I. Introduction

The real estate agent exercises a multifaceted profession: Article 3 of the Royal Decree of 6 September 1993 distinguishes between intermediation in various real estate transactions and the activities of a property manager (in particular the function of syndic).

In the limited framework of our intervention, we have chosen to limit ourselves to the brokerage activity of the estate agent (we will see that it should be distinguished from that of the agent) and as time is limited, after having recalled some basic principles that govern the matter, we have selected two questions, namely the duty to advise and inform that weighs on the estate agent as well as the extent of his professional confidentiality.

The subject is of course far from exhausted and may be the subject of future contributions.

II. The liability of the estate agent: general principles

1. The legal framework

a. The framework law of 1 March 1976

As a reminder, the Code of Ethics governing the profession of real estate agent was established in application of the framework law of 1 January 2001.^er March 1976 on the protection of the professional title and the exercise of intellectual service professions.

This framework law provides that the decision to protect the professional title and to regulate the conditions of exercise of an intellectual service-providing profession belongs to the Executive, by Royal Decree.

The Code of Ethics of 14 September 2006 is set out in Annex 1 to the Royal Decree of 27 September 2006, as are the ethical guidelines on professional liability insurance and surety and the guidelines on third-party accounts; both guidelines are dated 14 September 2006.

Mention should also be made of the Royal Decree of 12 January 2007 on the use of certain clauses in estate agent contracts.

The profession of Real Estate Agent is of course a profession of service providers that is specially regulated.

If the real estate agent carries out his activity as an independent natural person, he can only do so if he is registered on the roll or on the list of trainees.

Where the profession is practised under the cover of a legal person, only active directors, managers or partners who personally carry out the regulated activity or who have the effective management of the services, must be entered on the roll or on the list of trainees.

Persons employed by real estate agencies under contracts of employment do not have to be entered on the roll or the list of trainees; however, they may not use the professional title.

The real estate agent is therefore required to assume personal responsibility for all professional acts, even if he or she carries out his or her activity within the framework of a commercial company.

The Estate Agent also remains personally liable for the actions, even if not at fault, of his employees and collaborators. However, he shall not be liable for the actions of his collaborators, independent real estate agents, except when he has participated in facts likely to lead to such liability.

Article 4 of the Code of Ethics specifies that the real estate agent must personally and effectively organise his real estate agency in order to enable him to fully assume his personal responsibility.

Like any employer, he must therefore control and supervise the employees who are bound to him by an employment contract.

However, it will go further by ensuring the ongoing training of its employees so that they can respect the principles of the real estate agent's activity and its ethical rules.

It is important to note that the legislator has provided for criminal sanctions (imprisonment and/or fines) to deter anyone wishing to use the title of estate agent:

• without being registered on the list of holders or on the list of trainees
• or without having been authorised to do so

In accordance with the framework law of 1^er March 1976, the Real Estate Agent is reminded that he must comply with the following obligations:

• have a professional background
• take personal responsibility for all professional actions;
• respect the ethical rules laid down by the Professional Institute;
• be bound by professional secrecy;

It is established that the ethical rules are not binding on third parties, including the estate agent's client.

However, the existence and enforceability of these rules are binding on third parties. 

The client of an estate agent can therefore benefit from the breached ethical rule and take advantage of it.

Third parties can thus invoke a breach of an ethical rule if it is the cause of a prejudice they suffer.

Similarly, a disciplinary conviction may constitute an indication of misconduct for the purpose of calling into question the professional liability of the estate agent.

The third party must prove that the ethical breach committed constitutes a civil fault, that he has suffered damage and that there is a causal link between this civil fault and the damage suffered.

b. The Professional Institute of Real Estate Agents (P.I.A.)

The I.P.I. was created by Royal Decree of 6 September 1993.

Article 2 of this Royal Decree determines the conditions of use of the title of estate agent, while Article 3 defines the professional activity of estate agent.

Article 2 reads as follows:

" Art. 2. No one may exercise the profession of real estate agent as a self-employed person, on a principal or secondary basis, or use the professional title of "I.P.I. approved real estate agent" or "trainee real estate agent", unless he or she is registered on the list of holders of the profession or on the list of trainees kept by the Institute or unless, being established abroad, he or she has obtained authorisation to exercise this profession occasionally. "

Article 3 reads as follows

" Art. 3. The professional activity of real estate agent within the meaning of this decree is exercised by anyone who, on a regular and independent basis, carries out on behalf of third parties :

1° intermediary activities with a view to the sale, purchase, exchange, rental or transfer of real estate, real estate rights or business assets;

2° property management activities providing :
(a) the management of real estate or real estate rights;
(b) the function of trustee of co-owned real estate".

c. Legal references

Article 1 of the Code of Ethics refers to a series of legal provisions that the real estate agent must respect.

