The Cellar Strikes Back

When fraud entitles the wrongdoing seller to compensation

Note on Cass. civ. 3, 9 April 2026, no. 24-17.405, F-D

Audiard’s dialogues have this in common with great wine: they cross generations without suffering the insult of the years. In Le cave se rebiffe (Gilles Grangier, 1961) — a French crime classic where « cave » is slang for a sucker — Gabin and Blier trade quips, gibes and aphorisms. Blier, whom one had mistaken for a cave, a naïve fool, turns out to be far more cunning than expected.

In the judgment handed down on 9 April by the Third Civil Chamber of the French Cour de cassation, under the presidency of Mrs Teiller, there was indeed a cellar at stake — although, this time, of the architectural kind. And, plausibly, a touch of cunning too.

A property sale is concluded in 2018. After moving in, the buyers discover cracks. They learn that the seller had, in the years preceding the sale, commissioned major structural works on the building’s foundations. The notarial deed says not a word about these works — quite the contrary, in fact, since it states that « to the seller’s knowledge, no construction or renovation has been carried out in the last ten years ».

Fraud might seem self-evident, given the gap between the notarial declaration (no works) and the reality (significant structural works). Hence the action for nullity brought by the buyers, who considered themselves victims of deceit.

The Court of Appeal of Rouen (29 May 2024) accepts the action and annuls the sale. It orders the restitution, on the one hand, of the property and, on the other, of the sale price.

The seller then lodges an appeal to the Cour de cassation, raising two grievances: one on the characterisation of fraud, the other on the consequences of fraud.

1. The characterisation of fraud

As stated above, fraud seemed flagrant, since the notarial declaration was contradicted by the reality of the facts. As the Cour de cassation notes, « the notarial deed of sale of 28 February 2018 contained a declaration by the seller stating that to her knowledge no construction or renovation had been carried out in the last ten years, and that no element constituting a structure or equipment indissociable from the structure within the meaning of Article 1792 of the Civil Code had been carried out within that period, whereas the seller had been dealing for several years with disorders affecting the building’s structure, by having, in particular, structural works carried out in 2016 ».

Such a declaration is plainly inaccurate. For it to be qualified as deceitful, however, it must be deliberate. He who deceives himself commits no fraud. Thus, if our seller had herself been unaware of the works in question, her inaccurate declaration could not amount to fraud.

In the present case, however, it appears that the seller had commissioned the works herself, and could therefore hardly claim to be ignorant of them. The intentional element accordingly raised no doubt in the Court’s eyes.

Some points of difficulty remained. Two deserve highlighting.

The first lies in the existence of an attestation by witnesses, who stated that the buyers had gone down to the cellar and had been able to exchange with the neighbours about « the works of the Brochard company, a specialist firm that had carried out the works in the cellar and on the party wall ». The seller inferred that her buyers could not claim ignorance of the works that had preceded the sale.

The argument carries weight neither before the trial judges nor before the Cour de cassation, which defers to the trial judges’ sovereign appreciation: « the mere summary mention of works during the visits, in particular the rebuilding of the cellar staircase, was insufficient to enlighten the buyers about the actions undertaken on the foundations ».

In other words: a passing mention of cellar works will not suffice to inform the buyer’s consent as to the quality of the foundations.

The second point concerns the qualification of the material element of fraud. In our view, since the seller had made a false statement — uttered a « lie » within the meaning of Article 1137 of the French Civil Code — fraud in the classic sense, which presupposes an active behaviour, was made out. Why then mobilise the figure of fraudulent concealment, why hold that the seller had « knowingly omitted to disclose the interventions on the foundations »? Should one not see in it, on the contrary, not an omission but an action?

On the characterisation of fraud, the ruling breaks no new ground. It is of greater interest as to the consequences of fraud.

2. The consequences of fraud

Fraud being a defect of consent, it may lead to the annulment of the contract where it was determining of consent. That much is settled.

It is also a settled point that the nullity of a contract is always retroactive. As Article 1178, paragraph 3, of the French Civil Code provides: « The annulled contract is deemed never to have existed ».

A wondrous fiction, retroactivity, calling to mind Giraudoux’s aphorism that « law is the most powerful of all schools of imagination ». Has anyone ever seen retroactivity in the state of nature? Can one truly turn back, grow young again, resurrect, forget what has just happened? Plainly not. Yet French law continues to profess its attachment to retroactivity: what is null can produce no effect whatsoever.

So be it. But how can one act « as if » the contract had never existed? After all, if the sale is annulled several years after the event (the appellate judgment is six years later than the conclusion of the sale), one will have to act « as if » the contract had never produced any effect.

Yet, during those six years, the buyers will have lived in the premises. Our seller will have been separated from her property.

How should this intermediate period, between sale and annulment, be treated?

For the Court of Appeal of Rouen, nothing of what occurred occurred. The slate must be wiped clean. Each party restores what it received and goes its way.

Concretely, this means that our seller cannot receive any sum of money for the intermediate period, those six years during which the buyers occupied the property.

This may seem just, if one stresses that the annulment is attributable to the seller’s wrongdoing, she having committed fraud.

Accordingly, the trial judges reject the seller’s request to be awarded an occupation indemnity, on the ground that « because of the retroactive effect of the annulment of the sale, [the seller] could not benefit from an indemnity corresponding to the mere occupation of the property ».

One recognises here a position established by the Joint Chamber over twenty years ago in a similar case, the seller having committed fraud. The Cour de cassation had then held that « the seller is not entitled, owing to the retroactive effect of the annulment of the sale, to obtain an indemnity corresponding to the mere occupation of the property » (Cass. ch. mixte, 9 July 2004, no. 02-16.302).

The trial judges could therefore rely on a certain praetorian footing.

Their decision is nevertheless quashed.

And rightly so: it disregards the very letter of Article 1352-3, paragraph 1, of the Civil Code, which has provided since 2016 (and was therefore inapplicable at the time of the Joint Chamber’s ruling) that « restitution includes the fruits and the value of the enjoyment that the thing has provided ».

Accordingly, the restitution of the thing (the property) includes the fruits and the value of the enjoyment it has provided to the buyer.

One may be troubled by such a solution, denouncing it as a premium on bad faith. One cannot rule out seeing some commentators exhume the adage nemo auditur, to stigmatise the conduct of the bad-faith seller, who may now claim an indemnity from the good-faith buyer.

Yet emotion is a poor counsellor. The solution has the orthodoxy of the law of restitutions on its side — a regime that must be distinguished from that of compensation for damage (on the dividing line between restitutions and liability, see S. Pellet, « Des mystérieux liens entre restitutions et responsabilité », RDC 2025, no. 1). As the Cour de cassation held in 2024, « the restitution owed to sellers following the annulment of the sale of real property is not subordinated to the absence of fault on their part » (Cass. 3e civ., 5 December 2024, no. 23-16.270, FS-B).

In the judgment of 9 April 2026, no value judgment is passed on the seller’s conduct. The very word « fault », present in the 2024 ruling, is absent.

The quashing is curt: in holding that the retroactive effect of the contract’s annihilation barred the payment of an occupation indemnity, the Court of Appeal violated the law by refusing to apply it.

So no innocent is being punished: one merely touches with the finger the limits of the fiction of retroactivity.