Monaco’s Court of First Instance recently ruled on the importance of establishing a legal framework for the relationship between real estate agents and their clients. Here are the main outcomes of the court’s decision.
Referring to the provisions of Act n°1252 of July 12th 2002 on the conditions applicable to activities relating to certain transactions involving real estate property or businesses, the court recalled that a written agreement between a real estate agent and its client is not mandatory unless the latter expressly requests it.
However, and this is the main development in this ruling, any estate agent charging a commission must prove:
- what was done by way of consideration (note that the estate agent’s actions must have played a deciding role in the sale)
- that the client agreed to the amount to be paid (in other words, that the parties agreed on the percentage of the sales price).
Lastly, if there is no proof of a written or oral agency agreement, the estate agent is only entitled to claim payment for actions taken when it proves that they were:
- effectively taken
- for the exclusive benefit of the client from whom payment is claimed
- proportionate to the amount of payment claimed (in practice, it will be extremely difficult to prove that payment is proportionate to a service provided when the amount is calculated as a percentage of the sales price).
In summary, even if there is no mandatory requirement for a written agency agreement between estate agents and their clients, it is a practice that we strongly recommend as a way to clarify the relationship and avoid disputes.