Examples include the Trade Practices Act of 14 July 1991, the Money Laundering Act of 11 January 1993, the Personal Data Protection Act of 8 December 1992 and the Breyne Act of 9 July 1971, which applies to general contractors and property developers.

Naturally, the real estate agent must comply with the provisions of the Civil Code and the Criminal Code.

2. General obligations of the real estate agent

Among the general obligations imposed on the real estate agent, we shall recall here in particular:

• the obligation to draw up a written contract, the content of which is laid down by the Royal Decree of 12 January 2007; the mandatory clauses include the obligation to define the agent's mission and the scope of his powers, the fees, the duration of the contract, etc.
• respect for privacy (art. 6 and 7 of the C.D.)
• the opening of a third-party account (Art. 67 C.D.)
• conflict of interest and incompatibilities
• obligations towards colleagues, in particular when assignments have already been entrusted to other agents, whether exclusively or not

3. Professional insurance

This matter is regulated by the Ethical Guideline on Professional Liability Insurance and Bonding, which is based on Articles 5 and 32 of the IPI Code of Ethics

The real estate agent must insure his professional civil liability as well as that of the legal entity through which he exercises his profession.

The insurance policy must contain minimum risk covers. It must also cover at least the real estate agent's contractual and extra-contractual civil liability.

There is therefore no freedom in the insurance policy to be taken out by the estate agent.

4. Real estate agent's responsibilities

Like any professional, the real estate agent is bound by contractual and legal obligations.

Otherwise, he/she is liable. This will be of a civil or criminal nature.

Civil liability is contractual (Articles 1146 to 1155 of the Civil Code) and will be assessed by reference to the contractual provisions governing the relationship between the agent and his client, or extra-contractual (or quasi-delictual or aquiline), i.e. the liability that anyone incurs towards third parties who are not covered by the contract (Articles 1382 et seq. of the Civil Code).

Criminal liability arises from the provisions of the criminal code or from specific laws which sanction their prescriptions by penalties (e.g. the Breyne Act or the laws on workers' welfare).

We have recalled above that real estate agents are personally liable, even if they exercise their profession through a legal entity.

The latter will therefore be "transparent" and will not be able to absorb the liability of the natural person agent.

5. As to the validity of the liability waiver clauses in the contract

The case law accepts the exemption from liability clauses as long as the clause :

• is not intended to cover fraud;
• does not affect the purpose of the contract;
• is not contrary to provisions of public policy

However, it is clear that the regulation of the real estate agent's profession cannot be jeopardised in any way by contractual clauses limiting or removing the agent's professional liability.

The agent will only have the right to contractually limit his liability to a certain amount or according to the type of possible damage, e.g. he can limit his liability to the amounts covered by his professional liability insurance.

6. Brokerage and mandate

A brokerage contract is a contract whereby an independent intermediary, called a broker, undertakes to put two or more persons in contact with each other with a view to enabling them to conclude a legal transaction between them to which he is not himself a party.

The broker therefore does not represent his principal in a legal act but limits himself to purely material acts.

The case law considers that when the Real Estate Agent's mission is not to conclude a legal act, but only to carry out material services to find a buyer or a tenant, the contract which binds him to his client must be analysed as a brokerage contract and not as a mandate.

In most cases, the Real Estate Agent is not the agent of his client, but is rather entrusted with a brokerage mission consisting of finding a candidate and putting him in touch with the Principal.

III. Selected issues

1. The duty to advise and inform

a. General principles

Case law has increasingly highlighted the duty of the professional practitioner to give advice; this duty is clearly imposed on certain professions such as doctors, lawyers, notaries etc.

However, this obligation extends to all professionals and accompanies the exercise of their art; thus an architect must inform and advise his client from the beginning of the pre-contractual relations until the acceptance of the works and even beyond by the delivery of a document specifying the conditions of use and maintenance.

The entrepreneur is no longer seen as a slavish executor; in the sphere of his speciality, he must contribute his knowledge and experience by giving appropriate advice.

