Buying property in Europe

After the seller and buyer have agreed on the purchase of a real estate, the conclusion of a contract is the most important phase in the sale and purchase of the real estate. To enter into an agreement for the transfer of ownership title over the real estate (sales contract, a deed of gift or any other contract form), the law requires written form and a notarial certification of the transferors’ (seller’s, donor’s) signatures on the land registry permission.

A preliminary contract is usually entered into when, due to some reasons, the main contract still cannot be concluded although the essential elements – eg. the subject of contract and price – are already adjusted and agreed upon between the contracting parties. With a preliminary contract, the parties (owner, seller, in agreement with the future owner) bind themselves to enter into another, main contract at a later point of time

The Slovenian Obligations Act (Zakon o obligacijskih razmerjih) stipulates that regulations about the form of the main contract apply also to a preliminary contract if the imposed form is a precondition for the contract to be valid. The preliminary contract may also be concluded as a private document or notarial deed.

In most cases, a preliminary contract is not necessary (parties usually make an oral agreement, however, which is not formally binding or it usually makes it more difficult to prove if a dispute arises between parties). The preliminary agreement is binding if it contains all essential elements of the main contract. If demanded by the interested party, the court shall impose upon the party which does not want to conclude the main contract to sign it within a certain time limit. The conclusion of the main contract can be required within six months after the deadline for its conclusion has expired, but if this deadline is not defined, then it is from the day when the contract should have been signed according to the nature of business and the circumstances. However, the preliminary contract is not binding if  the circumstances have changed since its conclusion to the extent that it would not have been concluded if the new circumstances had been known at the time of the signing of the preliminary contract. 

The parties can agree in a preliminary contract that the seller shall pay part of the purchase price at this stage, which is then taken into account in the purchase price and/or is deposited in a notary’s account. The remaining part of the purchase price shall be paid when the main contract is signed.

Repayment of the already paid amount depends on stipulations of the concluded preliminary contract; money can be repaid if one of the contracting parties did not comply with its obligations.

The preliminary contract is not binding if circumstances have changed since the time it was concluded (i.e. without fault of the either contracting party) to the extent that the parties would not have concluded the preliminary contract if the circumstances had been thus at the time of its signing.

If the future buyer is in a (justified) error in relation to some essential characteristic of the subject of the future main contract when concluding the preliminary contract, s/he has the right to reject the main contract signing. The preliminary contract does not bind him/her then similarly as in the event of significantly changed circumstances. In such event, s/he does not need to bring a suit for the annulment of the preliminary contract.