Right of Withdrawal in Off-Premises Contracts: Keys for Real Estate Agencies
The Supreme Court ruling of March 24, 2021 emphasizes the importance of respecting the consumer’s right of withdrawal in off-premises contracts. This ruling directly affects real estate agencies, which must adjust their contracts to the current regulations to avoid significant economic losses.
Recently, the Supreme Court (SC), in its ruling dated March 24, 2021, established the legal consequences of not recognizing the consumer’s right of withdrawal in an off-premises contract, applicable to all companies in general, and real estate agencies in particular.
The factual situation analyzed by the SC consisted of the conclusion of an intermediation contract for the sale of a property at the domicile of some private sellers. In the order form, the real estate agency did not include any information on the sellers’ right of withdrawal, which is specifically recognized by consumer regulations for this type of contract, and which can be extrapolated to contracts concluded at a distance. The real estate agency fully executed the order, without informing of this right of withdrawal, and finally found buyers for the property. At that time the sellers exercised their right of withdrawal, informing the real estate agency that they had decided not to sell the property, and the agency proceeded to claim payment of the fees for having fully performed the service.
The Supreme Court (SC) considers that the exercise of this right of withdrawal is effective and it is not required to pay the fees claimed by the agency. The SC recalls in the Judgment that in distance or off-premises contracts, the trader must inform the consumer in advance of the existence of the right of withdrawal. If there is no such prior information, and the consumer does not give express consent to the start of the service recognizing that he is fully aware that with the execution of the service he will lose the right to withdraw, this right is retained even when the service by the entrepreneur has been fully executed, and the consumer will not bear any cost.
The SC considers that in this way the legislator tries to prevent the entrepreneur from circumventing the consumer’s right of withdrawal, carrying out the execution of the contract without having previously informed the consumer of the existence of this right of withdrawal and its legal regime. The entrepreneur must not only inform in advance of the right of withdrawal, but also of the possibility that in the event that the right of withdrawal is exercised within the legally stipulated period, it may entail reasonable costs.
The legal right of withdrawal in this type of contract can be exercised within 14 days from the conclusion of the contract, provided that the employer has previously informed. However, if the employer has not previously informed of the existence of this right, this period is considerably extended to 14 days from the conclusion of the contract plus 12 months for failure to comply with the duty to provide information on the right of withdrawal. During this period, consumers have the legal right to withdraw, as finally recognized by the SC in the aforementioned ruling.
In short, the real estate agency has not been able to claim payment of the fees despite having fully performed the service, due to a defect in the preparation of off-premises contracts concluded with consumers.
This type of situation can have a significant economic impact, but it can be easily solved by adapting the general conditions of distance or off-premise contracts to current consumer regulations. A good commercial work in such a competitive moment as the current one can be ruined if the contractual documents are not properly drawn up, and as the Supreme Court reminds us, this can lead to the loss of the right to collect the fees despite having fully performed the service.
This ruling reminds us of the importance of seeking advice, and the high price of not doing so.