What is a sales mandate?
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When selling a property, you may choose to entrust this task to a broker. This real estate professional is responsible for finding one or more potential buyers and negotiating the best possible terms for the sale. The broker’s role is essentially to defend your interests throughout the entire process.
Definition of a real estate mandate
A real estate brokerage mandate is the contract that establishes the relationship between you, the owner, and the broker. Through this contract, you give the broker the authority to represent your interests in the sale of your property in exchange for a fee, usually a percentage of the sale price.
This mandate is based on two fundamental principles:
- The broker is paid by commission, which means they will only be paid if the sale is successfully completed.
- The contract must be clear and explicit, outlining the rights and obligations of each party, the method of remuneration, and the duration of the mandate.
It is important to note that if a fixed fee is requested upfront without any guarantee of results, this is no longer considered a brokerage mandate but rather a service contract.
What is the role of a sales mandate?
The sales mandate is essential when a property owner decides to sell their real estate asset. This legal document details the services provided by the estate agent and governs the financial relationship between the seller (principal) and the agent (representative).
Its main role is to protect the interests of both parties by ensuring compliance with contractual terms throughout the sales process. The mandate also specifies all the actions undertaken by the agency to market the property effectively, with the goal of completing the sale quickly and at the agreed price.
Is a sales mandate mandatory?
Since the adoption of the Hoguet Law in 1972, the sales mandate has become a mandatory document: “the real estate agent must obtain a written mandate authorising them to negotiate or act on behalf of the owner or landlord. This mandate must be signed before any brokerage or negotiation activity takes place.”
Whether simple or exclusive, the mandate requires the signature of both parties before any real estate transaction can begin.
The sales mandate establishes a reciprocal commitment that protects both the owner and the estate agent. An agent who proceeds with a sale without a mandate risks non-payment of fees and potential criminal penalties.
What are the obligations of the agent?
By signing a sales mandate, the estate agent undertakes to include precise information, such as their fees (often referred to as agency fees). The mandate must also detail the strategies the agent will use to market and sell the property.
The agent is required to verify and maintain transparency regarding the information provided by the seller, including proof of ownership and the legitimacy of the sale. If the property is jointly owned, as in the case of an inheritance, the agent must ensure that all heirs have given their consent.
The agent is also responsible for being aware of the specific characteristics of the property and for informing the buyer of any potential issues, such as the presence of asbestos (for properties built before 1991 if renovation is planned), lead, termites, or flood risks.
They must also ensure the compatibility between the current use of the property and the buyer’s intended use. For example, they cannot sell a residential property to someone intending to use it for commercial purposes. In addition, the agent must verify the buyer’s solvency.
Beyond a simple obligation of result, the agent has a duty to advise and inform their clients throughout the sales process. In the event of non-compliance with these duties, their liability may be engaged.
What are the different types of real estate mandates?
Here are the main types of mandates available in property sales:
- Simple mandate: The owner may entrust the sale of their property to several agents while retaining the right to sell it themselves. This flexibility is the main advantage, but it may lead to less involvement from agents, who know they are competing with others – and potentially with the seller.
- Semi-exclusive mandate: With this mandate, the owner works with a single professional, while still keeping the possibility to sell the property on their own. This provides a degree of exclusivity without removing the seller’s chance of finding a buyer independently.
- Exclusive mandate: This mandate gives exclusive selling rights to one agent. The advantage is the agent’s full dedication, which can increase the effectiveness of the sale.
It is crucial to choose the type of mandate best suited to your needs and circumstances in order to maximise your chances of selling under the best possible conditions.
How to draft a real estate sales mandate?
The sales mandate, governed by legislation, must meet specific requirements to avoid being declared null and void. An inadequately drafted contract may compromise the relationship between the property owner and the estate agent. The following information must be included:
- Identity of the estate agent
- Identity of the owner (or co-heirs in the case of inherited property)
- Description of the property: address and detailed information on the property concerned (luxury apartment, luxury house, chalet)
- Type of mandate: sale, search, etc.
- Duration of the mandate: six months, renewable in three-month periods
- Property price: estimated market value excluding agency fees, with an optional negotiation range
- Agent’s remuneration: fixed amount or percentage, specifying whether it is paid by the seller or buyer
- Marketing strategies: to be deployed by the agent depending on the type of mandate
This document must be validated and signed by both parties.
Who is authorised to sign a sales mandate?
The property owner is usually the one who signs the sales mandate. However, in the context of joint inheritance (indivision):
- Unanimous agreement: all heirs must appear on the mandate and sign it for it to be valid.
- Individual signature: the sale is possible only if the non-signatory heirs give their approval afterwards.
- Refusal by one heir: the initial signatory may have to compensate the agency or the potential buyer.
These rules ensure clarity in transactions and protect the parties involved.
FAQ on the sales mandate
Why is it necessary to value a property before signing a sales mandate?
A property valuation makes it possible to set a realistic selling price in line with the market. A well-defined price encourages a faster sale and avoids excessive negotiations.
What is the difference between a search mandate and a sales mandate?
A sales mandate is a contract by which a property owner entrusts an estate agent with the mission of selling their property.
A search mandate, on the other hand, is a contract by which a buyer instructs a professional to find a property that meets their criteria.
What is the duration of a sales mandate?
The initial duration of a mandate is generally six months, tacitly renewable. After this period, it may be terminated at any time with 15 days’ notice.
Can the sale price be changed after signing the mandate?
Yes, but only with the agreement of both the owner and the agency. Any revision of the price must be formally agreed in writing and signed by all parties concerned (the seller and the broker), and recorded through an amendment to the mandate.
