Estate Agent Failed to Advise Buyer of Bypass
Tuesday 09 July 2019
An estate agent failed to advise buyers of a proposed bypass, but just what was the notaire doing?
In December 2010 a couple sold a house located in the village of Bordères-sur-l’Échez (Hautes-Pyrénées) to two international buyers for the sum of €170,000.
Unknown to the buyers a bypass was to be constructed in the area, which came within 50 metres of the property.
This information was well known to the sellers, who had for several years been members of a local campaign group fighting against the project.
When the new owners learned of the proposed bypass they brought a legal action against the sellers, as a result of which the sale was annulled by the local tribunal, a decision that was confirmed in the court of appeal sitting in Pau in June 2015,
In coming to their decision the court considered that at no point had the new owners been provided with precise information about the proposed bypass, either from the sellers or the estate agent, despite protestations from the agents who claimed that they had informed the buyers of the project. It similarly appears that the bypass did not figure in the searches carried out by the notaire!
The court concluded that, "in view of the decisive nature for the purchasers of the presence of the ring road, the mention of which would have resulted in a significant capital loss, it must be considered that the fraud is established at the expense of the sellers, who were under obligation, under Article 1116 of the Civil Code and the obligation of good faith in the negotiation of agreements, to mention precisely the existence of the bypass project, the imminence of the start of work, the location of the route, as well as the nuisances likely to be caused".
The sellers were ordered to reimburse the buyers not only the sale price, but also the transaction costs, loan interest costs, as well as €5,000 in respect of non-material damage.
Subsequently, the sellers sold their house to another buyer, but for a significantly lower sum of €119,000.
As a result of their losses the couple brought a legal action against the estate agents whom they had engaged in the original sale.
They accused the agents of a failure to provide appropriate advice to them on the importance of disclosing the bypass project to the buyers. They claimed in court that if they had been warned of the risk of fraud they would have acted differently.
When the case was heard by the local tribunal and later by the court of appeal, the judges considered that it was not the responsibility of the agent to warn the seller of the risks of non-disclosure, and that, in any event, the sellers self-evidently had no need for advice from the agent that their silence was deliberating misleading the buyers.
They also concluded that as the agent of the sellers and not of the buyers, the estate agent could not act against the interests of the sellers, and against their willingness to conceal these elements by disseminating precisely what they wanted to hide.
The case finally ended up in the Supreme Court, the Cour de Cassation, to whom the couple appealed successfully against the judgement, with the court ruling that the real estate agent is bound, with regard to his principal, by a duty of information and advice and as such, "they must enlighten his principal not only on the facts of which he is not aware, but also on the consequences and risks associated with the proposed transaction".
Comment
Whether the sellers should have been let off the hook in this way is questionable, as they had an obligation of full disclosure, which manifestly did not take place.
Of at least equal significance is the fact that the bypass project was not picked up by the notaire as part of their formal ‘search’ enquiries.
Barbara Heslop of French property solicitors Heslop and Platt states that: "Sometimes the search carried out by a notaire is limited to the perimeter of the property only, with no questions asked of the local authority concerning local developments. It is quite possible that is what occurred in this case."
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