Of course, the duty to advise is not unlimited; it must be assessed in the light of and within the framework of the practitioner's professional training; one cannot require the architect to become a lawyer or the estate agent to replace the notary!

The duty to advise is assessed according to a series of criteria which depend on the personalities of the parties, the context of the case, the urgency with which it was dealt with, the importance of the information to be gathered and provided to the client etc.

In other words, there is no ready-made solution in this area; each case will be examined by the judge.

b. The nature of courage: a reminder

The Code of Ethics defines a real estate agent as someone who carries out intermediary activities on behalf of third parties with a view to the sale, purchase, exchange, rental or transfer of real estate, real estate rights or business assets.

The activity in question constitutes a contract of enterprise; but it cannot be confused with the agent, whose obligations, particularly with regard to the duty to advise but also to respect professional secrecy, are different.

On the other hand, the real estate agent is a trader; as such, he or she must respect commercial law and the law on commercial practices.

c. The duty to inform

The broker must inform himself to inform his client and third parties.

Since the purpose of the broker's mission is to bring two or more persons into contact with each other in order to enable them to conclude a legal transaction, it is important first and foremost to verify the conditions for the feasibility of this transaction; this will be the first purpose of the duty to inform.

Secondly, the research carried out by the broker should enable him to provide useful advice to his client.

It should collect a range of data including

• concerning the parties: the broker must first clearly identify himself and then identify his client: who is he, what are his legal ties to the building or property that will be the subject of the planned real estate transaction; does the client(s) have the full and exclusive rights necessary to carry out the transaction?
• concerning other possible participants: he must check whether another brokerage or similar mission has not already been entrusted by his principal to another agent on an exclusive or non-exclusive basis and draw attention to the consequences of such a situation.
• Concerning the property: what is its geographical, urban and legal situation?

d. Application: some examples

The real estate agent must carefully research the characteristics of the property offered for sale or rent and verify the accuracy of the information given to him.

The agent must check the urban planning situation of the property he/she is responsible for marketing; he/she must therefore make an active approach to the municipal administration of the place where the property is located.

He must also pay particular attention to the regulations relating to soil remediation and enquire about the existence of the soil certificates required by the Brussels-Capital Region ordinance of 5 March 2009.

He must also be concerned about the origin and ownership of the property for which he is responsible for finding a buyer. He cannot rely solely on the claims of his clients. This also applies to subsequent intervention cases.

It is also important to be aware of the provisions of the basic deed of a condominium in order to check whether there are any specific restrictions or prohibitions in the event of sale.

The Agent must also provide copies of the leases relating to the property to be sold or rented.

The agent must check the general state of maintenance and conservation of the building; this must be presented to the candidates in a fair and objective manner.

If the agent has doubts or questions that are beyond his or her competence, he or she will advise the client to consult an expert architect or surveyor.

A particularly important and delicate element is the valuation of the property for sale. All too often, the impression is that this valuation is done in a hurry, without serious or objective references.

It is not enough to give an estimate according to a theoretical and abstract value per m2 !

Article 29 of the CD. provides that "the agent, with his knowledge of the market, shall assist his principal in estimating the real value of the property. If necessary, he shall be assisted by an expert.

The agent must therefore play an active role in this matter and must conduct sound and continuously documented information campaigns on the state of the real estate market, without being satisfied with summary calculations.

He must specify the real and intrinsic value of the property; then he will advise his client to fix the presentation price or convenience value and finally a minimum price (confidential) which will allow, in particular, to verify if the agent's mission has been carried out.

The Broker must value the property sincerely and must express reservations when the price his Principal wishes to obtain does not correspond to the objective value of the property. He must give a correct estimate of the value of the property offered (art.45 and 46 of the Code of Ethics). Therefore, even if the client is in a hurry to sell his property and has set the selling price himself, it is up to the Agent to express the most express reservations about a price that is clearly insufficient. Otherwise, he will be held contractually liable.

The client's instructions should be taken into account; do they want to sell as quickly or as expensively as possible? This will be confirmed in writing.

The value of a property may change over time and even during the course of the sale, and the broker should advise the client to review the price in the light of the outcome of the sale.

The agent may be held responsible for any over- or underestimation.

Concerning the candidates sought in the context of a sale, a purchase, a rental, etc.: the Real Estate Agent shall not be liable to his Principal for the solvency of the amateurs or the failure to respect their commitments.

