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Real Estate Law. A buyer sued the occupant of an apartment for payment of occupancy compensation for a period during which the buyer was not yet the owner of the property.
A recent decision by the Court of Cassation has caught the firm’s attention (Court of Cassation, Civil Chamber 3, September 19, 2019, No. 18-14.172, Ream Real Estate Asset Management v. Banon & Philips) due to its implications for real estate sales.
The facts underlying this decision are as follows.
In 2002, Company X promised to sell to Company Y a real estate complex partially occupied by third parties; the promise stipulated that the transfer of ownership of the property would be deferred until the date of the notarized deed of sale or a court decision.
The sale was formalized in 2007 pursuant to a court decision, which was upheld on appeal in 2010, as it was determined that the sale in question was valid as of the date the promise was entered into.
The purchaser sues the occupant of the apartment for payment of occupancy compensation for the period 2003–2006.
“It is, in fact, established case law that the parties may agree that ownership of the sold property will not be transferred to the buyer until after a certain period of time.”
His claim was dismissed. An appeal was then filed against this decision.
The Supreme Court first noted that the parties had mutually agreed to defer the transfer of ownership until the sale was formalized by a notarized deed or until it was confirmed by a final court decision.
It is, in fact, established case law that the parties may agree that ownership of the sold item will not be transferred to the buyer until after a certain period of time, the fulfillment of certain conditions, or the completion of prescribed formalities (Cass. req., June 26, 1935, DH 1935, 414).
The provisions of Article 1583 of the Civil Code, according to which the sale is “final between the parties, and ownership is acquired by operation of law by the buyer vis-à-vis the seller, as soon as the item and the price have been agreed upon, even if the item has not yet been delivered or the price paid,” are not a matter of public policy; therefore, the parties may deviate from them (Cass. Civ. 3rd Ch., June 9, 1971, Bull. 1971 III No. 362, p. 257; Cass. 1st Civ., Jan. 24, 1984, No. 82-14.841, Bull. Civ. I, No. 31).
The appellate court also emphasizes that, in accordance with the parties’ intent, the sale became effective as of the date the judgment was rendered, in 2007.
The Court of Appeals had correctly held that “it was on that date that the actual transfer of ownership, with entry into possession, took place, and that nothing in the operative part of that decision contradicted the terms of the preliminary sales agreement,” and not in 2002, as the plaintiff had argued.
Consequently, the plaintiff had no legal standing to claim occupancy compensation from the occupant of the premises during a period when he had not yet become the owner of the property.
