Newsletter No. 12 – Real Estate Law
Summary
LEGISLATION
COMMUNICATION OF DOCUMENTS AND VISIT TO A PROPERTY BY THE HOLDER OF THE URBAN PRE-EMPTION RIGHT
Decrees of December 22, 2014
JURISPRUDENCE
… of December 10, 2014
Real Estate Agent – Register of Mandates
… of January 15, 2015
The holder of the action for annulment of the acceptance of the offer to sell
… of December 16, 2014
The mere presence of asbestos is not a latent defect
… of January 14, 2015
Commercial Lease – Period of the right of option
… of December 17, 2014
Request for annulment of an amendment to the descriptive statement of division and the condominium regulations
… of January 14, 2015
Basis of the liability of the condominium association
LEGISLATION
Communication of documents and site visit by the holder of the urban pre-emption right
The provisions of the Town Planning Code relating to the right of pre-emption in urban areas were amended by Law No. 2014-366 of March 24, 2014 (the ALUR Law). As such, Article L.213-2, paragraph 1, now grants the holder of the right of pre-emption the possibility of sending the owner a single request for access to documents enabling them to assess the nature and condition of the building, as well as, where applicable, the social, financial, and asset situation of the real estate company. Similarly, paragraph 6 of the same article stipulates that "the holder of the right of pre-emption may request to visit the property under conditions set by decree."
On December 22, 2014, two decrees were issued to implement these provisions. These two decrees apply to requests for site visits notified by the holder of the right of pre-emption to owners who filed a declaration of intent to sell on or after January 1, 2015.
Document disclosure: Decree No. 2014-15721 specifies the list of documents that may be requested from a property owner.
The holder of the right of pre-emption may, in particular, request the following documents:
- the technical diagnostic file
- the indication of the surface area of the premises or, if available, the measurement carried out by a professional;
- extracts from the preliminary sales contract containing significant information relating to the nature and condition of the property;
provided that they are mentioned in the prior declaration:
– the agreement or lease constituting real rights and, if they exist, its annexes, in particular the plans and inventory of fixtures;
– the agreement or lease establishing personal rights and, if they exist, its annexes, including plans and inventory of fixtures;
- provided that it is mentioned in the prior declaration and that it has been published in the land registration register, the instrument establishing the easement and, if they exist, its annexes, in particular the plans and inventory of the premises;
- the up-to-date articles of association of the real estate company whose shares are being transferred;
- the books and documents prepared for the last closed financial year mentioned in article 1855 of the civil code;
- the financial statement prepared for the last completed financial year mentioned in Article 1856 of the Civil Code;
- In the absence of the documents mentioned in the two preceding paragraphs, a statement certified by the manager establishing the composition of the assets and liabilities of the real estate company and specifying the profit of the last closed financial year.
Property viewing
Decree No. 2014-1573 sets out the conditions for viewing the property by the holder of the right of pre-emption 2.
Request for a visit
The request for a visit must be notified in writing to the owner or their representative, as well as to the notary (Art. D. 213-13-1 of the Town Planning Code).
The request must specify:
- the references of the prior declaration;
- the provisions of article L. 213-2 of the Town Planning Code and those of articles D. 213-13-2 and D. 213-13-3 of the same code, in visible characters;
- the name and contact details of the person or persons whom the owner, their agent or the notary can contact to determine the arrangements for the visit;
- that the visit must be made in the presence of the owner or his representative and the holder of the right of pre-emption or the person mandated by the latter.
1 Decree no. 2014-1572 of 22 December 2014 establishing the list of documents that may be requested from the owner of a building by the holder of the right of pre-emption pursuant to Article L. 213-2 of the Town Planning Code
2 Decree No. 2014-1573 of 22 December 2014 setting out the conditions for the visit of the property by the holder of the right of pre-emption pursuant to Article L. 213-2 of the Town Planning Code
Acceptance of the visit
Acceptance must be given in writing within eight days of the date the viewing request is received (Article D.213-13-2 of the Town Planning Code). If the viewing is accepted, the owner, their agent, or the notary must inform the building's occupants.
Refusal of viewing: The owner may refuse to allow a viewing of the property (Article D.213-13-3 of the Town Planning Code). The refusal must then be notified within eight days of the date the viewing request was received. If no response is received within this period, the refusal is tacit.
Visit arrangements
The visit must take place within fifteen calendar days of receiving confirmation of acceptance, excluding Saturdays, Sundays, and public holidays. Failure to visit within this timeframe constitutes either a refusal or a waiver of the right of visit.
