Preliminary Sales Agreement: What You Need to Know Before Buying

November 7, 2024 5-minute read
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Promesse de vente : tout savoir avant d’acheter

Buying or selling real estate is one of the most important transactions in a person’s life. At the heart of this process is the preliminary sales agreement, a crucial step that commits the parties to the future transaction. 

Preliminary Sales Agreement: What You Need to Know Before Committing

Our real estate agency in Paris's 16th arrondissement, our offices CENTURY 21 Auteuil Real Estate and Auteuil Seine provide you with everything you need to understand the preliminary sales agreement.

What is a preliminary sales agreement?

A preliminary sales agreement is a preliminary agreement between a seller and a prospective buyer in the context of a real estate transaction. This legal document commits the seller to transfer the property to the buyer within a specified timeframe and under specific terms. It is a crucial step in the process of purchasing real estate, providing legal certainty for both parties.

What is the purpose of a preliminary sales agreement in a real estate transaction?

The main objective of a preliminary sales agreement is to secure the ongoing real estate transaction. It gives the buyer time to finalize financing and complete the necessary steps, while ensuring that the property will not be sold to a third party. For the seller, it represents a firm commitment from the buyer, thereby reducing the risk of a last-minute withdrawal.

What must a preliminary sales agreement include?

A preliminary sales agreement must include several elements:

  • Property Details : the exact address of the property, the property’s history (date of the previous deed of sale, name of the previous owner, notarized deed, etc.), a detailed description of the property, its fixtures and fittings, and any outbuildings, and whether there is a mortgage and/or an easement.
  • Information Regarding the Sale : 
    • Amount of the fees for the professional handling the sale (if a professional is involved) and who is responsible for paying them;
    • Sale price and payment terms (with or without a mortgage);
    • Validity period of the preliminary sales agreement and deadline for signing the final sales deed;
    • Information regarding the conditions for exercising the right of withdrawal (failure to comply with this disclosure requirement is punishable by a fine of up to €15,000);
    • Date the property becomes available.

Where and how do you sign a preliminary sales agreement?

A preliminary sales agreement may be signed private document (between the parties) or before a notary. Signing before a notary provides additional legal certainty and is recommended for complex transactions. 

In any case, it is advisable to hire a real estate professional or a legal professional to ensure the document complies with regulations.

What are the financial implications of a preliminary sales agreement?

In the case of a unilateral promise to sell, the obligation to sell applies only to the seller. If the seller withdraws without valid cause (outside the withdrawal period or when conditions precedent have not been met), the buyer has the right to take legal action to compel the seller to honor the promise to sell and thus to proceed with the real estate transaction.

Is it possible to back out after signing a preliminary sales agreement?

For the buyer, the law provides for a 10-day withdrawal period beginning on the date of receipt of the signed preliminary sales agreement. During this period, the buyer may withdraw from the agreement without cause and without penalty. For the seller, a withdrawal is not possible, unless conditions precedent in his favor have not been lifted.

What are the risks involved in signing a preliminary sales agreement?

For the buyer, the main risk is financial. If the sale falls through due to the buyer’s own actions—excluding any conditions precedent specified in the contract—the buyer could lose the earnest money deposit paid.

What is the difference between a preliminary sales agreement and a sales contract?

The main difference lies in the parties’ commitments. In a preliminary sales agreement, only the seller commits to selling, while the buyer has an option to purchase. In a sales agreement, both parties make a mutual commitment—one to sell, the other to buy. In practice, the legal effects are often similar, but the preliminary agreement is generally considered to be more binding.

Can a mortgage be contingent on a preliminary sales agreement?

A preliminary sales agreement is often a key factor in securing a mortgage. Banks may request this document to review the loan application, as it demonstrates the seriousness of the purchase plan and provides the necessary details about the property and its price.

What happens after a preliminary sales agreement is signed?

After the signing, several steps follow:

  • The buyer has a 10-day withdrawal period;
  • The notary prepares the final deed of sale;
  • Once the conditions precedent have been satisfied, a date is set for the signing of the notarized deed ;
  • The transfer of ownership and payment of the purchase price take place upon the signing of the notarized deed.

Please note that a preliminary real estate sales agreement, if not formalized by a notarial deed, must be registered within 10 days of its signing; the fee charged by the Public Treasury is €125.

How can our CENTURY 21 Auteuil and Auteuil Seine offices assist you?

In the complex world of Parisian real estate, navigating it on your own can be a real challenge. That’s where the expertise of our CENTURY 21 Auteuil and Auteuil Seine agencies really comes into its own. 

Our team is here to answer any questions you may have about your real estate projects—whether you’re selling, buying, or managing rental properties. Please feel free to contact our two real estate agencies, CENTURY 21 Auteuil Immobilier and CENTURY 21 Auteuil Seine, by phone at 0142151621 or 0156071621, or by email: auteuil@century21.fr or auteuilseine@century21.fr

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