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If you’re ready to sign a preliminary sales contract, you’ve probably already completed a full search and have found your dream home by now!
Then things come into play that you don’t have to deal with very often in your life, but where it is important to have everything in order.
We explain more about what is involved in signing the preliminary contract of sale below .
What is a preliminary sales contract?
Simply put, a preliminary contract (or deed of sale) is a binding, written agreement for the purchase of a home. After signing this contract, you have three days in which you can still withdraw from the purchase without giving reasons.
After the above three days, there are still resolutive conditions under which the buyer can abandon the sale without penalty. The most common resolutive conditions are financing and/or an architectural inspection.
With the reservation of financing, the bank is really just going to check that you can pay all the charges now and in the future.
And with the structural inspection, you as the buyer can cancel the sale free of charge if the inspection shows that the repair costs for immediately necessary maintenance exceed a pre-agreed amount. This protects you from unexpected high costs.
What is in a preliminary sales contract?
Pay close attention when drafting the purchase contract that all things are named correctly, so that no ambiguities or problems arise afterwards.
So below are the most important points to check before signing.
- Binding: Realize that the contract is binding. If you waive the purchase without a valid reason (other than the standard cooling-off period and resolutive conditions), you usually pay 10% of the purchase price as a penalty.
- Conditions precedent: Check that the resolutive conditions are properly included, such as the reservation of financing (usually 4 to 6 weeks) and the structural inspection.
- Purchase price and date: Check that the agreed purchase price, completion date and transfer date are correctly written in the deed.
- Movable items: Check the list of items left behind or taken away (e.g., curtains, flooring, built-in appliances).
- Cadastral data: Check the cadastral designation and look carefully to see if there is a long lease.
Three-day reflection period
As described earlier, after signing and receiving the contract, the legal three-day cooling-off period starts, during which you can still cancel without giving any reason.
It is always wise to have the contract checked by a buying agent or legal advisor. If you don’t work with a buying agent, you can also ask the Home Owners Association to check the contract for you. You then send the contract to their legal department and immediately make an appointment to discuss it at a later time.
Written requirement
If the buyer and seller agree on the price, completion date, resolutive conditions and any agreements on movable property, then there is an agreement.
The law stipulates that the sale of an immovable property must be in writing. Once the parties have verbally agreed on the sale, the buyer and seller are not yet bound. Thus, a verbal agreement is not binding.
The writing requirement does not apply to the sale of all real estate.
It applies only to the sale of residential real estate to individuals (consumer buyers). The selling broker records the agreements made in the sales contract.
Together with your purchase broker or legal advisor, you will go through the purchase agreement to see if all the details are correct and provide clarification where necessary. This way, as a buyer, you know exactly what you are signing for.
Signing can, of course, be done digitally these days. Anyone who needs to sign can do so from his or her own computer after digital identification.
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