“The real estate business provider”, Me Caroline Dubuis Talayrach, lawyer

The business contribution activity remains unclear. The Hoguet law does not provide for it and in case of doubt, the judges assess on a case-by-case basis.

The quest for information leading to the signing of a mandate is essential for a real estate agent or a property manager. Also, the professional can consider remunerating certain business contributors. But what is the status of these business providers with regard to the Hoguet law? Is the contribution of business in real estate possible? If so, under what conditions? These questions are important because if the contribution of business falls under the Hoguet law, the sanctions can then be criminal (illegal exercise of the activity of real estate agent) and civil (loss of the right to remuneration).

I. The principle

The contribution of business in commercial law does not pose any particular difficulties. However, when this operation concerns a regulated activity (real estate, banking, insurance), it must be studied with regard to the scope of the said activity. Because without knowing it, the business provider can “enter” into the scope of a regulated activity and therefore be in illegal exercise of the activities of real estate agent, banker or insurer. In real estate, it is therefore necessary to analyze article 1 of the Hoguet law which provides that “this law applies to natural or legal persons who, in a usual manner, engage or lend their assistance, even on an ancillary basis, transactions relating to the property of others and relating » to transactions for the sale, rental, management of real estate or property management.

Above all, it should be noted that this definition is broad and that in case of doubt, it is the judges who will assess the situation submitted to them on a case-by-case basis. There are certain exceptions referred to in article 2 of the Hoguet law which are not included here for educational purposes and in view of the format of the article.

A. Remuneration

Remuneration is often mentioned on the occasion of business contributions, yet it is not a criterion for applying the Hoguet law. Indeed, the aforementioned article does not make it a condition for the application of the Staff Regulations. It does not matter whether the business contribution is remunerated or not and regardless of the amount of the remuneration. The Paris Court of Appeal recently applied this principle with regard to remuneration of more than 80,000 euros (CA Paris, 1, ch. 8, 5/6/2020, n° 19/16391). If remuneration is not a criterion, the criterion of habit is decisive: payments made to the benefit of a business introducer can constitute proof of habit.

B. Habit

The Hoguet law applies to persons “who, in a usual manner, engage in or lend their assistance, even on an ancillary basis, to transactions relating to the property of others […] “. Habit is therefore a criterion for applying the Hoguet law. Thus, a person who once makes a business contribution or even a paid intermediation will not be covered by the Hoguet law (Cass. 1st civ., 27/1/2001, n° 99-14005). But if the same person carries out two intermediation operations, it falls under the Hoguet law (Cass. crim., 2/11/1978, n° 77-93464). Only counts the number of times – once – and not the periodicity.

C. The profession of the parties

The profession of the parties is also irrelevant to the scope of the law. (see in particular CA Bordeaux of 25/11/2020, n° 18-00893, and Cass. 1re civ. of 17/12/1991, n° 90-11935) Yet we very often hear that the Hoguet law does not does not apply between real estate professionals: it is true… and false. Because we must not confuse the profession of the parties and the delegation of mandate. The Hoguet law does not apply in the context of a delegation of mandate but it is exercised when the seller is a real estate agent and he entrusts the sale of his fund and his walls to a colleague (Cass. 1st civ ., 23/1/2019, n° 18-11677), or in relations between a promoter and a real estate agent (Cass. 1re civ., 1/7/2020, n° 19-15009, Cass. 1re civ. , 17/12/1991, no. 90-11935).

The principle being established, what about the position of the courts on the very notion of business provider?

II. The legal position

Is the contribution of business comparable to the fact of lending its assistance on an ancillary basis to a sale, rental, rental management or trustee operation?

A. The position of the Court of Cassation

The Supreme Court defines real estate mediation as being the search for clients and negotiation, or in one of these missions only (Cass. 1re civ., 8/7/1986, n° 84-15731; Cass. 1re civ ., 18/6/2014, no. 13-11543). Thus it judges that the Hoguet law applies ” […] in particular to a contribution of business” (Cass. 1re civ., 17/12/1991, n° 90-11935).

B. Towards an evolution of case law?

However, recent decisions of courts of appeal judge on the contrary that the business introducer is not subject to the Hoguet law (CA Aix-en-Provence, 5/1/2021, n° 19-11033; CA Paris, 1, ch. 8, 5/6/2020, n° 19/16391). Contrary to the position of the Supreme Court, they make a distinction between the provider (or the business indicator) and the negotiation. The Chambéry Court of Appeal (6/11/2018, No. 17-00811) seems to follow this reasoning, while that of Bordeaux agrees with the position of the Court of Cassation by judging that “the Court can only find that the transactions for which the commissions are requested fell, even as a business provider, within the scope of the law of January 2, 1970…” (25/11/2020, n° 18-00893).

More generally, and in the age of digitization and platforms, it would be desirable for the Court of Cassation to precisely define the services that fall under the Hoguet law and the others. Indeed, the Paris Commercial Court recently ruled that the fact of questioning a prospective buyer on his financing plan and therefore of qualifying it, did not constitute a service falling under the Hoguet law, on the grounds that this service was ” truly annexed” to all the other services offered (dissemination of advertisements, photographs, digitization of the property, virtual visit), themselves not covered by the Hoguet law. However, Article 1 of the said law does indeed target persons who “engage in or lend their assistance, even on an ancillary basis, to transactions relating to the property of others and relating” to transactions for the sale, rental, management of real estate or of trustee. This judgment having been appealed, we are therefore awaiting the position of the Court of Appeal before possibly that of the Court of Cassation.

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