Stephen Smith (France) Ltd

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BEWARE THE “PROPERTY FINDER”

We have all seen ads in the property press offering “Property Find” services. Where property in France is concerned, it is wise to ensure you use properly qualified and regulated professionals.

Here are two preliminary points to consider.

1. Absence of a carte professionnelle

“Property finders” or anyone else based in France, the UK or elsewhere (‘agents’) who deal or assist in dealing with the sale/purchase of French realty must hold a carte professionnelle (license). The purpose of this license is to prove that agents have the necessary qualifications and insurances to protect the consumer.

Agents can incur civil and criminal penalties if they do not hold a licence.

“Deal or assist in dealing with” means actual involvement (‘entremise’).

For example, no entremise exists if the agents only market lists of French realty for sale, or otherwise only put potential purchasers in touch with potential sellers (e.g. via a licensed French estate agent who would then complete the transaction).

However, entremise exists either if the agents negotiate (price or otherwise) on behalf of either party; undertake to bring together a specific seller and an eventual purchaser; or otherwise act as an intermediary. Entremise may also exist if agents enter into a commission -sharing or other remunerative relationship with a licensed French estate agent.

2. Absence of a mandat de vente

By law, licensed agents must hold a written authority (mandat de vente) from the French vendor before they can market or sell the property. This document reveals amongst other things the minimum price at which the French vendor is prepared to sell and the amount of commission the licensed agent will earn (usually expressed as a percentage of the final sale price).

It is not unheard for property finders and other agents to approach licensed French estate agents with a view to selling a property at a much higher price (often to a gullible foreigner) than the French vendor could imagine.

Take the following example:

Agence Napoleon are licensed and have a mandat to sell a French property for € 100,000. An unlicensed operator based in the UK (and/or France) markets the property on its website or elsewhere for € 150,000. A buyer is found. The unlicensed operator charges the purchaser a fee (say £1,500) for his services. The unlicensed operator approaches Agence Napoleon who agree to sell to the buyer and share their commission (say €15,000) equally with the unlicensed operator. In other words, the unlicensed operator earns about £6,500 from this transaction.

The innocent buyer could quite easily have avoided paying about £25,000 over the odds (£1,500 and a further €30,000) by either doing his own homework (e.g. contacting licensed French estate direct) or taking independent legal advice from the outset.

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