What are the main types of mandates in real estate?
A mandate is a contract by which an owner gives an agent a particular power over his real estate assets.
In real estate, there are 4 types of mandate:
- The sales mandate (owner wishes to sell his property): simple mandate and exclusive mandate
- The search mandate, corresponding to someone looking for a property to rent or buyer (future tenants and future buyers)
- The rental mandate signed by the owner who wishes to rent his pied-à-terre, simple mandate and exclusive mandate
- The management mandate that allows the real estate agent or real estate negotiator to manage the owner's property throughout the lease.
What content must be included in a mandate?
- Type of mandate
- The identity of the parties
- The obligations of the mandate and the mandatary
- The selling price and fees
- The duration of the mandate: The duration of a mandate is necessarily limited in time, whether it is a simple or exclusive mandate, in no case it has the function of being perpetual. Whatever it is, simple or exclusive, any mandate must, under penalty of nullity, therefore clearly and precisely indicate its period of validity.
- Termination conditions
Please note: To protect his clients as much as possible, the real estate agent or negotiator must prepare a few documents as soon as he takes the mandate for properties subject to co-ownership:
The title deed
The last three (3) minutes of the AG (General Assembly)
The Carrez law surface certificate
What is the exclusive mandate?
The exclusive mandate represents a more important constraint, in return it generally allows a more efficient and faster sale compared to a sale under a simple mandate. Exclusive properties are most often signed in less than 3 months, while for comparison, in the case of a simple mandate, the time between the signing of the mandate and the sale is approximately double, 6 months.
BENEFITS
The real advantage of the exclusive mandate lies in a high and assured involvement on the part of the real estate agent. The latter doing his utmost to complete the transaction as quickly as possible and at the most attractive price, allowing him to receive, in passing, his commission. The second advantage, remaining not negligible, consists in the valuation of your property by its rarity on the market.
DISADVANTAGES
The signature of the exclusive mandate to a single agency gives an impression of loss of control and total freedom over the sale of the property. Agencies can be criticized for relying on their achievements once the exclusive mandate is signed, instead of rushing to find a buyer. This makes it possible to realize the mistake of having bet on the wrong structure, the real estate agency being less efficient than expected ... As the minimum duration of the exclusive mandate is three months, it would be impossible for you to use another agency or sell to a buyer on your own.
What is the research mandate ?
The search mandate is a type of contract thanks to which a buyer entrusts to a transaction real estate agency the search for the property to buy according to its criteria, predefined beforehand in order to benefit from the agent's network.
Governed by the Hoguet law of 1970 and Alur of 2014 governing the professions of real estate agent and apartment hunter, this type of mandate is very close to the sales mandate even if the two are the opposite of each. These two mandates can be distinguished by the two different objects of the contract, the search mandate having for the purpose of acquiring real estate while the sales mandate represents a delegation of power concerning the transfer of real estate objects.
It must be specified in the mandate the power conferred on the agent, the conditions of provision of the service, the means mobilized as well as the remuneration, defined all taxes included (TTC).
Two specificities frame the research mandate in order to protect the client:
- It is only in case of success, and only when the notarial deed is signed, that the professional's fees are due, moreover, the administrative fees are prohibited.
- It is mandatory to hold a professional card bearing the mention transaction for the mandated agency, guarantee of a certain professionalism.
What is the rental mandate?
Governed by the Civil Code by Article 1984, this mandate corresponds to a power of attorney by which the landlord empowers his representative to act on his behalf.
In the rental mandate, we find:
- The rental management mandate which then allows the agent to take care of all the steps related to rental management: search for the new tenant, drafting and signing of the lease, realization of the inventory of fixtures but also the support of all other steps related to the rental of the property (recovery of rents, drafting of receipts, taking charge and management of the work of the property and common areas if the case arises etc.)
- The "simple" rental mandate which concerns the rental of the property
- The complete identities of both parties
- The designation and description of the property
- The various missions entrusted (precise estimation of the amount of the rent, assumption and termination of the diagnostics, dissemination of the advertisement, management and planning of visits, study of files, drafting of the rental / signature contract and deed of guarantee, realization of inventory and exit, etc.)
