Preliminary purchase agreement

When buying residential real estate, the main contract of sale is often concluded at once. But there are situations when it is preceded by a preliminary contract. If the buyer has found an object that suits him, but he does not yet have the full amount, he can agree with the owner to conclude a preliminary contract. The initiator can also be the seller, for example, if he has not had time to collect the entire package of documents. More about this type of contract in the article.

What is a preliminary sales contract

According to the Civil Code of Ukraine, a preliminary agreement for the sale and purchase of an apartment is a document in which two parties fix their obligations and within a certain period of time contact to sign the main contract on the terms and conditions that were fixed earlier.

What may be the reasons for entering into a preliminary contract:

• the seller needs a little more time to gather all the necessary documents;

• the buyer can only hand over the full amount of money after a certain period of time, for example, he is waiting for a mortgage application to be approved by the bank or he is selling another property;

• one of the co-owners of the apartment being sold cannot be present at the transaction yet;

• the seller wants to slowly prepare the housing for sale - move furniture and other things, pay debts on utilities, etc.

What is the difference between a preliminary sale and purchase agreement and the main agreement

In contrast to the main contract of sale, a preliminary contract does not confer rights and obligations associated with the purchase of residential property. A preliminary agreement only confirms the intentions of the parties, but does not actually bind them to anything.

When signing a preliminary agreement, the buyer does not have to pay the entire cost of housing at once, the seller in turn is not obliged to transfer ownership of it. The main nuance is that the parties express their intentions to make a sale after a certain period of time. If the buyer or seller eventually refuse to sign the main contract, it may be a reason to go to court with the requirement to compensate for losses or still conclude a sale transaction. But each situation is considered individually.

What legal force does a preliminary sale and purchase agreement have?

A properly executed and notarized preliminary contract is legally binding, includes a number of requirements and imposes obligations on both parties. For legal consequences to occur, the document must contain the essential terms of the further contract and be concluded in the same form. If the form of the preliminary agreement does not meet the requirements for the form of the main agreement, no legal consequences will arise if no further agreement is concluded.

A signed and certified preliminary contract protects the interests of both buyer and seller. When a deposit is made, the parties receive certain guarantees that the transaction will take place after a certain period of time.

A preliminary contract loses its legal force when the parties sign the main contract or the time limit set for its conclusion expires, and neither the buyer nor the seller has made an offer to sign a new document.

How to conclude a preliminary sale and purchase agreement and what you need for it

When buying an apartment, the buyer should carefully check the property documents and the seller's documents. First of all, it is important to make sure that the owner really owns the property. He can provide:

• the certificate of ownership of the apartment;

• certificate of title to the inheritance;

• a contract of sale, gift, exchange, life maintenance contract or inheritance contract;

• a copy of the court decision on the right to immovable property.

To make sure that the owner of the object is present at the transaction, it is necessary to check his passport. You should also ask the owner to show a marriage or divorce certificate or a certificate from the Registry Office that he was not married. The seller's details specified in the preliminary agreement must match the original documents provided.

Important points when entering into a preliminary contract:

• All owners of the property must be present at the transaction. If the apartment was bought in marriage, it will be spouses, also the owners can be brothers and sisters, etc. Co-owners must draw up and sign a written consent to the sale of housing.

• The buyer provides passport, identification code, marriage certificate, written consent of the spouse for the purchase of living space.

• The preliminary contract must specify all the terms and conditions important to the parties. With this can help an experienced lawyer who will not miss anything. The contract specifies the exact date of signing the main contract, the detailed characteristics of housing in a new building or in the secondary market, the sale price, the procedure for settlement, at what point the ownership right is transferred, etc. The contract should also specify the exact date of signing the main contract.

• The preliminary agreement must be concluded in the same form as the main agreement - in writing and notarized. Since there is no transfer of ownership of the apartment, state registration of the agreement is not required.

When the buyer and seller have agreed to conclude a transaction and to support their intentions with a preliminary contract, one of the parties contacts a lawyer to properly execute the document. The parties sign the preliminary contract and have it notarized. After a specified period of time, they conclude the main contract of sale of housing, after which the ownership of the object is transferred to the buyer.

What must be stipulated in a preliminary sale contract

In order for a preliminary agreement for the sale and purchase of an apartment to have legal force and protect the interests of the seller and the buyer, it is necessary to spell out in it all the necessary information.

What is important to specify in the preliminary contract:

• full details of the seller and the buyer - full name, passport details, identification code, year of birth;

• obligations of the parties to conclude a preliminary contract;

• the amount of the advance payment or deposit;

• the date by which the parties must conclude the main contract of sale;

• price of the apartment - it should be specified in hryvnias, but you can additionally specify the equivalent price in dollars;

• Settlement procedure - the full value of the object can be paid at the conclusion of the main contract of sale or after the expiry of the specified period;

• detailed information about the property - area, number of rooms, address, etc.;

• the moment of transfer of ownership - at the conclusion of the main contract or after the buyer transfers the full amount for the real estate;

• circumstances to terminate the contract without having to pay penalties.

If we talk in more detail about the obligations, then for the seller it may be the provision of all necessary documents for the apartment, including a certificate of registered persons and a certificate of absence of arrears on utility payments. Also included in the obligations is the discharge of tenants prior to the conclusion of the main contract, the eviction of the seller from the apartment within a specified period of time, a ban on changing the condition of the apartment and on renting it out. The seller is obliged to ensure the presence of all co-owners at the transaction.

The buyer's obligations in the preliminary contract are to pay a Pension Fund fee of 1% of the value of the apartment, bank and notary fees. The buyer also undertakes to transfer the full amount for the housing to the seller before signing the main contract. Points of obligations may vary depending on the specific situation.

Can a preliminary sales contract be terminated

A preliminary contract cannot be terminated unilaterally and without a valid reason. However, the parties may agree on this in advance and specify in the document the grounds on which the contract may be terminated with or without penalty.

Reasons for terminating a preliminary contract without penalty may be situations that cannot be foreseen or influenced. For example, if a buyer wants to buy an apartment with a mortgage, but after concluding a preliminary contract is rejected by the bank.

It is most often allowed to unilaterally terminate the preliminary contract with payment of a fine. In such a case, the buyer gets his deposit back, and if the seller's fault is proven, the deposit can be returned in double the amount. Such a situation may occur if the owner has deliberately concealed defects in the property or provided untruthful information in the documents.

If the seller initiates the termination of the contract and refuses to return the advance payment or deposit, the buyer has the right to appeal to the court. If the preliminary contract is properly drafted and notarized, the court will side with the buyer.

It is possible to properly execute a preliminary sale and purchase agreement when buying an apartment with the help of experienced lawyers of the Mayak Real Estate Agency. The agency has its own legal department, whose specialists have repeatedly faced non-standard situations when concluding transactions and know what important nuances should be taken into account to protect the interests of the buyer and seller. In "Mayak" also has its own notary, who will certify the signed preliminary agreement.

With “Mayak” real estate agency you can save time on finding a lawyer and a notary, as well as safely buy an apartment in Kyiv, Kyiv region or in Zaporizhzhya under a preliminary contract.