the website of the Ministry of Housing. Check whether it has been made mandatory by decree in your area.
• Respect a six-month period between the information and the notice: The agreement imposes a notice period of at least six months for notices to quit for sale. Do not serve the notice too early. Count from the date of sending the written information.
• Inform your tenants in writing and precisely: The information must state the sale price, conditions, and the tenant's right of pre-emption. Do this by registered letter with acknowledgement of receipt, and keep a copy.
• Consult a specialist lawyer before starting the procedure: A property lawyer (such as Maître Zakine) can check that you comply with all formalities. This will save you from a costly dispute. A 30-minute consultation can save you months of proceedings.

Further reading: related case law and developments

This decision is part of a line of case law protective of tenants. Already, in a judgment of 6 May 2009 (no. 08-14.731, delivered on the same day), the Court of Cassation held that the formalities of the collective agreement apply to operations in progress. It confirms its position here. An earlier judgment of the Paris Court of Appeal (18 January 2008) also annulled notices for lack of formalities, but based on the Law of 6 July 1989. The Court of Cassation goes further by imposing the collective agreement. Since then, courts have strictly applied this rule. For example, the Lyon Court of Appeal (10 September 2012) annulled notices served without prior information, even though the sale had been underway since 1998. The trend is clear: judges are very demanding regarding compliance with formalities. In the future, it is likely that new decisions will further strengthen tenant protection, particularly regarding deadlines.

What you absolutely must remember

FAQ

Q: Do the formalities of the collective agreement apply to me if I made the decision to sell before 1999?
A: Yes, if you serve notices after 22 July 1999. The date of the notice is decisive, not the date of the decision.

Q: What are the risks if I do not comply with these formalities?
A: The notice is void. The tenant can remain in the premises and you cannot force them to leave. You will have to start the entire procedure again.

Q: What exactly are the formalities?
A: Written information to the tenant (price, conditions, right of pre-emption), a notice period of at least six months, and a priority offer to sell. The agreement also provides for specific notification procedures.

Q: Can I sell my building as a single lot to avoid these formalities?
A: Yes, if you sell the entire building (and not by lots), the collective agreement does not apply. But check the rules of co-ownership if the building is already divided.

Q: What should I do if I have already served notices without complying with the formalities?
A: Consult a lawyer immediately. You may be able to regularise by serving new compliant notices, but time may have been lost. In some cases, a settlement with the tenant is possible.

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 →