Newsletter n° 28 – Real estate law – November 2015
Co-ownership, rents, real estate agents and trespassing
LEGISLATIVE AND REGULATORY NEWS
Co-ownership informing buyers
Ordinance of August 27, 2015
Evolution of rents
Decree of July 29, 2015
Real estate agents
Decrees of June 29 and August 28, 2015 – Order of July 1, 2015
Home invasion
Law of June 24, 2015
JURISPRUDENCE
SALE
Diagnostician's error
Compensable damage
PROPERTY
Bank loan
Early repayment justified by dismissal
Expropriation for public utility
Scope of the right to compensation
OWNERSHIP
Action by a co-owner
Participation of the syndicate of co-owners
General
meetings Appendices to the minutes
Payment of charges
The unenforceability of the transfer of ownership as an obstacle to the request for payment
Syndic
Regularization of the mandate
Authorization to take legal action
LEASE
Commercial lease
Judicial fixing of the rent
Newsletter n° 28 – Real estate law – November 2015
Legislative and regulatory news
Information for purchasers of co-owned lots
The government was empowered by the law on the simplification of business life1 to take, within nine months following the publication of the law, by means of an ordinance, measures with the aim of simplifying the procedures for informing purchasers provided for by Articles L.721-2 and L.721-3 of the Construction and Housing Code (CCH) created by the Alur law (Art. 15). The ordinance of August 27, 20152 was therefore issued on the basis of this law.
Documents relating to the organization of the building
The documents must now be given to the purchaser and no longer attached to the promise of sale or the authentic deed, at the latest when signing the promise of sale.
In addition, the obligation to submit the minutes has been modified. These must be given to the purchaser, except when the selling co-owner was unable to obtain these documents from the trustee. Concerning the methods of delivery of the documents, these can be delivered on any medium and by any means including by dematerialized way subject to the agreement of the purchaser. The purchaser must attest to this delivery either in the deed containing the promise of sale by his simple signature when it is an authentic deed or, when the deed is drawn up under private signature, in a document that he signs and dates from his hand.
Easing of the information obligation
When the purchaser is already the owner of a lot in the co-ownership, the documents relating to the organization of the building, the maintenance log, the information notice relating to the rights and obligations of the co-owners and the conclusions of the overall technical diagnosis are not required.
Similarly, the minutes of the general meeting, the maintenance book, the information notice relating to the rights and obligations of the co-owners and the conclusions of the overall technical diagnosis are not required in the event of the transfer of an annex lot.
- 1 Law No. 2014-1545 of December 20, 2014 on the simplification of business life and containing various provisions for the simplification and clarification of law and administrative procedures
- 2 Ordinance no. 2015-1075 of August 27, 2015 relating to the simplification of the procedures for informing buyers provided for in Articles L. 721-2 and L. 721-3 of the Construction and Housing Code
Starting point of the withdrawal period
When the documents relating to the organization of the building and those relating to the financial information are not given to the purchaser at the latest on the date of the signature of the promise of sale, the withdrawal period provided for in Article L. 271-1 of the CCH only runs from the day following the communication of these documents and information to the purchaser.
Finally, when the documents relating to the organization of the building and the overall statement of unpaid charges and debts are not attached to the draft notarial deed, the reflection period only runs from the day after the communication of these documents and information to the purchaser.
Evolution of rents
Under the terms of article 18 of the law of July 6, 19893, modified by the Alur law, in areas of continuous urbanization of more than 50,000 inhabitants where there is a marked imbalance between supply and demand for housing, leading to serious difficulties of access to housing on the whole of the housing stock, a decree fixes annually the maximum amount of evolution of the rents of vacant housing and renewed contracts.
The decree of July 29, 20154, taken for the application of this provision is applicable to contracts concluded during the period from August 1, 2015 and July 31, 2016. According to this decree, when a vacant dwelling is the subject of a new rental, the rent of the new rental contract cannot exceed the last rent applied to the previous tenant.
However, when no rent revision has taken place during the twelve months preceding the conclusion of the new rental contract, the rent applied to the new tenant cannot exceed the last rent applied to the previous revised tenant according to the variation of the rent. benchmark rent index.
The decree provides for several derogations when the owner has carried out work to improve the property, when the previous rent was manifestly undervalued and when the prefect has set a reference rent by decree.
