A complete guide to the Hoguet Act

Without good regulation, it is impossible to oversee the functioning of a profession and especially to guarantee the safety of the various stakeholders. In the particular case of real estate, the Hoguet Law was put in place to better regulate the profession.

Indeed, whether it is about the financial aspects of buying or selling or anything else related to it, this law was created to properly regulate the market.

In the framework of this article, we will help you first understand what the “Hoguet Law” is. Then we will talk to you about the implications and especially how it evolves over time.

What you need to know about the Hoguet Act

The various practices observed at the level of real estate professionals are now regulated thanks to the entry into force of the Hoguet Law since July 20, 1972. This law, in addition to providing protection to the public, establishes several guarantees. Indeed, it requires agencies to detail the types of services provided and especially to highlight the cost of the bill.

However, given that this law has existed for decades, it is the subject of controversy. Indeed, despite the fact that it has undergone some updates at certain times, it has not undergone any significant changes.

Taking out professional liability insurance is an obligation for real estate professionals according to Hoguet legislation. To practice freely, these professionals must hold a T card, which corresponds to a professional card. Also, keeping a task register and a directory are mandatory for real estate professionals.

Let's discover below some of the obligations that real estate professionals must face under the “Hoguet Law”:

• Hold a written mandate authorizing to intervene in transactions.
• Have a financial guarantee available.
• When receiving money, issue a receipt.
• Compliance with the various administrative obligations.
• Mandatory display of the costs of the various services in the amount including VAT (while clearly and accurately indicating the method of calculation)

It is important to remember that in the event of non-compliance with the various obligations mentioned above, the “Hoguet Law” provides for sanctions. For example, you should not work as a real estate professional without having a professional license. If you do, you will be required to pay a fine of €7,500 in addition to 6 months in prison.

The “Hoguet law”: what are its objectives?

The Hoguet Act pursues a main objective which is essentially aimed at regulating professions related to real estate. Thus, it regulates in a way the fields of action of the real estate agent in order to allow him to exercise his profession legally. On the other hand, this law also aims to protect individuals from the tricks of real estate professionals in the event of abuse or unforeseen events.

In the context of real estate transactions, the Hoguet Law intervenes. And requires real estate professionals to be clear and very precise about the fees received. Indeed, there is a decree dating from 1980 that allows the fees received to be fixed freely. However, the price of the various services in the amount including VAT must be displayed and indicated in a very visible way to all visitors to the real estate agency.

According to the Hoguet law, real estate professionals must take care to charge only the amount of the transaction. In addition, the sales authorization must contain the invoiced service. Indeed, from the year 2005, if the seller refuses to conclude the sale or if no sales agreement is signed, the real estate agent will not receive any commission.

In addition, the law takes into account the fixed remuneration of agents. In this case, we are talking about sales mandates. On the various documents, it will be necessary to clearly show all the information that should be mentioned and show the real commitment of professionals able to do everything necessary to conclude the transaction. It is from this law that the division of real estate sales mandates was born namely.

The simple mandate

In the context of a simple mandate, the seller enjoys full freedom of action. In this case, he has the choice between collaborating with one or more agencies or even using individual platforms.

The co-exclusive mandate

We are in a context where the number of real estate agencies that the seller can use is limited. This number is fixed at the start of the collaboration.

The semi-exclusive mandate

Here, the seller can only use one real estate agency. However, it is possible for him to search for a potential buyer himself.

The exclusive mandate

In this case, the seller has more constraints. He is obliged to use the service of a single agency with the prohibition of looking for potential buyers by himself.

However, this mandate only lasts for a limited period of one year and its duration is determined by agreement between the two parties involved.

At the end of the term of each of the mandates mentioned above, it is possible to renew it according to the wishes of the stakeholders. In addition, if the seller wishes to use another type of mandate, he is obliged to notify the real estate agent in charge of the file 1 to 3 months in advance. It is important to strictly respect this deadline in order to avoid any embarrassing situation with the real estate agent.

Other useful information

The T card, generally known as a professional card, has a lifespan of 3 years. Issued by the CCI, this professional card costs €120. To obtain the T card, these initial conditions must be met:

• Be registered with the RCS.
• Have validated professional skills

What sectors are affected by the Hoguet law?

