Buying property in Europe

Once the buyer and the seller have agreed on all aspects of the transaction (the property, the price, the method of payment, etc.), they can sign an initial agreement in order to prepare the conclusion of the final contract. This initial agreement is called a preliminary contract.    

The preliminary contract must be in writing. The law does not require an authenticated form or a notarial certification but, if the parties so wish, a notary can certify their signatures on the preliminary contract. This certification is more beneficial than a simple written contract. In fact, the notarial certification provides probative force as to the date of signature and the identity of the signatories of the contract and ensures that the obligations provided for in the contract are enforceable (payment of certain amounts, obligation to transfer ownership of the property).

A notary, a lawyer, a real estate agency, or even the parties themselves can draft the preliminary contract. It is better for the preliminary contract to be drafted by a professional so as to ensure its quality.  

The legal consequence of the preliminary contract is that it gives rise to a contractual relationship between the buyer and the seller according to which the seller is obliged to sell, and the buyer is obliged to buy, a particular property at an agreed price and subject to predetermined conditions. If there is a breach in the fulfilment of the preliminary contract, the other party can ask for the contract to be completely cancelled and/or for damages for non-performance of the contract. Each of the parties, provided they have acted properly, can ask the court to declare the preliminary contract to be the final contract. If the application is accepted, the court's decision, by which the preliminary contract is deemed to be the final contract, has the force of a title deed and replaces the final contract (notarial act) in respect of the sale of the property.

Even if a preliminary contract is not compulsory in the process of buying and selling property, the parties almost always enter into one. It is rare for the parties not to sign a preliminary contract and to proceed directly to the conclusion of a final contract, for example, when the seller has all documents required and the buyer has the financial means to buy the property or for other reasons.  

It is common practice, when the preliminary contract is concluded, for the seller to make a payment to the buyer by which the seller guarantees his/her commitment to conclude the final contract. Usually, this amount represents 10% of the price of the property, but a higher or lower percentage can be negotiated. This amount represents a guarantee that the contract will be concluded. If the buyer refuses to buy the property, the seller can terminate the contract and keep the money.  If the seller refuses to sell the property, the buyer can terminate the contract and receive from the seller double the amount already paid. From the buyer's point of view, and in order to simplify collecting double the amount already paid, it is better for the contract to be certified by a notary, as the notarial certification ensures that the contract is enforceable and saves time and costs incurred in contentious proceedings before the court. 

There are no special measures such as a cooling-off period or a right of withdrawal.