The preliminary agreement
Selling a home always requests the signature of a preliminary sales agreement which sets the agreement of the seller and the buyer on the terms of the sale. Then the notary will take care of the many formalities prior to the signature of the deed of sale. Then, about three months after signing the compromise, the buyer and the seller meet to sign a final deed of sale with the notary.
The compromise is what is called a "preliminary contract", a promise by the seller to sell his property to the buyer, and a promise by the buyer to buy the property to the seller. Signing the agreement secures their agreement on the price of the property sold, the general and special conditions at which take the sale, the suspensive conditions and the date by which the deed should be signed.
The seller must inform the buyer about the status of the property sold by providing a record of technical diagnosis*. The buyer must be able to see this record before signing the compromise in order to buy in full knowledge of the facts. The notary also asks, especially when it comes to selling a detached house, a certificate of cleaning up. Since 1st January 2011 the sanitation diagnosis is part of the record of technical diagnosis.
People often wonder if the signature is made before a notary or not; to sign the compromise, you can choose:
- You can sign between individuals using a exemplification. This choice can allow you to sign sooner.
- Or sign it before a notary. As a specialist, he can advise, for example, in drafting of special conditions, or more generally on the transaction. He takes care of everything: he collects all the necessary parts and writes the compromise that it only remains for you to sign at the meeting.
The signing of the deed of sale is always made before a notary.
The compromise always contains suspensive conditions of the sale that is to say that the sale takes place only if the conditions included in the compromise come true. This is the case, especially when the buyer purchases on credit, it has in this case a suspensive condition of obtaining credit. This clause is legal and public policy that is to say that it acts in fact even if the compromise does not mention it. This clause allows the buyer to benefit automatically from the condition which allows him to buy only if he gets his credit within a certain time. This makes of course the sale uncertain. Therefore the condition is still delimited within a certain time: at least one month, according to the law. But one generally let 45 days to the purchaser, because the period of one month is too short to allow the buyer to make all its efforts and to obtain the agreement of the bank.
The loans that he intends to suscribe must be specified in the compromise, and their conditions: amount, duration, rate ... For example, the purchaser buys subject to obtaining a loan of an amount of 150,000 Euros over 15 years, at the maximum rate of 3.65%. He cannot then use a refusal to loan over 20 years as an excuse. But if he is offered a loan at 3.75%, he can refuse and withdraw from the sale without penalty.
As for buyers without having recourse to a loan, the law requires them to include a handwritten note in the compromise that they waive to benefit from this suspensive condition of loan.
The compromises also can contain these following suspensive conditions:
• the renunciation by a local authority of its right of pre-emption on the property
• the mortgage situation discharged at the time of sale.
• the sale of real estate: If you already own your principal residence, you will certainly have to sell before buying your new property. In this case, must be integrated in the compromise a condition providing that the transaction will be realized only if you find a buyer for the property.
To "block" the sale, it is customary that the buyer pays an amount to the seller in return for the commitment he takes to sell the property. This amount is paid at the time of signing the agreement, never before. It usually corresponds to 5% or 10% of the property. When the signing of the agreement takes place between individuals, the buyer sends the money after the delay of revocation of seven days directly to the notary or then the estate agency to hold the proceeds in an escrow account. The cheque is in all cases made out to the notary. However, when signing the agreement takes place before a notary, the buyer pays the cheque the day of signing the agreement, directly to the notary. This amount is considered a deposit and will then be deducted from the sale price upon signing of the final. However, if the buyer retracts into the withdrawal period of seven days, he recovers the amount paid within twenty-one days from the day after his withdrawal. Moreover, if one of the suspensive conditions is not coming true within the due period, this amount is refunded to the purchaser. However, if he does not want to buy for other reasons, the seller is entitled to retain that amount.
As tackled above, the buyer has a right of withdrawal for seven days which he can exercise without having to justify a particular reason. Any buyer who purchases a particular housing benefits it, whether the transaction is entered into between individuals or notarized. As the seller, once the agreement signed, he is committed to the purchaser. If he withdraws, he will have to pay significant compensation in the contract and any damages resulting from an action in court.
The countdown time is different if you sign before a notary or between individuals. When the compromise was signed between individuals that is “under private agreement” the seller must, once the sales agreement signed, send a copy to each of the buyers by registered post with acknowledgement of receipt. It is this obligatory formality that can give a definite date at the start of the withdrawal period. On the day after the first presentation of the letter, the buyer has a period of seven days to retract. When the compromise is signed before a notary, the counting of seven days of withdrawal begins from the day after where the notary presents the deed to the purchaser against receipt.
In case of cancellation, the buyer must send a letter to the seller by registered post with acknowledgement of receipt informing him of his wish to abandon the sale. If he does not within seven days, he is definitely committed.
* See the article “Inspections"