Why do we need a preliminary contract for the purchase and sale of a property

Once you have reviewed various options and selected your future home, the next step is to coordinate the purchase process with the seller. The discussion will naturally turn to payment schedules, the preparation of documentation, and the date on which you will receive the keys. In the case of high-end properties, there may also be additional arrangements regarding furnishings or finishing works, which should be clarified at this stage.

If there is a time gap before the final transaction is executed before a notary, the buyer and seller may enter into a preliminary real estate purchase agreement. This document outlines the terms under which the property will be transferred, as well as the obligations of both parties leading up to that point. Carefully reviewing the agreement before signing helps clarify exactly what you are acquiring, when specific payments are due, and the procedures to be followed should the agreed-upon terms not be met.

What does the preliminary agreement offer you?

A preliminary agreement binds the buyer and the seller while the necessary documentation, payment arrangements, and the formal transfer via a notary deed are being prepared. The Law on Obligations and Contracts (LOC) requires that such an agreement be in writing and include provisions regarding the essential terms of the final contract. In the context of a real estate sale, the essential elements include the specific identification of the property, the agreed-upon price, and a clear definition of the parties assuming the respective obligations.

To ensure you are adequately prepared, the agreement should also specify precise deadlines, payment terms, and the consequences of non-performance. There can be a significant difference between the statutory minimum requirements and the specific terms needed to protect your interests in a given transaction. The agreement must also address what will happen if any of the anticipated events fail to occur on time.

Furthermore, you should define the seller’s obligations during this interim period—for instance, by stipulating that the seller may not negotiate the sale with other potential buyers or place any additional encumbrances on the property. Such clauses establish contractual liability; however, it is important to note that the mere signing of a preliminary agreement does not, in itself, legally prevent the seller from disposing of the property in favor of a third party.

What should you check before signing?

The due diligence process begins with verifying ownership and the authority of the counterparty to undertake the promised obligations. The lawyer should examine the basis of acquisition, any potential co-ownership, the applicable marital property regime, and the validity of representation—particularly if the seller is a company or is acting through a proxy. The scope of this review is determined by the specific history of the property in question.

It is also necessary to check for registered rights and encumbrances. The Registry Agency notes that a property certificate reflects all registrations, annotations, and deletions as of the date of its issuance. Since months may elapse between the signing of the preliminary contract and the final transaction, the due diligence must be updated prior to the actual transfer.

Legal review and technical inspection serve different purposes. In cases involving a house with an extension, a remodeled apartment, or a rooftop terrace, it is advisable to have a specialist compare the actual on-site condition with the construction documentation. Should any issues arise, agree upon who is responsible for providing the necessary evidence, the timeframe for doing so, and how this will impact the payment terms.

What should a preliminary agreement for the sale of a property contain?

What should a preliminary agreement for the sale of a property contain?

A well-drafted preliminary agreement for the sale of a property outlines the rights being acquired, the financial commitments, and the sequence of steps leading up to the final transaction. When reviewing it, it is useful to check whether every agreed-upon detail is covered by sufficiently specific wording or an attachment

The property and everything included in the price

The property should be described based on the official documentation, including relevant identifiers, floor area, and any appurtenant areas. Regarding garages, storage units, and land rights, it must be clearly specified exactly what is being acquired. If the offer includes a parking space or the right to use a portion of a yard, ensure that the legal basis for this is clarified and explicitly stated in the contract.

For a furnished property, include an inventory of the furniture and equipment that will remain. This list may specify appliance models, built-in furnishings, and any items that the seller intends to remove. Photographs can supplement the inventory, provided they are dated, clearly linked to the list, and accepted by both parties. This will serve as a reference point for the agreed-upon condition of the property at the time of handover.

Total price and additional costs

Specify the total price, the items included, and the portion of the amount due at each stage. If there is a separate price for a garage or furnishings, this should be clearly distinguished. In the case of a sale by a company, clarify whether the stated amount includes VAT, where applicable.

Also, account for the costs associated with preparation and transfer. For properties within a complex, request the terms for management and maintenance in advance, including the fees and the procedure for adjusting them. These payments will form part of your future budget for the property and warrant review before you commit to the purchase.

Deadlines and Required Assistance

Set a final date for the transaction and deadlines for the documents upon which it depends. The seller may need to provide a bank letter regarding an existing loan, while the buyer may need to arrange for a valuation and financing. Each party should know what the other is preparing and when they are expected to receive it.

Also, agree on the method of notification, including the addresses for correspondence. Phrasing such as "upon provision of the documents" leaves room for ambiguity if there is no specific list, deadline, or procedure for confirming their receipt.

Earnest money, advance payment, and deposit: what do you pay upon signing?

The term "kaparo" (earnest money/deposit) does not, in itself, provide sufficient clarity regarding the consequences of the payment. The contract should specify whether the amount constitutes an advance payment toward the price, earnest money serving a security function, or some other agreed-upon payment. An advance payment is deducted from the total price, whereas the legal regime governing earnest money also encompasses consequences in the event of non-performance.

Regarding earnest money paid by the buyer, Article 93 of the Obligations and Contracts Act (ZZD) provides for the following scenarios: if the buyer fails to fulfill their obligation for a reason for which they are liable, the non-breaching seller may withdraw from the contract and retain the amount. If the seller is liable for the non-performance, the non-breaching buyer may withdraw from the contract and demand the return of the earnest money in double the amount. The application of these rules depends on the specific nature of the non-performance and the actions taken by the parties.

There is no statutory requirement that the initial payment must amount to 10% of the price. Both the amount and the specific function of the payment are matters for negotiation. In the case of a purchase price of 1.2 million euros, a 10% payment would amount to 120,000 euros. This example illustrates why the terms governing the retention or refund of such funds must be reviewed prior to the transfer.

