Real property sale and incapacity

Mon 03 September 2018, Philippe Ropenga Incapacity

A lady under curatorship signed a deed to sell real property with the assistance of her curator. The sale still had to be confirmed. The vendor died, and her daughter, standing as her heir, refused to confirm the sale arguing that the vendor was unsound of mind. The Court of Appeal held that the sale was null. The buyer challenged this decision. The decision of the Cour de cassation, i.e., the supreme court that deals with civil, commercial and criminal cases, supports a guiding principle of French incapacity law (1) and leaves room to reconsider French practice (2).

1 French law

This decision combines the formal validity of the sale (1.1) with the procedural protection of incapacitated majors (1.2).

1.1 The formal validity of the sale

Strict formal requirements have to be met for a transfer of immoveable property rights to bind third parties. Changes affecting immoveable property rights have to be registered in the land register. French notaries are public officers who have a monopoly on modifications of this register. When a buyer and a seller agree on the sale of real property, they sign a bilateral commitment to sell that has to be confirmed in front of a notary in a public officer deed. The formal requirements are not discussed in this case. The vendor's heir argues that the sale is null since the vendor was unsound of mind when she signed the commitment to sell, notwithstanding the fact that requirements regarding people under curatorship had been met at the time of signature.¹

The supreme court has to examine the protection granted by law to vulnerable people.

1.2 The procedural protection of the incapacitated

The buyer argues that the commitment to sell cannot be annulled according to article 414-2, paragraph 2 of the French civil code. This provision deals with legal actions taken after the death of a person to challenge the validity of his acts. The Legifrance translation available on legifrance.gouv.fr reads as follows:

"After his death, the acts he had made, other than donations inter vivos and the testament, may be attacked only by his heirs for unsoundness of mind in the following cases: 1º If the act itself demonstrates a mental disturbance; 2º If the act was made when the person concerned was under judicial protection; 3º If an action has been brought before his death to open a tutorship or curatorship or if effect had been given to a mandate for future protection."

Sauvegarde de justice translated here by the expression "judicial protection" refers to a protection regime that is distinct from tutorship and curatorship. The buyer argues that the vendor was already under curatorship when she signed the commitment to sell. 3º deals with a different situation. Hence, according to the buyer, the seller can only rely on 1º to have the commitment to sell annulled.

The Cour de cassation had to decide whether a claim for annulment for unsoundness of mind could only succeed in one of these three situations. It followed the same reasoning as the Court of Appeal and relied on article 466 of the French civil code to remind the parties that provisions regarding the validity of the acts made under curatorship do not override general provisions.² According to article 414-1 of the French civil code, "To make a valid act, one must be of sound mind. Those who seek the nullity on this ground must prove the existence of a mental disturbance at the time of the act." Hence, the heir can bring a claim to have the commitment to sell annulled for unsoundness of mind.

It has been seen that a real property sale required to comply with strict rules regarding formalities, and that these rules combined with those regarding curatorship could not stop a party from pleading unsoundness of mind. This decision is favourable to protected parties and has interesting practical implications.

2 French practice

The practitioner has to pay a great attention to the context of the deed (2.1). It casts a new light on evidence (2.2).

2.1 The deed and the context

One may think that a valid deed contains anything necessary to judge its validity as well as to evaluate the possible outcomes of a dispute. In its simplest form, a deed answers three questions:

• Who are the stakeholders?
• What is at stake?
• What are the stakeholders obliged to?

Soundness of mind is related to consent and seems to be a preliminary issue that comes before the three questions mentioned above. One should examine the consent to the deed before examining the deed. This case shows that unsoundness of mind may not only be a preliminary issue. A deed may be challenged several years after its signature. Proving unsoundness of mind requires to know the context in which a deed was signed. Context, unlike written documents, easily changes over time. It may also be difficult to know when something happened. When did the lady become unsound of mind? The answer to this question is not always easy because it mainly depends on the context. Furthermore, the trust and estate practitioner is more likely to face contextual uncertainty since estates are built over time and what seems obvious one day may not seem obvious at all several years later. The EU succession regulation (650/2012) for instance addresses issues related to international mobility by putting the habitual residence forward as a connecting factor.³ Determining the habitual residence of very mobile people before their death may be far from easy. One however has to consider the question of habitual residence when drafting a will for example. The deed therefore has to take contextual details into account without trying to freeze the context.

Paying a greater attention to context also allows the practitioner the look at evidence from a different perspective.

2.2 A different approach to evidence

A practitioner may ask himself what he wants to prove before checking pieces of evidence. It makes sense since practitioners have to deal with a constantly growing amount of evidence. Clients indeed tend to flood their lawyer's mailbox with documents to reformulate the reality in a way that seems more favourable to them. Practitioners therefore have to go straight to the point by quickly eliminating pieces of evidence that are weak or irrelevant. Nevertheless, this method does not help to notice difficulties in a family relationship or in a management context. Several family members are often involved and none of them alone can be seen as entirely liable for the disorder. These changes often precede legal disputes. It therefore is interesting to look at pieces of evidence to notice changes without having a precise question in mind.

It has been seen that soundness of mind was a contextual issue and that changes in a family context could be difficult to prove. Practitioners should therefore pay as much attention to the context as to the deed.

In brief, strict formalities do not necessarily ease the burden of proof regarding soundness of mind nor that of any other contextual issue. The context is important since it can support or undermine the deed.

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