Buyer Fails to Pay Deposit
30th June 2025
A buyer who failed to pay a deposit on a property purchase is ordered to pay compensation to the estate agent.
In a case that was recently heard in the French Court of Appeal, an estate agent was engaged by a seller to sell their property, for an advertised price of €2,980,000.
The property comprised a mansion house of 20 rooms, with a surface area of 366 m², situated in 9,000 m² of land. The property also included barns and 2 villas, each of 120 m², with planning permission for 2 further villas of the same size.
The commission payable was 5%, equivalent to €140,000 at the sales price.
The estate agent was successful in finding a buyer, who offered €2,700,000, a price that was accepted by the seller. The commission payable to the estate agent, payable by the buyer, was agreed at €100,000 (inc 20% VAT).
Buyer and seller signed a sale and purchase agreement (compromise de vente), which was not subject to a conditional clause concerning a mortgage.
A security deposit of 10% (€270,000) was stipulated in the contract, which the buyer agreed to pay within 10 days of signing of the agreement.
Several months passed and as the deposit had not been paid, the seller withdrew from the contract, as they were entitled to do.
As a result, the buyer was liable to pay damages to the seller, in addition to which the estate agent later brought a legal action seeking damages of €90,000 for a loss of opportunity.
When the case was heard in the lower tribunal, although the estate agent was successful in their claim, the damages awarded amounted only to several thousand euros. As a result, the agents appealed.
The Court of Appeal assessed the loss of opportunity to receive the commission at 80%, i.e. €80,000, a sizeable award, which may have been linked to the fact that a year after the failed contract the property had yet to be sold.
It also awarded €11,000 for the costs incurred (visits, procedures, preparation of the preliminary agreement) a sum that was large due to the prestigious nature of the property and the work required by the agents.
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