11/12/2020 | Sell my property

The different possible contracts between the offer to purchase and the deed of sale

A real estate transaction is only officially carried out when the authentic deed is signed at the notary’s office, followed by registration in the Land Registry. But before this step, the two parties may be required to sign, between themselves or before a notary, certain commitments or pre-contracts. Here are the different commitments that you may need to sign during a real estate transaction.

Preliminary contracts to the deed of sale

Here are the different commitments or pre-contracts that you may need to sign before proceeding to the actual deed of sale. That is to say, the signing of the authentic deed before the notary. Note that the following steps depend on each individual’s situation.

The purchase offer

Your property is for sale and a buyer is interested. He will give you a signed offer in writing, the purchase offer, indicating the price he is offering you. You can accept it, or refuse it if you find the price too low, and make a counter offer. When you have found the buyer for your property, and depending on your situation, you proceed to one of the steps listed below. Note that price negotiations are generally handled by your real estate agent who will also advise you on the next steps.

The memorandum of understanding or reservation

This step is neither essential nor mandatory. It is a written document, signed by both parties, which establishes their will, for one to sell and the other to buy. This document is intended to show everyone’s goodwill. It is not signed in front of a notary and it is not binding on either party. If the buyer or seller withdraws, they have no obligation to continue with their commitments.

The agreement to sell

This is a pre-contract, an agreement signed between the two parties, used in the event that all the terms of the transaction are not fulfilled. By this contract, the two parties undertake to subsequently conclude a deed of sale. The price, the completion time for the transfer of the property and any conditions precedent are mentioned therein. The conditions precedent likely to cancel a real estate transaction are relatively classic. They generally correspond to the failure to obtain administrative authorizations (which rarely happens), the mortgage loan or the building permit in the case of land. Another condition precedent: the prior sale of its own property. This pre-contract gives rise to the payment of a security deposit corresponding to approximately 10% of the price of the property. The promise of sale is signed before a notary.

Real estate sales contracts

They are signed before a notary and constitute the actual sale of the property.

Direct selling

This is the easiest way to close a sale when both parties have agreed on a date and neither the buyer nor the seller needs a delay for any reason. The notary drafts the deed of sale, in other words the authentic deed. The buyer pays a deposit, or the entire sale price, into an account in the notary’s name. As soon as the direct sale contract is signed by both parties, the notary asks the Land Registry to validate the deed and to change the owner’s name on the sheet devoted to the property. It is also his responsibility to make the transfer to the seller on the day the deed is entered in the Land Registry. Since direct sale is not always possible, the legislator has provided for another type of contract, forward sale with right of pre-emption.

The forward sale with right of pre-emption

It is a sale in which the execution, that is to say the transfer of ownership and the payment of the price are deferred to a later date that is convenient for both parties to give them time to organize themselves (moving, obtaining the loan, etc.) The forward sale of real estate is also carried out before a notary and binds the parties as soon as the contract is signed. Upon signing, a payment of around 10% of the purchase price is usually requested. The balance is settled upon transfer of ownership. To secure the buyer and so that between the time of signing the deed of sale and the completion of the transfer of ownership, the seller, who still owns his property, cannot make a decision that would be harmful to the buyer, the legislator has planned to add a right of pre-emption to the forward sale. The right of exemption acts as a kind of « reservation » with the Land Registry and secures the transaction by avoiding, for example, the subsequent registration of a servitude that could cause the property to lose value or the sale of it, on better terms, to another person. This right is registered in the Land Registry for a maximum period of 10 years. It cannot be transferred except by agreement between the parties but it can be transferred by succession.

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