Preliminary agreement for the purchase of an apartment – take advantage of the mortgage loan offer

Buying a flat or house is a serious investment that can force buyers to take advantage of the mortgage loan offer to finance part of the costs involved.

Before a final notarial deed is concluded confirming the transfer of ownership of the property to buyers, a preliminary contract is usually signed. What provisions should it contain, in what form is it concluded and what are the consequences for the parties to the contract?

What is a preliminary contract?

In many cases, the buyer of the property cannot immediately conclude the relevant contract with the seller – a notarial deed for the transfer of ownership. In such a situation, a preliminary contract is usually signed. In the Civil Code, in art. 389, it was defined what such a contract actually is.

One or both parties undertake in it to conclude a designated contract (promised contract) in the future. It can be said that it is a document obliging the parties to conclude a final agreement. This is a preliminary declaration of intent in which the parties undertake to conclude a final property purchase and purchase agreement.

Most often, the preliminary contract for the purchase of an apartment is signed when, for various reasons, including financial agreements, the final contract cannot be concluded immediately. If after the conclusion of the preliminary contract one of the parties fails to fulfill the contract, its provisions allow the other party to effectively pursue its claims.

What should the preliminary purchase contract contain?

Buyers and sellers of apartments should know what the preliminary contract for the purchase of such property looks like. A template may be presented by one of the parties or a real estate agent if he/she participates in such a transaction. What should the preliminary purchase contract contain? Its basic elements are defined in the Civil Code.

Proper formulation of the provisions of the preliminary contract is very important because of the possibility of future redress by the parties.

The preliminary contract for the purchase of an apartment should contain a minimum of such provisions as:

  • determining the subject of the sales contract,
  • determining the parties to the contract – buyer and seller,
  • property price.

Due to the Principle of Freedom of Contracts, the parties may freely shape other provisions of the preliminary contract, although everything must comply with existing law. These rules cannot oppose the rules of social coexistence, as well as the very nature of the preliminary contract.

It cannot oblige the parties with a record that cannot be met in reality. In principle, the preliminary contract for the purchase of an apartment should indicate the provisions of the final contract, i.e. the final contract, signed in the form of a notarial deed. It is good to include in it:

  • data about the flat – its location, address, building condition, area, price;
  • personal data of the parties to the transaction – names, surnames, dates of birth, addresses, ID numbers;
  • deadline for concluding the final contract – although the provisions of the Civil Code do not require it.

The conclusion of the final agreement may not be demanded if no deadline has been set for the conclusion of the final agreement within one year from the date of the conclusion of the preliminary contract.

For the safety of the parties to the preliminary contract, it is worth including the maximum precise date of concluding the final contract and avoiding ambiguous wording as to such date. The date of the final contract can be determined in several ways:

  • providing the cut-off date by which the promised contract is to be concluded;
  • providing a specific date when the final contract is to be concluded;
  • by accurately marking the end of the period by which the final contract should be concluded.

You can indicate both the date of the conclusion of the final contract in the preliminary contract and the condition under which the final contract will be concluded.

The preliminary contract may include the payment of an advance or advance payment by the prospective purchaser of the property. It is very important to determine what the payment made by the buyer to the seller is in this situation.

What does the preliminary contract for buying an apartment on loan give?

The circumstance justifying the conclusion of a preliminary contract for the purchase of an apartment is taken by the potential buyer for a loan for an apartment. Banks, when granting a loan for the future purchase of the real estate, very often demand a form of security for the liability, which may be a preliminary contract for the purchase of a mortgaged flat.

Then it is treated as a reservation in a bank, i.e. it is known that the customer has every chance to buy a given property when granting a financial commitment. When applying for a mortgage at a bank, it is very often necessary to attach the said contract to the application.

The preliminary contract for the purchase of an apartment for a loan may include a provision that the promised contract will be concluded, provided the buyer receives a positive credit decision from the bank.

The cost of the preliminary contract for the purchase of an apartment – how is it?

We already know how important the preliminary contract is to buy a flat. How much does such security cost for parties? If the preliminary contract is concluded in the form of a civil law contract between the parties, it does not involve additional costs.

However, it is also possible to conclude a preliminary contract in the form of a notarial deed and then the contract is signed in the presence of a notary public, who charges a notary fee for drawing up the contract and certifying it. If only a preliminary contract is concluded with a signature authenticated by a notary public and the notary public does not check its content, the cost of its conclusion is a maximum of about USD 100 gross.

The final fee depends on, among others from the number of signatures to notarial certification. The tax for one signature is USD 24.60 gross. It is different in the case of a preliminary contract in the form of a notarial deed. It involves higher fees.

The notary’s remuneration, i.e. notary fee, depends on the value of the property. To this must be added the possible fee for the land and mortgage register application for claim disclosure – USD 246 gross. This cost is the notary’s tax for applying.

In addition, those concluding the preliminary contract in the form of a notarial deed will pay USD 150 of the court fee and USD 100 for copies of the notarial deed.

Leave a Reply

Your email address will not be published. Required fields are marked *