Property management agency: the guarantees to check before signing

Before entrusting your property to a property management agency, the first check concerns three very specific points: the professional card with the correct designation, the financial guarantee and professional civil liability insurance. These elements determine the right to operate and the protection of funds that the professional may receive on your behalf.

For an annual tenancy, it is useful to carefully reread the contractual document proposed by the professional. On the Alabaster Coast, where many owners let a property they do not occupy daily, these checks supplement those relating to the landlord’s obligations and the checks the agent is able to carry out.

Key points to remember

• Property management is a regulated activity : the professional must hold a professional card bearing the designation of the activity carried out.
• In property management, financial security is compulsory; the minimum is €30,000 during the first 2 years of activity, then a minimum of €110,000.
• The €30,000 threshold does not apply to certain legal entities when a legal or statutory representative has already previously been subject to this obligation.
• Professional indemnity insurance is compulsory; it covers personal injury, property and financial losses, including those caused by employees.
• For the purchase, sale or rental of a property, the involvement of an estate agent as an intermediary requires a written mandate.

First check the right to carry out property management

Letting management is not merely an administrative service. According to the official page on estate agents, it is a regulated profession. To practise, the professional must hold a professional card.

This card must correspond to the activity actually carried out. For an owner who entrusts a property for year-round rental, the key point is the mention relating to property management. The authorities also remind us that professional competence, good repute, financial guarantee and professional indemnity insurance are checked when the card is issued or renewed.

For a landlord, the useful first step is therefore to ask for identification of the cardholder and the activity covered.

The financial guarantee, a key point when the agency receives your rent

In property management, financial security is compulsory. For a landlord, it is particularly important because the manager may receive sums on your behalf: rent, a deposit or other funds related to the tenancy.

The authorities specify that this guarantee takes the form of a written undertaking or a certificate issued by:

• an approved insurance company,
• a credit institution,
• a finance company,
• or the Caisse des dépôts et consignations.

Its role is to safeguard the funds paid by clients and enable their repayment if the agency suffers financial failure.

The minimum amounts to know

The minimum amount of the guarantee is €30,000 during the first 2 years of activity, then a minimum of €110,000. This guaranteed sum applies to each property activity carried out, such as transactions, management or property management.

The official information sheet adds a useful clarification: the €30,000 threshold does not concern legal entities when one of their legal or statutory representatives has previously been subject to this guarantee obligation.

What you need to look at in practical terms

If the agency receives funds, the financial guarantee certificate should be checked carefully. When this guarantee is provided by a bank or insurer, a dedicated account must be opened to receive payments or remittances related to the intermediary mandate. The official rule specifies that only one such account may be opened per professional card holder.

For property management, this requirement is particularly important, as the authorities state that no declaration of non-holding of funds is possible for this activity.

RPL insurance, cover against errors and damage

Professional indemnity insurance is compulsory for estate agents. It does not only protect the professional: it also compensates their clients in the event of damage.

According to the authorities, this insurance covers three categories of risk:

• bodily injury, for example an injury during a viewing;
• material damage, for example lost keys;
• non-material damage, for example a failure to carry out a survey or an operation undertaken on the basis of incorrect information.

The cover also extends to damage caused by the agency's employees. For a landlord, this guarantee matters just as much as the financial guarantee: one protects funds held, while the other covers faults and incidents that may cause loss.

The professional indemnity insurance certificate is also one of the documents required to issue and renew the professional card.

The technical and financial checks that the professional can carry out

Beyond the certificates, the official information sheet on estate agents describes duties that a professional may be required to perform: draft and sign a mandate, agree the rent and cost of charges with the owner, show the property, draw up an inventory and check the technical and financial aspects of the transaction.

Among these elements, the administration notably cites:

• clients’ income,
• the energy report for a property,
• the floor area.

Entrusting management does not replace the landlord’s obligations

Signing with a professional does not remove the obligations attached to the property itself. Under the landlord’s obligations, you must provide decent accommodation that poses no danger to the tenant’s safety or health.

Finally, works that do not constitute tenant repairs remain your sole responsibility throughout the term of the tenancy.

Before any letting begins, one simple question arises: does the property's actual condition make it possible to comply with these obligations ? If any doubt remains about its decency, the documents to be provided or the works for which you are responsible, ADIL, a solicitor or a legal professional can advise you.

One final check that is often overlooked: the professional's integrity

To obtain and retain their card, the professional must not have certain convictions or measures against them, such as a final conviction for a crime within the last 10 years, personal bankruptcy or a management ban. Operating despite these prohibitions constitutes a criminal offence punishable by 5 years' imprisonment and a fine of €375,000. The landlord cannot check these convictions themselves: the professional card, issued by the president of the CCI to people meeting these conditions, therefore remains the reference to check.

Frequently asked questions