- 3 Law no. 89-462 of July 6, 1989 aimed at improving rental relations and amending law no. 86-1290 of December 23, 1986
- 4 Decree No. 2015-931 of July 29, 2015 relating to the change in certain rents in the context of a new rental or a renewal of a lease, taken pursuant to Article 18 of Law No. 89- 462 of July 6, 1989
Real estate agents
The Alur law aims to further regulate the exercise of the profession of real estate agent. To this end, several texts have recently been adopted. Thus, the code of ethics, the principle of which was provided for by the Alur law, is now applicable to these professionals. Similarly, the terms and conditions relating to their insurance obligation have been clarified.
Code of ethics
Since September 1, 2015, the code of ethics for real estate agents5 has come into force. This code, containing twelve articles, notably includes requirements relating to the ethics of these professionals, their skills and the organization of the company.
Insurance obligation
The obligation to take out civil liability insurance, imposed by article 24 of the Alur law, is specified by a decree of June 29, 20156. This decree, which entered into force on October 1, specifies that agents must be able to justify at any time of an insurance contract.
The minimum conditions of the contract as well as the form of the contract were the subject of a decree of the following July 17. This decree notably sets the minimum amount of guarantee at 75,000 euros and specifies in the appendix the minimum content of the contract.
Home invasion
The law tending to specify the offense of invasion of domicile8 only modifies article 226-4 of the Penal Code as follows:
The introduction or maintenance in the domicile of another person using manoeuvres, threats, means of fact or coercion, except where permitted by law, is punishable by one year's imprisonment and a fine of 15,000 euros.
Staying in another person's home following the introduction mentioned in the first paragraph, except where permitted by law, is punishable by the same penalties.
- 5 Decree No. 2015-1090 of August 28, 2015 setting the rules constituting the code of ethics applicable to certain persons carrying out transaction and property and business management activities
- 6 Decree No. 2015-764 of June 29, 2015 relating to the obligation of professional civil liability insurance for commercial real estate agents
- 7 Order of July 1, 2015 amending the amended order of September 1, 1972 setting the minimum conditions of the insurance contract and the form of the supporting document provided for by decree no. 72-678 of July 20, 1972 setting the conditions for the application of Law No. 70-9 of January 2, 1970 regulating the conditions for the exercise of activities relating to certain transactions relating to buildings and businesses
- 8 Law No. 2015-714 of June 24, 2015 clarifying the offense of trespassing
Case law
Compensable damage in the event of an error by the diagnostician
Mix. July 8, 2015 (n°13-26.686) PBRI:
In this case, the parasitic state given to the purchasers was incorrect and did not allow them to know before the purchase, the advanced state of infestation of the building by termites.
The purchasers therefore sued the real estate agent through whom they had purchased the property as well as the diagnostician's insurer for compensation for their damages, the latter having been placed in compulsory liquidation. The insurer contests before the Court of Cassation its order to repair the material and enjoyment damage suffered by the purchasers.
In support of its appeal, the insurer claims that the consequences of the breach of the obligation to inform can only be analyzed as a loss of opportunity and not as material damage. The Court of Cassation dismissed the appeal. According to the Court, it follows from Article L. 271-4 of the Construction and Housing Code that the technical diagnostic file appended to the promise of sale or the authentic deed of sale of a building guarantees the purchaser against the risk linked to the presence of termites and that the responsibility of the diagnostician is engaged when the diagnosis has not been carried out in accordance with the standards enacted and the rules of the art, and that it proves to be erroneous. The material and enjoyment damages suffered by the purchasers as a result of this erroneous diagnosis are therefore certain and the insurer of the diagnostician owes them its guarantee.
Early repayment indemnity
1st Civil. June 17, 2015 (n°14-14.444) F-PB:
Invoking the dismissal of one of them, two co-borrowers proceeded to the early repayment of their loans using a repurchase of credit from another establishment and then sued the bank for restitution of the early repayment indemnities.
The bank is contesting the appeal ruling granting the request.
According to the bank, the repayment of the loans was not really motivated by the dismissal of one of the borrowers but by the failure of a renegotiation of the interest rate. The Court of Cassation, relies on the appeal judgment, under which it is specified that the borrowers had motivated their decision to repay the loans early by the dismissal of one of them.
The Court therefore considers that the Court of Appeal was therefore right to decide that the reason relating to the reduction of interest rates was in no way exclusive of that relating to the dismissal and ordered the bank to return the early repayment indemnities. Expropriation for reasons of public utility – Scope of the right to compensation
ECHR 25 June 2015 (req.24756/10) Couturon c.
France In this case, the applicant complained of the lack of compensation for the loss of value of the part of his property which he had not been expropriated due to the construction of the A89 motorway near it and invoked the violation of Article 1 of Protocol No. 1 relating to the protection of property.
