What is the maximum duration of a preliminary sales agreement?
With our real estate agency in Paris’s 16th arrondissement—our CENTURY 21 Auteuil Immobilier and Auteuil Seine offices—find out everything you need to know about the maximum duration of a preliminary sales agreement
What is the legal term of a preliminary sales agreement?
As a general rule, a preliminary sales agreement is valid for a maximum of three to four months. On the agreed-upon date, if all conditions have been met, the notary arranges for the signing of the final deed of sale.
However, since the duration is freely agreed upon by the parties, a “long-term sale” may be entered into that extends the term of the preliminary agreement. In this case, the timeframe may exceed six months, thereby giving the parties more time to finalize the transaction.
This period allows the buyer to complete the various steps necessary to secure financing, and the seller to fulfill the conditions precedent set forth in the preliminary sales agreement. It is a crucial timeframe, as any delay could jeopardize the sale.
What are the main steps between the preliminary sales agreement and the final deed of sale?
Once the preliminary sales agreement has been signed, several steps must be completed before the final deed of sale is executed. First, it is common for the seller to ask the buyer to pay a security deposit, which is generally between 5% and 10% of the sale price. This amount is deposited into an escrow account managed by the notary—or the real estate agency if it drafted the preliminary agreement—and will not be released until the final deed is signed.
After signing the preliminary sales agreement, the buyer has a 10-day withdrawal period. During this period, the buyer may withdraw from the agreement without penalty. After this period, if the buyer withdraws from the contract, the earnest money deposit is returned to the seller, unless the withdrawal is due to a condition precedent, such as the buyer’s failure to obtain a mortgage.
The notary, for their part, must ensure that all procedures are completed within the allotted time. If the buyer is financing the purchase with a mortgage, the bank generally has 45 days to review and approve the loan application. Once the loan offer is received, the buyer must wait an additional 10 days before formally accepting it (mandatory cooling-off period). This further extends the time required to finalize the transaction.
Good to Know : Throughout this period, the seller remains responsible for maintaining and insuring the property, while the buyer must arrange for insurance to be in effect as of the date of the final signing.
What are the specific deadlines that must be met in a preliminary sales agreement?
There are several specific deadlines throughout the process of entering into a preliminary sales agreement. The 10-calendar-day cooling-off period is the first important step. This period includes holidays and is extended to the next business day if it ends on a weekend or a holiday.
After the preliminary sales agreement is signed, the notary obtains the mortgage statement detailing the legal status of the property. For buyers taking out a loan, the law provides for a minimum of thirty days to obtain a loan offer.
Any preemptive rights expire 60 days after notification. The notary may then submit the draft deed of sale to the parties.
Why can a preliminary sales agreement be extended?
Although the preliminary sales agreement is subject to a maximum term, it is sometimes necessary to extend it. This extension, agreed upon by both the buyer and the seller, is formalized through an amendment—that is, a supplementary document that extends the term of the preliminary sales agreement.
The amendment allows the signing date of the notarized deed to be postponed in the event of unforeseen circumstances, such as delays in obtaining a loan or administrative issues. This document must be drafted by the notary and signed by both parties to be valid.
