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Real estate: property sales mandate and right of withdrawal

Journée Formation « L'essentiel des Marchés Publics »

Does the Luxembourg Consumer Code provide for a right of withdrawal following the conclusion of a sales contract between an individual and an estate agent?

What are the estate agent’s obligations and the rights of the private seller when the contract is signed at the seller’s home or sent over the internet (i.e. outside the estate agency responsible for selling the property), and what are the consequences?

The Tribunal d’Arrondissement de Luxembourg (Luxembourg District Court) has had the opportunity to consider these questions and has ruled that the Luxembourg Consumer Code is fully applicable to property sales mandates signed at the home of an individual – i.e. a consumer – since we are dealing with a contract concluded away from business premises:

It should be emphasised at the outset that consumer law, and more specifically the rules applicable to “off-premises contracts”, is called upon to govern the case in point.

Indeed, it is not debatable that in the present case the respective classifications of consumer and professional within the meaning of Article L. 010-1 of the French Consumer Code apply to the parties in dispute, classifications which are not disputed by the applicant.

It is also common ground in this case that the agreement of 16 February 2017 was concluded at the defendants’ domicile, so that, as the defendants rightly maintain, it falls within the scope of Article L. 222-1, 2) of the same Code defining an “off-premises contract” as, among other things, “any contract concluded between a professional and a consumer in the simultaneous physical presence of the professional and the consumer, in a place which is not the professional’s commercial establishment” (Article L. 222-1, 2) 1st indent of the Consumer Code).

Tribunal d’arrondissement, 8th chamber, 15 October 2019, no. TAL-2018-02138

As a reminder, article 222-1 2) 1st indent of the Consumer Code defines an off-premises contract as being:

“any contract concluded between a trader and a consumer with the simultaneous physical presence of the trader and the consumer, at a place which is not the trader’s business establishment.”

When, for example, estate agents visit premises that are to be put up for sale (or rent), they are therefore obliged to provide their customers, before signing any contract, with information about their right of withdrawal, the conditions, timeframe and procedures for exercising this right, and a withdrawal form, in accordance with article L.222-6, paragraph 1), h) of the Consumer Code:

The professional seller must provide the consumer, before the latter is bound by the contract or by an offer of the same type, in a clear and comprehensible form, with the following information which is contractually binding on the professional: […] where the right of withdrawal exists, the conditions, period and procedures for exercising this right in accordance with Article L. 222-9, paragraph (5), as well as the model withdrawal form set out in a Grand-Ducal regulation.

In addition, pursuant to article L. 222-7 (1) and (5) of the Consumer Code, the pre-contractual information set out above must in principle be provided on paper, unless the consumer agrees to another durable medium.

If the agent fails to comply with his essential obligation to inform the consumer of the existence of the right of withdrawal and the procedures for doing so, the seller may potentially claim that the contract is null and void.

It should be emphasised, however, that any breach of an obligation to provide information does not automatically render the contract null and void, as the individual seller may in any event exercise his right of withdrawal.

In the above-mentioned decision, the Tribunal d’Arrondissement de Luxembourg held that :

It follows that the exercise by the defendants of their right of withdrawal following a telephone conversation on 17 February 2017, reiterated by registered letter on 20 February 2017, validly annulled the disputed agreement.

Lastly, for contracts concluded off-premises, reference should be made to article L.221-3 of the Consumer Code, which states that the consumer has the right to withdraw from the contract in writing or on any other durable medium, without giving any reason and without penalty, within fourteen calendar days.

It is important to note that in the absence of information on the right of withdrawal in the contract concluded, the period is extended by twelve months, pursuant to Article L.222-9 paragraph (3) of the Consumer Code.

Please do not hesitate to contact us if you would like our law firm to review the terms and conditions of your estate agency in Luxembourg, or if you would like to review the validity of the mandate you have entered into.