However, as a general rule, the agent should inquire into the financial capacity and powers of the amateur and express his reservations in case of doubt. He should therefore check the apparent solvency of the amateur.

Concerning the evolution of his mission: the Broker must inform his Principal of the evolution of his mission and communicate to him, without delay, any proposal or any firm commitment sent to him by a third party.

e. The duty to advise

Once the broker has gathered all the information needed to carry out his mission, he must process and analyse it in order to report it to his client and provide him with the appropriate advice.

The agent should always bear in mind that clients do not always have the knowledge and understanding of legal situations relating to real estate and that they may sometimes be confused or misunderstand the true extent of their rights.

However, the agent is not required to have the same knowledge and skills as a notary, lawyer, tax expert, architect, etc.

The real estate agent's obligation is to warn his client of the need to seek specialist advice by drawing his attention to the complexity of a situation that requires specialist advice.

He must be sufficiently trained to realise that a particular situation is or may become problematic and must therefore inform his client.

Two issues are of particular interest here, among others concerning the duty to advise:

When to advise?

Certain advice or warnings should be provided in the pre-contractual phase so that the principal can make an informed decision. The problem arises because in order to give this advice the broker may have to provide important services which in one way or another have to be remunerated.

The solution could be to sign an initial contract limited to the feasibility of the transaction or to the collection of the necessary information, in return for a fixed and agreed remuneration which would be deducted from the brokerage fees if this additional mission is then entrusted.

Who is entitled to this duty to inform and advise?

Certainly the principal client, but what about the third party amateur candidates that the broker is responsible for canvassing?

Of course, the latter are not the broker's co-contractors, but brokerage essentially consists of putting two or more people in contact with each other to enable them to conclude a legal transaction; it is understandable that this mission also generates obligations with regard to the candidates, particularly of loyalty and truthfulness. Thus, the agent could not mislead the third party on the legal, urbanistic or technical situation of the property.

The Agent may be held extra-contractually liable to third parties if he neglects to communicate information to them, if he conceals essential information on the characteristics of the property, if he does not inform the third party of the existence of legal proceedings in progress.

The test taken into consideration by the Courts and Tribunals is that of the normally prudent and diligent agent in the same circumstances.

However, it is accepted that the prospective buyer must take the necessary information and behave as a prudent and diligent person. Therefore, buyers who visited a house and could see its characteristics cannot blame the agent for a fault.

After all, the broker does not have a duty to advise, but only a duty to provide objective information to third party applicants.

He may only be held liable for hidden defects of which he was aware and of which he did not inform the buyer, or concerning the legal or fiscal situation of the property (e.g. absence of a guarantee in the event of the application of the Breyne law, VAT or registration duties, etc.).

2. Professional secrecy

With regard to professional secrecy, this is not the same as the professional secrecy which is imposed on doctors (cf. art. 458 of the Criminal Code), lawyers, notaries, company auditors, chartered tax advisors. (reference should be made to the distinction between the necessary confidant and the voluntary confidant);

In reality, it is a duty of discretion (referred to in Article 34 of the Code of Ethics) which relates to confidences made to him by his client or personal information entrusted to him in confidence.

This is the same duty of discretion that is imposed on professionals with property interests such as stockbrokers, insurance brokers and bankers.

However, this duty of discretion must be assumed while respecting the obligation of information and loyalty incumbent on the estate agent.

The agent must inform applicants of the necessary information about the property he or she is selling or renting.

The real estate agent must therefore constantly juggle this duty of discretion with his obligation to inform third parties of the elements affecting the property.

Fortunately, Article 34 of the Code of Ethics determines the contours of this duty of discretion that the agent must ensure is respected within his agency by the people working under his authority:

• the staff member may not communicate data, facts and opinions relating to a mission to persons other than those authorised to take cognisance of them, even after the mission has been carried out;
• There is no disciplinary breach if the staff member discloses information in his or her personal defence in judicial or disciplinary matters;
• he cannot be prosecuted if his Principal has expressly released him from his duty of discretion with regard to matters that concern him personally;
• Nor may he be reproached for disclosing information if he finds that his rights or those of his Principal are being infringed and it appears that the communication of information relating to the assignment entrusted to him makes it possible to re-establish and safeguard those rights;
• Nor can he be reproached for revealing information useful or necessary to his mission to people involved in it: collaborators, specialists, etc.

In any case, the agent may never provide false information by invoking the existence of his duty of discretion. (See Article 35 of the CD).

Mr Sadri ELLOUZE