The Court considered that France had a wide margin of appreciation in this case insofar as the construction of the motorway was part of the implementation of a regional planning policy, where the interest General of the community occupied a prominent place. Furthermore, the Court considers that the owner benefited from a fair judicial examination, the French courts having duly examined his arguments relating to the depreciation of his property following the construction of the motorway. Consequently, the Court concludes that there has been no violation of Article 1 of Protocol No. 1 to the ECHR.
Participation of the syndicate of co-owners in the event of an action by a co-owner
3rd Civil. July 8, 2015 (n°14-16.975) FS-PBI
The owner of lots in a building subject to the status of co-ownership for having been divided into lots divided between two co-owners, has assigned the other owner, in demolition of constructions affecting the common parts built by this one without authorization.
To order the co-owner to restore the premises, the Court of Appeal held that insofar as the community of union members was not organized, it could not be involved in the proceedings. The Court of Cassation reverses the judgment. According to the Court, a co-owner who exercises an action on an individual basis for the restoration of the common portions must call the syndicate of co-owners in the case, after having, if necessary, had his representative appointed by the court.
Appendices to the minutes of the general meeting
3rd Civil. July 8, 2015 (No. 14-12.072) FS-PB:
The owner of a lot within a building subject to the status of co-ownership, summoned the trustee, in communication of the caretaker's employment contract.
According to the Court of Appeal, the co-owner was entitled to ask the trustee for the communication of the documents which are necessarily annexed to the minutes of the general meeting. Such was the case with the caretaker's employment contract insofar as her hiring had to receive the approval of the co-ownership. According to the Court of Cassation, the employment contract of a union officer does not constitute an appendix to the minutes of the general meeting. The judgment is therefore quashed.
Expenses
3rd Civil. July 8, 2015 (No. 14-12.995) FS-PB:
In this case, the purchaser of lots in a building subject to the status of co-ownership disputes his order to pay charges.
According to the Court of Appeal, this purchaser was inadmissible to challenge the general meeting during which the decision to call for funds had been taken insofar as this purchaser was not known to the trustee since the transfer of the lots did not had not been notified in the forms required by article 6 of the decree of March 17, 1967, so that he did not have to be summoned. The Court of Cassation considers on the contrary that the syndicate of co-owners, which opposes to the purchaser the inopposability of the transfer of ownership occurred in the absence of notification of the transfer, cannot claim from him the payment of the charges of co-ownership. The appeal decision is therefore quashed by the Court.
Mandate of the trustee – regularization
3rd Civil. 2015 September 16, 2015 (No. 14-16.106) FS-PBI:
A general meeting on January 27, 2010 gave a mandate to a trustee until December 31, 2010, then the general meeting of July 5, 2012 retroactively gave a new mandate to this trustee.
A judgment having upheld the request of two co-owners for the cancellation of a decision taken by the general meeting, the trustee, on October 25, 2011, raised an appeal against the decision on behalf of the syndicate.
Since the syndic's mandate expired on that date, the respondents invoked the inadmissibility of the appeal for lack of power on the part of the syndic. The Court of Appeal held that the appeal lodged by the trustee when he had no mandate on that date was void of a substantive nullity and that the nullity had not been covered.
The Court of Cassation clarified that the regularization of the powers of the trustee who acted in court on behalf of the union without a mandate cannot intervene after the expiry of the appeal period, consequently, the Court rejected the appeal brought by the union co-owners.
Authorization of the trustee to take legal action
CE July 3, 2015 (n°371433):
The general meeting of a syndicate of co-owners had invited the trustee, by a deliberation, to “exercise a possible appeal in contestation of the building permit concerning the adjoining program”. To accommodate the plea of inadmissibility raised in defence, the Administrative Court of Appeal subsequently approved by the Council of State considered that, in the absence of any other clarification as to the object and purpose of the dispute that this deliberation mentions, this could not amount to authorization validly given by the general meeting to the trustee in order to appeal the contested judgment.
Judicial fixing of the rent
3rd Civil. July 1, 2015 (n°14-13.056) F-PB:
The owner of leased commercial premises sued the lessees to set the rent for the renewed lease.
To fix the rent of the renewed lease according to the rental value, the judgment of appeal takes account in particular of the three-yearly revisions which could have intervened on May 3, 2008 and May 3, 2011. The Court of Cassation reverses the judgment insofar as, by ruling in this way when no request for a three-year rent review had been made by extrajudicial document or by registered letter, the Court of Appeal violated Articles L. 145-37 and R. 145-20 of the Commercial Code .
