French property contracts: the sales agreement
Are you about to sign a preliminary contract? This is known as a "pre-contract". The preliminary contract and the sales agreement are two contracts with different consequences for the buyer and the seller..
Unilateral sales agreement
Sales agreement (also known as "unilateral preliminary contract"), the owner agrees with the prospective buyer (known as beneficiary) to sell him his property at set price. Therefore, it leads to an exclusive "option" for a limited time-period (generally two to three months).
During this period, he is forbidden from giving up the sale or offering the property to another purchaser. The candidate buyer benefits from the agreement in order to decide whether he wishes to buy or not. A key advantage! In return, he pays the seller a confinement benefit, theoretically equal to 10% of the sale price. If he decides to acquire, this compensation will be deducted from the sum which needs to be paid. But if he gives up on the purchase or if he does not show his acceptance within the option period, the owner shall acquire the benefit as compensation.
In order to be valid, the sales agreement must be registered with the tax office within ten days of signing. Moreover, when it is granted for a period going beyond 18 months, it must be carried out by an authentic act. The registration fees which is paid by the purchaser is 125€.
Often in a hurry to round off, the buyer and seller at times thinks that signing the preliminary contract does not lead to much. This is not true: despite its name, this preliminary agreement makes up a genuine "contract", which leads to important obligations for both parties. It allows them to specify the conditions for the future sale and highlights their agreement. Although it is not legally obligatory, this document is remains essential.
In the preliminary agreement (or "bilateral sales agreement"), the seller and buyer both agree to round off the sale at a price which is set jointly. Legally, the preliminary contract is the same as a sale. If one of the parties gives up on the transaction, the other can force the latter to do so through legal means, through additional damage and interest.
Signing the preliminary contract requires the purchaser to pay a sum which approximately ranges between 5% and 10% of the sale price. This is known as a security deposit ; it shall be deducted from the price when the notarial act is signed.
Unlike the sales agreement, the preliminary agreement does not require to be registered with the tax authorities. This absence of fees may seem to be an asset. However, in the event of a dispute, in terms of fulfilling the prior conditions, the parties shall remain bound by the sales agreement, except through an amicable agreement or court decision, in the event of a unilateral sales agreement, the parties resume their freedom. if the option is not applied by the purchaser
Offer to purchase or price offer
Indiscriminately known as an offer to purchase, a unilateral sales agreement or even simply a price offer, this document presented by some real estate agents should be treated in a cautious manner. Its main feature is to make the buyer commit and not the seller.
The seller must notify you with the offer, within the time limit and in the form prescribed within the offer (generally via registered letter and acknowledgment of receipt). If he accepts the offer in writing, the sale is theoretically deemed to be rounded off. On the other hand, you can perfectly retract if the seller makes you a counteroffer or if he does not respond to you within the given time.
A primary precaution consists in including in the purchase offer, the suspensive conditions (for example obtaining a loan) and to leave the seller only with a little time (a week or fifteen days) to give you his answer.
No payment can be demanded from the buyer, under penalty of the offer’s nullity (Article 1589-1 of the Civil Code).
Suspensive conditions: commitment exceptions
Whether it is a sales agreement or a preliminary contract, the buyer and seller can decide through mutual agreement to add suspensive clauses. These make it possible to foresee the nullity of the preliminary contract if certain events were to occur before the final sale (each of the parties resume their freedom).
- This can for example be a loan refusal from the purchaser’s bank, application of the pre-emption right by the municipality, discovering a new urban easement. In this case, the sums that had been paid by the purchaser are given back to him.
- Moreover, a sales agreement may also contain a clause, known as a "withdrawal clause", allowing the seller and/or the purchaser to waive the sale without cause by leaving the other party with the same that was agreed in advance. But theoretically, this isn’t common.
- It shouldn’t be confused with the penalty clause, present in most preliminary contracts, according to which the buyer undertakes to pay the seller a sum, as damages and interests, if he refuses to sign the sale.
Get your preliminary contract drawn out by a professional
Buyer and seller are free to write it themselves on paper or using standard contracts. However, the clauses present within the contract are of high importance, the final contract theoretically includes these, it is recommended to entrust the drafting to a professional (your notary), who has the duty to inform both parts. The cost of drafting the preliminary contract is included in the real estate agent's commission or in the notary fees , with whom the final sale shall be signed.
Withdrawal period for buyers
Purchaser of new or old house, you sign a preliminary contract, unilateral agreement: you have a period of ten (irreducible) days during which you can reconsider your commitment (through registered letter with acknowledgement of receipt).
Regardless of your reason, the sums you have paid must in all cases be returned to you in full. This withdrawal period runs from the day after hand delivery (or signing of the act if it is kept by the notary) in the event of a sales agreement made in the authentic form or the first presentation of the the registered letter with acknowledgment of receipt, containing the preliminary contract, in the event of a private signature.
For example, if the latter is sent on the 10th of the month and its first presentation is on the 12th, the deadline will be from the 13th onward and shall expire on the 22nd at midnight.
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