Three types of real estate agreements

In real estate transactions, three main procedures—compromise, sales promise, and purchase offer—have distinct legal consequences. Understanding the differences is crucial before making a decision.

Sales promise and its financial commitment

A sales promise, or unilateral sales promise (PUV), gives a buyer the option to purchase a property within two to three months. During this time, the seller must keep the property off the market and cannot refuse the sale at the agreed price. In return, the buyer pays an indemnity of about 10% of the sale price, which is non-refundable if they back out.

Legal significance of the pre-contract

The preliminary agreement, or pre-contract, is a legally binding document even though it is not mandatory. It outlines the terms of the future sale and creates obligations for both parties. This document is essential despite its name, as it marks the agreement between the buyer and seller.

Who prepares the sales promise

A sales promise can be created directly between the buyer and seller through a private deed. This is more common for low-value properties or when no mortgage is needed. Alternatively, a notary can draft an authentic act, especially if the agreement lasts more than 18 months. Real estate agents can also facilitate the process, though legal review by a notary is often recommended.

Sales compromise and mutual commitment

A sales compromise, or synallagmatic sales promise, binds both the buyer and the seller equally. Both parties agree to the sale at a fixed price, and if one backs out, the other may seek legal remedies, including damages. A penalty clause is often included to enforce this commitment.

Purchase offer and its limitations

A purchase offer allows a buyer to reserve a property under their own conditions without paying a deposit. However, the buyer has no right of withdrawal, unlike the PUV or compromise. If the seller accepts, the buyer becomes legally bound. This document should be used cautiously, as it only obligates the buyer, not the seller.

Suspensive clauses for flexibility

Including a suspensive clause in a pre-contract provides an exit strategy if certain conditions are not met, such as mortgage approval or a pre-emption right by the commune. If these conditions are not fulfilled, the buyer can withdraw and get their payments back.