It is common to hear some people say that the Hoguet Law only concerns real estate agents. Which is not entirely accurate. Indeed, this law affects several real estate sectors, namely:

• list dealers whose main role is to provide, as far as possible, lists of information relating to properties for rent or intended for sale by consulting individuals.
• Agents who are looking for ways and means to sell businesses
• property managers. The latter are mandated to act in place of the owners of housing in order to rent the property or for commercial use.
• condominium syndicates.

In addition, transparency is required when displaying ads. And real estate agencies must ensure this with the utmost rigor. In addition, these ads must be displayed and visible on the premises of the real estate agency. Thus, thanks to it, the seller will be able to know what agency fees he will have to face.

In the case of rental ads for a minimum period of 90 days, there are mandatory information that must appear on the documents, namely:

• the type of rental: furnished or bare
• How much are the rental charges including rent and frequency
• In accordance with the Loi Boutin diagnosis, specify the living area
• The amount of the security deposit
• The number of the municipality

Visit voucher and the Hoguet law

Before developing this point, let's specify exactly what a visit voucher is. A visit voucher is a document that states that a tenant or potential buyer has visited a property through a real estate agent. However, it is not legally regulated, but the Hoguet law refers to it. It also requires that a visit voucher be accompanied by a sales or rental authorization. This law also states that the sales commission should not be collected by the agent. Unless the latter is the holder of such authorization.

Moreover, it constitutes proof of insurance in case of theft or damage during the visit for the real estate agent.

As part of an exclusive mandate, a visit voucher makes perfect sense, because it has real value. With one exception, the seller signs an exclusive mandate. The reasons for this state of affairs are as follows:

• In the context of a simple mandate, the seller has the possibility of using numerous real estate agencies. What he wants to entrust them with the sale of his property. He can also refer to an individual for the sale according to his good wishes and abilities.
• In the context of a semi-exclusive mandate, only one agency receives the exclusivity of the sale. But the fact remains that the seller retains the right to sell his property to whomever he wants. Here, the choice of the real estate agency is therefore a crucial step for the seller.

Other advantage

During an exclusive mandate, the visit voucher allows the real estate agent to claim damages from the seller. And still in this same context, a seller cannot conclude a direct sale with the purchaser. If this happens, the real estate agent in charge of the sale will be entitled to claim damages from the seller.

It therefore seems clear that the seller is exposed to several justified sanctions if he tries to conclude a sale without the collaboration of the mandated real estate agency. This is therefore a sufficient reason to ensure that the conditions of this compensation appear in the mandate, in particular the amount that the seller must pay in the event of a dispute. It is a sign of good faith that should not be taken lightly to avoid any disappointment.

Has the Hoguet law changed over time

Although it has not undergone major changes. On 24 March 2014, this law was amended thanks to article 9 of the Alur law. This was partly done to adapt it to current situations and especially to extend it to other layers such as condominium associations. Another change concerns the validity period of the T card, which was increased from 10 years to 3 years on 1 July 2015.

Thus, through this regulation, real estate agents are called upon to follow periodic training courses throughout their career. These continuing education courses are mandatory and therefore, all real estate professionals must follow them without exception.

As of January 1, 2021, Decree No. 2020-1259 of October 14, 2020. It was already specified that periodic training established over the entire career of real estate professionals integrates the problem of non-discrimination into access to housing. In addition, of course, there are the hours devoted to the other rules not to be broken.

Since that time, fees and also remuneration should no longer appear in mandates and the register of directories. Among other measures taken, the various changes that have occurred provide for the creation of the CNTGI (National Council for Real Estate Transactions and Management). Like any structure, it has obligations. And hers will be to keep a vigilant eye on the promotion and maintenance of the rules of probity. But also for morality and essential skills. The aim of these is to successfully conduct all the activities carried out by real estate professionals.

Conclusion

All the rules proposed by the Hoguet law make it possible as much as they are to regulate and regulate all the activities of real estate professionals. Indeed, this law contributes in particular to creating and making lasting relationships of trust. Those that should exist between the buyer or the seller and the various real estate agencies.

Once this approach is established, it is now up to real estate agencies to take full advantage of it by offering several other types of useful services for their various clients. Thus, this law is intended to guarantee the safety of all parties involved in a real estate transaction. But also to avoid any excesses coming from one or the other of the various stakeholders.

Finally, it is also important to remember that the acquisition of real estate by an agent on his own behalf is formally prohibited if he is the one in charge of selling the property.