- Fees and general conditions of the contract
- The register number of the mandate and that of the professional card of the representative
- The E &O insurance policy number and the agent's financial guarantee
Like the sales mandate, there are two (2) types of rental mandates: the simple mandate and the exclusive mandate.
What is the management mandate?
The representative may be:
- A property manager
- A trustee
- A real estate agency
- A notary, even if it is not his core business
The management mandate must absolutely respect certain rules:
- be drawn up in duplicate, one for each part
- submit to the directives of Article 1984 of the Civil Code, the Hoguet Law (No. 70-9 of 02/1/1970) and its implementing decree (No. 72-678 of 20/07/1972)
- be registered in the register of mandates of the professional who deals with it
A rental management mandate is concluded for a fixed period because the Hoguet law prohibits management mandates for an indefinite period.
Generally this duration is one year, with tacit renewal and is limited to a total duration of 10 years.
The remuneration of the agent is negotiated between the principal and the agent and is freely determined. Generally, this varies between 5 and 8 % TTC of the sums collected.
The management mandate includes:
- The complete identities of both parties
- The designation and description of the property
- The various missions entrusted (precise estimation of the amount of the rent, assumption and termination of the diagnostics, dissemination of the advertisement, management and planning of visits, study of files, drafting of the rental / signature contract and deed of guarantee, realization of inventory and exit, etc.)
- Fees and general conditions of the contract
- The register number of the mandate and that of the professional card of the representative
- The E &O insurance policy number and the agent's financial guarantee
How to terminate a mandate ?
It is possible within the framework of an exclusive mandate, within three months of its signature, to denounce the exclusive mandate. However, taking care to respect the notice period of 15 days, while sending a registered letter to the real estate agent who has been entrusted with the mission of selling your property.
What is the simple mandate?
The simple mandate is more flexible than the exclusive mandate, it allows you to make a sale directly or deal with several agencies all without commission.
There remains a contract signed between the owner and the real estate professional giving him the authorization to broadcast ads of the property on the markets, to find potential buyers and then to put them in touch with the seller.
It has the advantage of not forcing you to deal with only one agency. This is a great advantage for the owner because it will allow him to reach a greater number of buyers by making the announcement of the sale of his property more widely disseminated.
The seller through this mandate can also and has the right to broadcast by himself the announcement of his property and therefore to make a direct sale with the buyer and is therefore exempt from agency fees.
BENEFITS
The main advantage is that by opting for a simple mandate you can technically reach a larger number of potential buyers. It is indeed all the agencies entrusted with the simple mandate that will be responsible for finding the buyers. Among these proposed buyers you will have a freedom of size, since not committed exclusively to an agency, you will retain the possibility of selling to the buyer of your choice.
DISADVANTAGES
Because the property is visible in multiple windows of real estate agencies, this represents a risk that can be penalizing by sending a negative image to potential buyers. They might understand that your property is struggling to sell. Being likely to find a buyer on your own can possibly also dissuade the real estate agent from fully investing in the sale of your property. In contrast to the point of view of the professional, the individual, during his research, finds your property and realizes that the selling price associated with your property differs depending on the agency or site visited.
In real estate, there are 4 types of mandate:
- The sales mandate (owner wishes to sell his property): simple mandate and exclusive mandate
- The search mandate, corresponding to someone looking for a property to rent or buy (future tenants and future buyers)
- The rental mandate signed by the owner who wishes to rent his pied-à-terre, simple mandate and exclusive mandate
- The management mandate that allows the real estate agent or real estate negotiator to manage the owner's property throughout the lease.
On a real estate mandate, we must see:
- Type of mandate
- The identity of the parties
- The obligations of the mandate and the mandatary
- The selling price and fees
- The duration of the mandate: The duration of a mandate is necessarily limited in time, whether it is a simple or exclusive mandate, in no case it has the function of being perpetual. Whatever it is, simple or exclusive, any mandate must, under penalty of nullity, therefore clearly and precisely indicate its period of validity.
- Termination conditions
It is possible within the framework of an exclusive mandate, within three months of its signature, to denounce the exclusive mandate.
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to sell in Paris or its surroundings ?
Posted on 10/02/2023 by
Andy LECUYER
