Sale under Judicial Protection: The Estate Agency May Lose Its Commission

Imagine: you are a homeowner in Sainte-Savine, near Troyes, and you wish to sell your house. You sign a preliminary contract with a buyer, but one of the sellers is under judicial protection (a measure for the protection of vulnerable adults). The contract states that the final sale requires the authorisation of the guardianship judge. Except that this authorisation never arrives. The sale falls through. And the estate agency still demands its commission. Is this legal?

This is precisely the question put to the Court of Cassation in this judgment of 18 November 2009. And the answer is clear: without the judge's authorisation, the sale cannot be completed, and the agency cannot claim its fee. A decision that reassures protected sellers and their families, but warns real estate professionals.

In this article, I explain the facts, the judges' reasoning, and what this changes in practice for you, whether you are an owner, tenant or estate agent. And I give you practical tips to avoid this type of dispute.

The facts: a story that happens every day

Mrs Y. is the owner of a house in Troyes, in the Aube. In March 2004, she signs a preliminary contract with a buyer, through an estate agency. The problem? Mrs Y. is under judicial protection (a legal protection measure for people who, without being incapable, need assistance in certain important acts). The contract expressly states: the final sale can only take place after authorisation by the guardianship judge.

Months pass. The guardianship judge, once seised, never authorises the sale. Why? Perhaps because the price was insufficient, or because the protection measure required additional checks. Whatever the reason, in June 2004, the parties sign an agreement to cancel the sale. The estate agency, which had already done its work of putting the parties in touch, then demands its commission — €5,000, for example — considering it is entitled to its fee since the preliminary contract had been signed.

Mrs Y. and the buyer refuse to pay. The agency sues them. Does the first instance court rule in favour of the agency? No, the lower court (Court of Appeal) decides that the agency is not entitled to its commission. Why? Because the sale could not be completed (i.e. signed before a notary) for lack of authorisation from the guardianship judge. And this impossibility is not attributable to either party: neither the seller nor the buyer obstructed the sale. The agency, which was aware of the situation, cannot therefore claim its fee. The agency appeals to the Court of Cassation.

The reasoning of the court — dissected

The Court of Cassation dismisses the agency's appeal. It upholds the reasoning of the Court of Appeal. But on what legal basis? The judges rely on Article 1240 of the Civil Code (formerly 1382), which sets out the principle of civil liability: "Any act of a person which causes damage to another obliges the person by whose fault it occurred to make reparation." In practical terms, for an agency to claim its commission, the sale must have failed due to the fault of one of the parties. Here, the sale did not take place because the guardianship judge did not give his authorisation. This is nobody's fault.

But that is not all. The Court also recalls that the preliminary contract itself provided that completion (the signing before the notary) was subject to the authorisation of the guardianship judge. The buyer had been informed of this condition. The agency, as a professional, could not ignore it. It had therefore accepted the risk that the sale would not materialise. Consequently, it cannot turn against the parties to obtain its commission.

This decision is not a reversal of case law, but a classic application of the rules of contractual liability and the suspensive condition (a condition that must be fulfilled for the contract to become final). The Court of Cassation had already ruled in the same sense in a judgment of 19 February 2003 (No. 00-22.123): where the sale is subject to a condition that is not fulfilled without fault of the parties, the agency is not entitled to its commission. Here, the condition was the authorisation of the guardianship judge. The agency could not ignore it.

What this changes for you — in practice

For the seller under judicial protection (or his curator/family): you can rest easy. If a sale fails because the guardianship judge did not give his consent, the estate agency cannot claim its commission from you. You do not have to pay for a service that did not result in a sale. Concrete example: in Sainte-Savine, an elderly lady under judicial protection signs a preliminary contract to sell her house for €200,000. The judge refuses authorisation because the price is undervalued. The agency demands €10,000 in commission. Thanks to this judgment, she can refuse to pay.

