Preliminary contract for purchase and sale of property

What is a preliminary contract for the purchase and sale of a property and what it is for. Differences between a preliminary and final contract?

Like this article requires a slightly more thorough analysis of the matter, we will divide it into two parts. In the beginning, we will explain the practical importance of the preliminary contract, and a little below we will go into more detail.

IN PRACTICE – the preliminary contract for the purchase and sale of a property is a written contract, which is signed by both parties – seller and buyer. Usually, upon signing it, the buyer pays the seller a deposit – a deposit of 10% of the sale price (or another amount, under a contract of the parties) to the seller's bank account, the purpose of which is to formalize its conclusion and, on the other hand, to serve as a guarantee. It is important to mention that if the buyer unduly renounces the contract (or violates any of the clauses), loses the deposit given so far, respectively the other retains what has been received so far. In the event that the seller refuses or breaks any of the clausutes, he undertakes to return the double amount paid so far. It is of great importance to describe all the arrangements concerning the essential terms of the final contract, since, under certain conditions as described below, the preliminary contract can be declared final.

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AS AN INSTITUTE, the preliminary contract for the purchase and sale of property is regulated in the law on obligations and contracts – Art. 19 of the GDPR. It is also important to mention the fact that it is different from the final contract, which has an independent meaning. The two contracts have different grounds– in the case of the preliminary there is a counter-obligation to negotiate, and in the final – for the consideration – in other words, the purpose of the preliminary is to oblige the opposite party to conclude a final one. There is also a difference in their subject matter – the purpose of the preliminary contract is the conclusion of a final contract, and the final – the execution of the counter-services, which are negotiated freely. The form of the two contracts is also different – the preliminary one can be concluded in writing and in oral form, except in the cases under Article 19, para 1 – in case of a preliminary contract, for the conclusion of a final for which a notarized/notarized form is required – must be written. It is in this column that the preliminary contract for the purchase and sale of immovable property also falls.

You can download 2 variants of a preliminary contract for the purchase and sale of a property – for a credit transaction and for a deal WITHOUT CREDIT.

CHOKE

Another feature of the preliminary contract is the possibility to leave an amount, which on the one hand serves as proof of its conclusion, and on the other hand – to ensure its implementation – in other words – the set under Article 93 of the GDPR. The specific thing about it is that if the party who has made the request fails to comply with its obligation, the other party may withdraw from the contract and retain what it has received. If the obligation is not fulfilled by the party who has received the contract, the other party may, in the event of withdrawal of the contract, claim the set in double amount. If the defaulting party prefers to claim performance of the contract, compensation for damages shall be determined in accordance with the general rules.

ANNOUNCEMENT OF A PRE-OVARIAN CONTRACT FOR THE PURCHASE AND SALE OF PROPERTY FOR FINAL 

(THE MEANING OF THE FOREVER)

Under certain conditions, the preliminary contract may be declared final if either party submits a claim under Art. 19 para 3 OF THE GDPR.

If it goes so far, the claimant must prove his or her health – that he is able to fulfil his counter-obligation. As evidence, the fact-finding protocol drawn up by a notary is usually used to show his apparent willingness to perform his duties under the preliminary contract. In this case, the claimant's action was approved, the court delivered a decision replacing the missing will of the other party. The judgment in the case has the meaning of a notarial deed.

As already mentioned, unlike the notary confession of a transaction, which requires a special notary form of reality, the preliminary contract for the purchase and sale of real estate does not need one. It is only his written conclusion that it is a prerequisite for its validity. If it comes to the need to declare a preliminary final contract and a claim under 19(3) of the GDPR is filed, the procedure described in 362-364 GPC requires a valid pre-contract.

In order for the action to be admissible, several prerequisites should be met –

  1. the parties to legitimize themselves as material.
  2. No proceedings pending between the same parties with the same request
  3. The case should be brought to court.
  4. No arbitration clause or, if there is no outright objection to jurisdiction

This is where the meaning of certification comes in. It serves as proof of two things – a valid date of conclusion of the contract and guarantees the identity of the persons who concluded it. Last but not least, it excludes the possibility of unilateral amendments to the contract. If a certified preliminary contract is declared final, the claimant may quickly and easily remove an CPC executive order. The valid date shall also ensure that, if the seller has concluded several preliminary contracts, it is possible to prove who was first concluded at the time.

And as the sentiment goes, "Qui Prior Est Tempore" or "First in Time, First in Law."

 

REFUSAL OF A PRELIMINARY CONTRACT FOR PURCHASE AND SALE OF PROPERTY

As you have already read before, the preliminary contract for the purchase of real estate is a serious business. One of the main reasons to conclude is that both sides want to strike a deal and have agreed on the terms. If any party refuses, there are consequences and serious consequences, unless it is done voluntarily.

The seller owes a double-size choke as a penalty when:

  • does not fulfil the terms of the contract or a legal (legal) impediment to the confession of the transaction
  • if it sells the property to a third party
  • if he abandons the transaction for no reason – in this case the buyer can file a claim in court to declare the preliminary contract final and buy it (this is the other main function of the preliminary contract).

The buyer loses the choke (as a penalty) in case:

  • fails within the agreed period to pay the remainder of the selling price
  • decides to abandon the transaction

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Disclaimer: Delta Analytics Foundation is a registered non-profit legal entity for the performance of public benefit activities. The materials published on the platform are for informational, educational and research purposes only in order to support the mission of the foundation and should not be perceived as specialized advice on real estate transactions. Delta Analysis Foundation is not responsible for the way you use the information contained on the site. Always turn to qualified professionals for financial, legal and other matters according to your specific circumstances and take action based on your informed choices.

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