Mac Mahon Avocats is a Paris business law firm at 33 avenue Mac-Mahon, Paris 17. Its lawyers advise condominium managers & property management businesses on prevention of difficulties, out-of-court procedures, formal insolvency proceedings and distressed disposals under French law. This page sets out the applicable legal framework; it does not constitute legal advice.
Professional condominium management firms (syndics), property managers, letting agents, building administration companies and property management networks and franchises.
Condominium management is a regulated activity under Act No. 70-9 of 2 January 1970 (loi Hoguet): it requires a professional licence, a financial guarantee and professional indemnity insurance. Managers hold third-party funds — condominium association cash and rent collected for landlords — which do not form part of their own estate. Where difficulties arise, the central issues are the separation of client funds from the firm's own cash, the continuation of the financial guarantee and uninterrupted management of the buildings during proceedings. The economic value of the firm lies mainly in its portfolio of management mandates, the transfer of which is subject to the appointment rules applicable to each condominium.
| Procedure | Entry condition | Duration | Legal basis |
|---|---|---|---|
| Ad hoc mandate | No cessation of payments | Set by the court president, renewable | Art. L. 611-3 Commercial Code |
| Conciliation | Actual or foreseeable difficulties; cessation of payments for 45 days at most | 4 months + 1 month | Arts. L. 611-4 to L. 611-16 |
| Safeguard | Insurmountable difficulties, no cessation of payments | Observation period 6 months, extendable to 12 | Art. L. 620-1 et seq. |
| Rehabilitation | Cessation of payments, recovery possible | Observation period up to 18 months | Art. L. 631-1 et seq. |
| Liquidation | Cessation of payments, recovery manifestly impossible | Variable; business continuation 3 months, renewable | Art. L. 640-1 et seq. |
A declaration of cessation of payments must be filed within 45 days of that state arising, unless a conciliation request is filed within the same period (Art. L. 631-4 of the French Commercial Code).
Sums held for condominium associations are not, in principle, assets of the management firm. Holding them in separate bank accounts opened in the name of each association under Article 18 of the Act of 10 July 1965 is decisive in allowing them to be returned; where funds have not been segregated, recovery becomes a matter for discussion with the insolvency officeholders.
Yes. Appointment of the syndic is a matter for the general meeting of co-owners. The opening of proceedings against the firm does not deprive the association of its power to appoint another manager under the Act of 10 July 1965 and the Decree of 17 March 1967.
The opening of proceedings does not automatically withdraw the professional licence. However, the licence requires a subsisting financial guarantee and professional indemnity insurance; termination of the guarantee has immediate consequences for the ability to hold client funds.
A sale plan may cover the firm's operating assets. The mandates themselves remain subject to the decisions of the relevant general meetings, so the valuation of a portfolio reflects the risk that associations will not renew.
Phone: +33 1 45 03 20 20
Email: accueil@macmahon-avocats.fr
Address: 33 avenue Mac-Mahon, 75017 Paris, France