How do you coordinate payments when there is an existing mortgage?

If the property is encumbered by a mortgage, request a pre-agreed procedure involving the lending bank. This should cover the outstanding balance, the repayment account, the required documentation, and the steps for the formal discharge (cancellation) of the mortgage. Relying on a seller’s promise to pay off the loan after receiving the purchase price leaves critical aspects of the transaction process undefined.

For the final payment, the use of a special bank account held by the notary may be considered. Article 25a of the *Notaries and Notarial Activity Act* provides for this option, with the terms for depositing and disbursing the funds governed by a written agreement between the notary and the parties.

In this scenario, specify the documentation required for the release of funds, the applicable fees, and the procedure to be followed in the event of a delay. If the purchase is financed through a loan, the entire arrangement must also be coordinated with the lending bank.

What should you arrange if you are buying with a bank loan?

When purchasing property using a bank loan, agree in advance on how to handle scenarios such as a denial of financing, a bank valuation lower than the purchase price, or a delay in loan approval. Simply stating that the balance will be paid via a bank loan is insufficient to address these situations in adequate detail.

A financing clause should specify a deadline for the loan application, the level of cooperation required from the seller, and the documentation needed to verify the bank’s decision. It should clearly define the circumstances under which the deadline may be extended, the conditions under which the parties may terminate the agreement, and the disposition of any funds already paid. Furthermore, distinguish between a loan denial based on the buyer’s creditworthiness and issues arising from the property’s documentation or legal status.

The practical significance of such provisions is illustrated by Decision No. 186 of March 24, 2026, issued by the Supreme Court of Cassation in Civil Case No. 2489/2025. In this case, the court determined that the contract was terminated by mutual consent—with no party found to be in breach—and ordered the refund of the earnest money (deposit) that had been paid. A general clause stating that the parties have no further obligations to one another was deemed insufficient grounds for the sellers to retain the funds they had received.

When preparing your transaction, it is advisable to explicitly outline the consequences of termination, including the specific timeframe for the refund of any paid amounts.

What are the additional costs when purchasing a property under construction?

For a property under construction, the contract must encompass the promised outcome. Request a plan of the specific unit, along with technical specifications that provide sufficient clarity regarding the finishing works, equipment, and common areas. If specific materials or systems are crucial to your decision, clarify how they will be described and under what conditions they may be substituted.

Link individual installment payments to clearly identifiable construction stages, and specify the documents required to certify that these stages have been reached. Distinguish between the deadline for the transfer of ownership and the deadlines for completion, commissioning, and handover. If the dates for these events do not coincide, there should be a separate provision for each.

Establish how the final area of ​​the property will be determined and whether any deviation will affect the price. Review clauses concerning price indexation, permissible project modifications, and the grounds for extending deadlines. In cases where the price depends on a future event, the buyer must be able to verify the calculation method and the conditions under which any price adjustment is accepted.

What happens in the event of a delay or a refusal to proceed with the transaction?

The contract should distinguish between late payment, failure to submit documents, delayed release [of property/assets], and a refusal to conclude the final transaction. Appropriate consequences—such as contractual penalties and timeframes for remedying the non-performance—may be stipulated for each of these scenarios. The mere passing of an agreed-upon date does not necessarily mean that the entire legal relationship is automatically terminated.

Options regarding contract rescission, the refund of amounts paid, and compensation for damages are determined based on the contract and the applicable law. Provided the necessary legal prerequisites are met, either party may seek a court order to compel the conclusion of the final contract, pursuant to Article 19, Paragraph 3 of the Obligations and Contracts Act. This legal remedy requires court proceedings and does not serve as a substitute for conducting preliminary due diligence.

Should a dispute arise, a legal review must be carried out prior to issuing any notice of refusal or rescission. The course of action chosen will determine what claims may subsequently be asserted.

How to arrange the handover of the home?

The finalization of the transaction and the handover of the keys may occur on different dates. Specify when the property will be vacated, the condition in which it will be handed over, and the consequences of any delay. If the property is currently tenanted, clarify the status of the lease agreement and the actual move-out date before making any commitments.

Prepare a handover protocol (protocol of delivery and acceptance) to document the property's condition, existing equipment, utility meter readings, and the access items (keys, fobs, etc.) being handed over. For technical systems, request the relevant instruction manuals, warranty documents, and available service history. Clearly define which identified defects must be rectified prior to the handover and how the completion of these repairs will be verified.

At Unique Estates, we approach the purchasing process through a personal meeting, selecting properties tailored to your specific requirements. Our consultants provide support throughout the review of offers, negotiations, and the preparation of the transaction. Specific contractual clauses should be reviewed by a lawyer, taking into account the nature of the property, the financing arrangements, and the agreed-upon terms.

Frequently Asked Questions

Is a preliminary agreement for the purchase and sale of a property mandatory?

The parties may proceed directly to the final notarial transaction if they are prepared to do so. A preliminary real estate purchase agreement is useful when there is an interval between the reaching of an agreement and the actual transfer—time needed for documentation, securing financing, or fulfilling other conditions.

Is notarization of the signatures required?

The general requirement for a preliminary contract for the sale of real estate is that it be in writing. Notarization of the signatures is not mandatory under Article 19 of the Obligations and Contracts Act (ZZD). It does not transfer ownership, nor does it replace the verification of documents or the review of the agreed terms.

How can the deadline for the final transaction be extended?

When the parties reach an agreement, the change is formalized through a written addendum. It is advisable to specify the new date, the impact on payments, and any other affected obligations. You should also clarify how the consequences of any delay that has already occurred will be addressed, rather than leaving this matter for a future discussion.