Real Estate Sale: Grounds That May Justify Cancellation of the Sale

The Amiens Court of Appeals recently confirmed that concealing a sensitive activity from buyers of a property may justify the cancellation of the preliminary sales agreement and the reimbursement of all expenses incurred. 

This is what happened in the case of a house that had previously been used as a gas station, without the buyers having been informed of this fact. This concealment of essential information, considered a form of deception by the court, led to the nullification of the preliminary sales agreement, as confirmed by the Amiens Court of Appeals (1st Civil Chamber, June 4, 2024, No. 22/0079).
 

The Court reiterated the conditions necessary to establish "fraudulent concealment" and its consequences. Article 1112-1 of the Civil Code imposes a precontractual duty to disclose information to the other party to the contract, while Articles 1130 and 1137 govern the nullity of contracts due to fraud.
 

In this case, the Court of Appeals upheld the previous judgment, finding that the property’s former use as a gas station and the presence of an underground fuel tank in front of the house were decisive factors for the buyers. 

She rejected the defense's arguments that the tank in question was not "actively dangerous."
 

Given the potential risks of pollution, the possible complications involved in expanding the house or building a deck, and the potential administrative hassles, this information was essential. Since the sellers were fully aware of the house’s history, there is little doubt that their silence was intentional.
 

Consequently, the preliminary sales agreement was declared null and void; the notary must return the escrowed funds to the buyers (6,782 euros in this case), and the sellers must compensate the buyers for all damages suffered. 

The buyers were also reimbursed for the real estate agent’s fees (1,400 euros), the notary fees for canceling the preliminary sales agreement, the real estate agency fees incurred in finding a new home (873 euros), and 15 months’ rent at 800 euros per month, totaling 12,000 euros. A hefty bill for the unscrupulous sellers.