During the visit, a joint report must be drawn up and signed by the owner or their representative and by the holder of the right of pre-emption or a person authorized by them. The report must state the date of the visit and the names and capacities of the persons present.
JURISPRUDENCE
Real Estate Agent – Mandate Register
First Civil Chamber, December 10, 2014 (No. 13-24.352) F-PB:
The use of two separate registers, one for sales mandates and the other for search mandates, is not in accordance with Article 72 of Decree No. 72-678 of July 20, 1972, which stipulates that mandates must be recorded in a single register.
Failure to comply with this provision renders the mandate null and void.
The seller: holder of the right to bring an action to annul the acceptance of the offer to sell
1st Civil Chamber, January 15, 2015 (No. 14-11.019) FS-PB:
A notice to vacate for the purpose of selling the property was served on a tenant. A preliminary sales agreement was then granted at a more advantageous price to two prospective buyers. In accordance with the provisions of Article 15 II of Law No. 89-462 of July 6, 1989, the notary notified the tenant of a second offer to sell, which the tenant accepted. Although the deadline for completing the sale had passed, the notary proceeded with the sale to the tenant. The prospective buyers, believing their rights had been violated, sued the notary, notably seeking damages. In support of their claim, they invoke the automatic nullity of the refusal of the offer to sell, as provided for in Article 15 II, paragraph 5 of the 1989 Law.
The Court of Cassation and the Court of Appeal held that only the landlord could invoke the nullity of the acceptance of the offer to sell stipulated by Article 15 II, paragraph 5 of the 1989 Law. Consequently, by executing the deed of sale requested by the landlord, the notary did not breach any of his professional obligations towards the prospective buyers.
The mere presence of asbestos does not constitute a hidden defect
3rd Civil Chamber, December 16, 2014 (No. 13-17.469) FD:
In this case, the Court of Cassation reiterates that the seller is only required to have an asbestos survey carried out and provide the buyers with a report on the presence of asbestos inside the building.
The Court further clarifies that the mere presence of harmless asbestos in materials in good condition does not render the building unfit for its intended purpose and is not considered a latent defect giving rise to a claim for rescission or price reduction.
Commercial lease – Period for exercising the option right
3rd Civil Chamber, January 14, 2015 (No. 13-23.490) FS-PBI:
The decision setting the rent for the renewed lease was served on the tenant on December 16, 2008. On February 13, 2009, the tenant notified the landlord of its intention to exercise its option. The question then arose as to the time limit within which this option could be exercised.
The Court of Cassation reiterated, firstly, that service of the first-instance decision setting the rent starts the clock running for both the option period and the appeal period. Secondly, it clarified that the Commercial Code does not require double service of the decision setting the rent for the renewed lease for the purpose of exercising the option. Consequently, the tenant company's exercise of its option on February 13, 2009, was untimely.
Request for cancellation of an amendment to the descriptive statement of division and the condominium regulations
3rd Civil Chamber, December 17, 2014 (No. 13-23.350) FS-PB:
Several co-owners are requesting the reinstatement of units within the building's common areas, the annulment of the composition of one of the units in the initial descriptive statement, and the annulment of the amended descriptive statement of division. The lower court judges dismissed the request as inadmissible.
The Court of Cassation upheld this decision. According to the Court of Cassation, these requests, seeking the annulment of deeds or real property rights resulting from documents registered with the land registry, are inadmissible due to the lack of registration of the summonses in the land registry.
Basis of the liability of the condominium association
3rd Civil Chamber, January 14, 2015 (No. 13-28.030) FS-PBI:
A condominium association was ordered to indemnify one of its co-owners, the landlord, against judgments rendered against him seeking compensation for damages caused by work carried out in the common areas. This work had forced the tenant of a commercial space to interrupt his business operations for several months.
According to the Court of Appeal, since the landlord did not seek compensation for himself, the association's liability was based on Article 1384 of the Civil Code and not on Article 9, paragraph 4, of the Law of July 10, 1965, which stipulates that a co-owner who suffers damages due to work of collective interest is entitled to compensation.
The Court of Cassation quashed the judgment on the grounds that the landlord was seeking compensation for personal damage resulting from his obligation to repair the disturbances suffered by his tenant, and that, as the work was carried out by the syndicate and affected his private areas, only the provisions of Article 9, paragraph 4, of the Law of 10 July 1965 were applicable.
