The "Loi Hoguet" French property Law
The law in France is there to protect all those buying property in France and imposes restraints on those selling French real estate. Ensure that you are protected by or operating within the law. If a buyer, ask for your agent’s bona fides in the shape of his carte professionnelle. If you deal in French property and run a “Property Find/Management service” or fancy yourself as an “Estate Agent”, make sure you are “en règle” wherever your registered office is, a UK Ltd company is not an option if you have any personnel acting on your behalf in France. Attempt to operate otherwise in French property transactions and you could end up paying a hefty fine or worse, going to prison.
1. The law
Individuals or companies who “deal or assist in dealing with “ the sale and purchase of French realty and other similar activities defined by Article 1 of the Loi Hoguet (Law 70-9 of 2 January 1970) must hold a French carte profesionnelle (Article 3 of the Loi Hoguet).
The card is valid for one year and is renewed annually. It must be produced to anyone who requests to see it. Amongst the qualifications for holding a carte profesionnelle is that the holder is fully indemnified financially and does not have a criminal record.
The carte is stamped “T” for transaction (sales and purchases), “G” for gestion (property management).
The Loi Hoguet was passed as a matter of public policy as a protection from unacceptably low standards of ethics and competence in the field of property sales. It is impossible to override its provisions or to avoid them contractually. This hasn't stopped many hundreds of people operating illegally in France and the UK, indeed worldwide.
Infringement of the Loi Hoguet may incur both civil and criminal penalties. Any unqualified person (that is not holding a carte professionnelle) who deals or assists in dealing with a transaction covered by Article 1 of the Loi Hoguet may be fined and/or be imprisoned.
The Loi Hoguet is applicable to all persons (not just estate agents) whether they are foreigners resident outside France (French Code civil Article 3) or not.
People in the U.K who “deal or assist in dealing” with French properties, be they Estate Agents or Property Find Service professionals cannot escape from the application of this rule. Neither can those based in France.
Such an agent is not permitted to practice, advertise, receive commission or fees without a carte professionnelle.
2. The meaning of “deal or assist in dealing with”
French case-law, when considering the meaning of the words “deal or assist in dealing with” has generally required that there is an actual “entremise” (i.e.involvement as an active intermediary) in the transaction.
For example, the activities of Agents or Propety Find Services may fall outside Article 1 of the Loi Hoguet if all they are engaged upon is putting sellers in touch with potential purchasers by, say, the simple fact of marketing of lists of property for sale.
However, when an Agent or Property Finder acts as an intermediary, or negotiates on behalf of one party or the other, the Loi Hoguet becomes applicable. The Loi Hoguet would similarly apply should an agent or intermediary undertake to bring together a specific seller and an eventual purchaser. This is as distinct from the mere marketing of a list.
The difficulty arises where an Agent/House Finder not holding carte professionelle enters into a remunerative relationship with a French Estate Agent who does. Simplistically, in my opinion, some commentators take the view that there is no problem with such an arrangement. However, the Agent/House Finder is paid for the introduction of a client once the client has paid his French Estate Agent a commission and this must amount to “dealing or assisting in dealing with” – i.e. there has been an entremise.
To illustrate this, consider two examples:
First, an English agent offering French properties to English purchasers in England, on a commission basis, and not being in possession of a carte professionnelle, would probably not be subject to the Loi Hoguet if the English agent restricts himself to the territory of the UK and to seeking clients who may be interested in possible land or property transactions in France and then puts those clients in touch with a qualified French agent or notaire who would then complete the transaction.
If, on the other hand, the English agent acted as an intermediary in a French property transaction, and/or was commissioned directly by a French agent or vendor to sell, then that person might well be deemed to be acting in breach of the Loi Hoguet, and be liable to prosecution.
If you are an Agent/Property Finder dealing in French property then you must look to any contractual and commission-sharing arrangements you have made. You must beware of any loose partnership agreements entered into. In the light of the foregoing, you must ensure that there is no entremise by you as the Agent/Property Finder and, if there is, that the entremise will be by a person holding an appropriate carte professionnelle.
If you are a buyer of French property either via someone based in the UK, in France, in Timbuktoo, whether they be an Agent, a Property Finder General or your best mate John, make sure they are regulated as required. Ask to see their carte professionnelle and don’t give them any money untill they show it to you and that you verify its validity.
With so many fully legal professionals to choose from, why take a risk and try to avoid the protection of a Law designed to stop you from falling for an unscrupulous rogue trader?
To be sure you're dealing with a legal Estate Agent in Brittany try www.breton-homes.com