A purchase agreement for real estate records the sale of immovable property. It creates only an obligation to transfer; ownership passes at a later stage, on execution of the notarial deed of transfer and its registration. Where a consumer buys a home, the agreement must be in writing to be valid.
Statutory basis
The general rules on sale are in title 7.1 of the Civil Code. Article 7:2 requires a written agreement for the sale of a dwelling to a consumer buyer and grants a statutory cooling-off period. Article 7:3 allows the purchase to be registered in the public registers, and article 7:17 sets the conformity standard. Most transactions use a model deed drawn up by the estate agents’ associations and the consumers’ association.
How it works in practice
The model deed follows a fixed pattern: description of the property, price and completion date, guarantee of normal use, transfer of rights and obligations, and a set of conditions. Standard elements are a deposit or bank guarantee of ten per cent of the price, a penalty of ten per cent for non-performance after notice of default, and one or more conditions precedent, usually financing and sometimes a structural survey.
Where it goes wrong
Age and non-occupancy clauses cause the most disputes. They shift the risk of hidden defects to the buyer, but only within their own wording: a clause about the age of the installations does not cover asbestos or a leaking foundation. Second, the guarantee of normal use protects intended use as a dwelling, not the buyer’s plans for an extension or a rental unit; that requires an express provision. Third, buyers who let the agreed completion date pass without a proper notice of default lose the right to the penalty.
Related terms
Statutory cooling-off period, financing condition and transfer of title.
Are you buying or selling and do the clauses need checking before you sign? Our real estate lawyers review the deed and the conditions.