For the buyer: you are also protected. If the sale does not go through because the protected seller did not obtain the judge's authorisation, you are not responsible. You owe nothing to the agency. However, be careful: if you had already paid a deposit, you must get it back in full, because the suspensive condition was not fulfilled.

For the estate agent: this judgment reminds you of a golden rule: before committing yourself, check that the seller has the capacity to sell. If the seller is under judicial protection, guardianship or curatorship, the sale is subject to judicial authorisation. You must inform the buyer of this condition and, above all, not count on your commission until the judge has said yes. In practice, in Troyes as elsewhere, some agents include in their mandate a clause stating that the commission will be due even if the sale fails due to a refusal by the judge. But such a clause could be considered unfair if it is not clearly brought to the seller's attention.

For the notary: this judgment confirms your role in securing the transaction. You must ensure that all suspensive conditions (including the judge's authorisation) are lifted before signing the deed. If authorisation is not obtained, you must inform the parties that the sale cannot proceed.

Four tips to avoid this type of dispute

• Check the legal capacity of the seller from the outset. Before signing a mandate or a preliminary contract, the estate agent must ask the seller whether he or she is under a protection measure (judicial protection, curatorship, guardianship). If so, he must request a copy of the judgment and inform the buyer in writing.
• Draft a clear suspensive condition clause. In the preliminary contract, state explicitly that the sale is subject to the authorisation of the guardianship judge and that if this authorisation is not obtained, the contract will be null and no commission will be due. This clause protects all parties.
• Do not pay a deposit before authorisation. The buyer should not pay the deposit (usually 5 to 10% of the price) until the judge has authorised the sale. Otherwise, if authorisation is refused, he will have to wait for reimbursement, which may take time.
• Consult a lawyer specialising in property law. If you are a protected seller or if you are a buyer of a property belonging to a protected person, seek advice before signing. A lawyer will help you secure the transaction and avoid pitfalls. In Troyes, Maître Zakine can see you for a consultation.

Further reading: related case law and developments

This 2009 judgment is part of a consistent line of the Court of Cassation. Already, in a judgment of 19 February 2003 (No. 00-22.123), the Court had ruled that the estate agency cannot claim its commission when the sale fails due to the non-fulfilment of a suspensive condition (for example, obtaining a loan) without fault of the parties. The logic is the same: the agency takes the risk of the contingency.

More recently, the Court of Cassation specified in a judgment of 11 September 2013 (No. 12-21.273) that the commission is only due if the agency was the direct cause of the conclusion of the sale. If the sale fails, even through the fault of the seller (for example, if he refuses to sign), the agency may claim damages, but not its commission. In the case of judicial protection, the lack of authorisation is not a fault of the seller.

The trend is therefore protective for sellers and buyers, and encourages agencies to be more cautious. In the future, we may see the development of "commission due in any event" clauses, but their validity is uncertain if they are not clear and balanced. In any case, the courts remain vigilant against unfair clauses in agency contracts.

What you absolutely must remember

FAQ:

• Question: Can the agency claim its commission if the sale fails due to a refusal by the guardianship judge?
  Answer: No, according to this judgment, the agency is not entitled to its commission because the failure is not attributable to either party. The agency was aware of the risk.
• Question: What should I do if the agency still demands the commission?
  Answer: Refuse to pay and ask them to justify their claim. If they pursue the matter, rely on the Court of Cassation judgment. Consult a lawyer to defend yourself.
• Question: Can I sell my property if I am under judicial protection?
  Answer: Yes, but you must obtain the authorisation of the guardianship judge before signing the deed. The preliminary contract can be signed subject to a suspensive condition.
• Question: What are the time limits for obtaining the guardianship judge's authorisation?
  Answer: The judge must rule within a reasonable time, usually a few months. If the judge does not respond, the sale cannot proceed and the preliminary contract lapses.
• Question: Can the buyer claim damages if the sale fails?
  Answer: No, unless he proves fault by the seller (for example, if the seller concealed his situation). In the absence of fault, the buyer simply recovers his deposit.

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