The sales agreement, also called “synallagmatic promise of sale”, is a preliminary contract in the same way as the promise of sale. It is the first official document before the signing of the final deed of sale. Unlike the unilateral promise to sell, the compromise binds both the seller and the buyer.
In accordance with article 1589 of the Civil Code, “The promise of sale is worth sale, when there is reciprocal consent of both parties on the thing and on the price”. In practice, therefore, the compromise obliges the seller to sell and the buyer to buy as soon as the preliminary contract is signed. In the event that one of the two parties does not comply with the commitment, damages and legal action could be brought in order to force the sale. Therefore, compromise is not an act to be taken lightly.
What information should be included in the sales agreement?
Like any official act, the synallagmatic promise of sale must contain precise information concerning the parties, the property for sale and the progress of the sale:
- the identity of the owner and the purchaser;
- the address of the property and a description (area, outbuildings, etc.);
- the origin of the property: construction, former owner, etc.
- the option period, i.e. the date on which the buyer undertakes to give his final answer;
- the date of availability of the property;
- the sale price validated by both parties as well as the terms of payment (mortgage, for example);
- the identity and fees of the real estate agent in charge of the sale;
- the withdrawal period.
The seller must also report the situation of the property by providing the future buyer with a real estate which contains, among other things, the energy performance diagnosis. In the case of a condominium lot, the seller must add to the sales agreement all the documents relating to the management of the building in which the apartment is located. This file generally includes:
- the co-ownership regulations;
- the minutes of the general meetings for the last three years;
- the summary sheet of the co-ownership provided by the syndic;
- the building’s maintenance logbook;
- the amount of the charges.
The seller does not have to present these documents if the buyer already owns a lot in the condominium or if he buys an ancillary lot, such as a parking space or garage.
Finally, the sales agreement may contain suspensive clauses which, generally, protect the buyer in the event of unforeseen events that would jeopardize the sale. The conditions precedent most often concern obtaining a mortgage, the absence of easements or a right of pre-emption.
How does the signing of a sales agreement work?
The sales agreement must be signed by both parties under private seal, before a real estate agent or a notary. Unlike the unilateral promise of sale, when it is signed under private signature, the compromise does not have to be registered with the tax authorities. It may, nevertheless, be interesting to register it to be authentic.
When signing the sales agreement, the buyer must pay a deposit of 5 to 10% of the market value of the property. It will then be deducted from the sale price on the occasion of the signing of the definitive deed. This security deposit may be refunded to the buyer in the event of the cancellation of the sale in the terms provided for in the sales agreement or as part of the conditions precedent.
Should I sign before a notary or not?
Nothing obliges the seller and the buyer of a property to sign the sales agreement before a notary. They can sign in an unofficial setting, so this is called the private deed. Nevertheless, the sales agreement is not trivial and its signature must take place in the best possible conditions in order to guarantee its legal value.
The compromise can be signed before a real estate agent, professional in the sector and therefore authorized to draft the contract and carry out the procedures within a legal framework. It can also be signed at the notary. It is customary to make the choice of officer up to the purchaser, but the seller may also involve his own notary. In all cases, the buyer pays the notary fees (between 150 € and 500 €) on the day of signature. The notary is then responsible for drafting the compromise and checking the documents to be attached to it.
Signing an official deed in front of a professional guarantees the smooth running of your purchase or sale project.
What are the conditions precedent of the sales agreement?
Conditions precedent are clauses added to a unilateral or synallagmatic promise to sell in order to specify the terms of the contract. The realization of one of its clauses may cancel the said contract. Therefore, these conditions must be rigorously drafted and must be accepted by both parties to a real estate sale to be valid. There are different types of suspensive clauses. The most frequently used in sales agreements are:
- Obtaining a mortgage: in the case of financing the real estate purchase using a loan, obtaining the latter conditions the sale. In the event of a favourable response, the suspensive clause is respected and the sale is final. On the contrary, if the loan is refused to the buyer, the latter may cancel the sale after justifying the proper completion of the steps.
- The sale of the previous property: if the money from this sale is necessary to finance the purchase of the new property, the sale of the previous property is registered as a suspensive clause.
- The absence of urban planning easements: often stemming from ancient customs and transmitted from one owner to another, they concern the right that a plot of land can exercise on neighbouring land. In general, it is a right of way, but one can also encounter easements of drawdown, view, stormwater flow, etc.
- The waiver of the right of pre-emption by a natural or legal person: whether it is the tenant of the property for sale or a local authority, these entities may invoke a right of pre-emption. The notary must therefore purge by systematically checking that no beneficiary wishes to exercise it on the property for sale.
There are other conditions precedent, in particular when it is for the buyer to change the nature of the property he acquires or to carry out substantial work. These actions require authorizations that sometimes cause a rather long response time. Registration in the suspensive clauses protects the buyer in case of refusal of an authorization, for example.
If a condition precedent is not met, the sale of the property is cancelled.
Is there a withdrawal period?
The signing of a sales agreement is accompanied by a withdrawal period 10 days (against 7 days since the law of 6 August 2015) for the buyer. The latter may choose to retract for various reasons without having to justify himself. To exercise this right, he must indicate his decision not to proceed with the sale in a registered letter with acknowledgment of receipt. He will have to respect a deadline of 10 calendar days, that is to say that weekends and holidays are taken into account. The only exception is that if the 10th day is a Saturday, Sunday or public holiday, the end of the period will take effect on the next working day. The withdrawal period begins the day after the notification of the sales agreement, according to the method of distribution:
- Registered letter with acknowledgment of receipt: the withdrawal period takes effect the day after the first presentation of the letter. Attention, a registered letter not withdrawn does not prevent the time limit from running!
- Hand-delivery: the withdrawal period takes effect the day after hand-delivery.
The withdrawal period does not concern the seller. Indeed, he is required to sell his property as soon as he has signed the preliminary contract.
What is the difference between a compromise and a promise to sell?
It is the commitment of the buyer that distinguishes the compromise from the promise of sale. Thus, the signature of the unilateral promise of sale binds only the seller while the synallagmatic promise of sale binds both parties.
In both cases, the seller is obliged to sell his property from the moment he has signed one of the two preliminary contracts. The buyer, if he has signed a promise to sell, has a legal period – 2 to 3 months – written prior to the contract to exercise or not the purchase option. On the contrary, the signed compromise commits the seller to sell and the buyer to buy the property.
