Real estate agency: commissions, escrow account and accounting

Quick answer. Estate agency activity is governed by the Hoguet law (Law n° 70-9 of 2 January 1970): a professional card T (transactions) or G (management), a financial guarantee of at least 110,000 EUR per activity where funds are handled, and a dedicated escrow account. In accounting, the golden rule is never to confuse transaction fees — revenue subject to 20% VAT, recorded in account 706 — with escrowed funds, which pass through third-party accounts and stay outside the income statement.

An estate agent handles two radically different flows: its fees, which are its turnover, and its clients' funds (deposits, down payments, sale escrows), which do not belong to it. The accounting rigour of an agency rests entirely on this separation. The issue is not only technical: it is regulatory, since the Hoguet law imposes precise guarantees on a professional who holds funds for others.

In 2026 the framework remains that of the law of 2 January 1970 and its implementing decree of 20 July 1972. The professional card is issued by the chamber of commerce and industry, and the financial guarantee remains mandatory wherever funds are handled.

Recently, an agency manager consulted us after recording as revenue down payments collected into an escrow account: turnover and VAT were artificially inflated, and the escrow reconciliation became unreadable. The clean-up reclassified those funds into third-party accounts and recognised fees only when sales were actually completed.

The professional card#

To practise, the agent must hold a professional card issued by the CCI:

• Card T for transactions (sale, purchase).
• Card G for property management (rental management, condominium syndic).

Obtaining it requires professional aptitude, a financial guarantee, professional liability insurance and the absence of incapacity. Every mandate must be written and entered in a register of mandates.

The financial guarantee#

As soon as the agency handles funds for third parties — down payments, deposits, rents — the financial guarantee is mandatory. Its amount cannot be lower than 110,000 EUR per activity. For a card T without fund handling, it has been optional since 2014. This guarantee, provided by a bank or an approved professional body, ensures repayment of funds should the agency default.

The escrow account#

Handling client funds requires opening a separate, dedicated escrow account. The sums passing through it are not the agency's property: they are held for third parties and must remain strictly separate from operating cash.

The trigger for the commission#

The agent's commission — the transaction fee — is due on the actual completion of the operation. In practice, it is due on signature of the notarial deed, unless the mandate provides otherwise. Revenue must be recognised on that date, not on collecting a down payment or signing the preliminary agreement.

Accounting treatment#

Here is the recording logic to follow:

1. On signing the mandate: no revenue. The mandate is a commitment, not a completed sale.
2. On collecting a down payment or deposit: the funds enter the escrow account and are recorded in third-party accounts (class 4), never as revenue.
3. On signing the notarial deed: the fee becomes earned. It is recorded as revenue (account 706 "Services"), with VAT collected at the standard 20% rate.
4. On remitting escrowed funds (to the seller, the notary): the third-party account is cleared, with no impact on profit.

Summary table#

Confusing these two natures is the most frequent and most consequential error: it distorts turnover, VAT and the escrow reconciliation.

Rental management and syndic#

Management activity (card G) adds the collection of rents on behalf of owners. These rents are third-party funds: only the management fees charged by the agency are its turnover, subject to 20% VAT. The principal account must be tracked rigorously.

The independent agent#

The commercial agent working on behalf of a card-holding agency handles no funds and holds no card. They invoice their fees to the agency and usually fall under the BNC regime or a company, with no financial guarantee of their own.

The register of mandates and the principal account#

The Hoguet law requires keeping a register of mandates, numbered and kept without blanks or erasures: each mandate receives a number repeated on the mandate itself. In accounting terms, management activity requires rigorous tracking of the principal account. For each owner, the agency collects rents, pays charges and remits the balance, keeping only its management fees. Cost accounting by principal makes it possible to justify each owner's position at any time and to produce the annual management statements. This traceability is expected both by clients and by the financial guarantor and, where applicable, during an audit.

Fees, disbursements and shared commission#

You must also distinguish fees from disbursements: sums advanced in the name and on behalf of the client (for instance certain administrative costs) are reimbursed exactly and stay outside the scope of VAT, provided they are justified and recorded in third-party accounts. Where two agencies share a commission (mandate delegation, inter-agency operation), each records as revenue only its real share of fees, subject to 20% VAT. Here too, rigorous recognition avoids artificially inflating turnover and collected VAT.

• Never recognise a fee before the operation is completed: no revenue on signing the mandate or the preliminary agreement.
• Strictly separate operating cash from escrowed funds.
• Secure the financial guarantee wherever funds are handled (at least 110,000 EUR per activity).
• Keep the register of mandates and the mandatory fee disclosure in listings and mandates.
• VAT: transaction and management fees are at the standard 20% rate.

As a chartered accountant registered with the Order and a statutory auditor, we support real estate agencies whose accounting rests entirely on this flow-separation discipline. The difficulty is not the VAT rate or the chart of accounts: it is the rigour of fee recognition and the watertightness of the escrow.

For the manager mentioned above, the correction immediately clarified the indicators: turnover reflecting genuinely completed sales, accurate VAT, and an escrow reconcilable to the cent. Beyond Hoguet compliance, this rigour also protects in the event of an audit or a client dispute over held funds.

Hayot Expertise advice. From opening, set up a chart of accounts that clearly isolates third-party accounts (escrows, principals) from revenue accounts (fees). Recognise your commissions on signature of the notarial deed, never before, and reconcile your escrow account monthly. Finally, check that your financial guarantee properly covers your fund-handling activity. This organisation secures both your regulatory compliance and the reliability of your accounting.