Buyer ordered to repay €28,800 due to overvalued French property

A property developer has been ordered by France’s highest court to pay €28,800 in damages after it was found to have significantly overvalued a flat – and failed to tell the buyer why.

The Cour de cassation ruled that property professionals must provide clear and transparent information about valuation assumptions for property and justify investment return forecasts to buyers, particularly in tax-incentivised buy-to-let schemes.

The buyer, who now lives in Switzerland, purchased a T3 (two-bedroom) flat and parking space in a town that was not publicly identified for €144,210 in 2006, under the Robien tax incentive regime.

An expert valuation carried out in 2016 assessed the property at €59,000, supporting the court’s finding that the original sale price had been significantly inflated relative to its real market value.

In the marketing materials provided at the time of sale, the developer – then known as Omnium Conseil and now Stellium Immobilier – described property investment as “an excellent safe haven, even if it was subject to ‘minor price variations’.”

It also stated that “your property will probably be revalued”. 

Property developer has duty to inform

The court found that these representations, taken together, failed to disclose the risk that the initial valuation itself was not grounded in a realistic assessment of market conditions.

The Cour de cassation held that the developer had breached its professional duty to inform and advise the buyer. It upheld a lower court ruling ordering Stellium Immobilier to reimburse 20% of the loss, setting damages at €28,800.

The court also rejected a legal challenge from the developer arguing that the claim should be dismissed as it was too late – after the end of the 10-year limitation period. 

However, the court ruled that the limitation period began in 2016, when the overvaluation was established through the expert valuation, rather than at the time of purchase in 2006.