Sales promise or compromise: what are the differences?

Buying real estate is a crucial step in the life of any individual. During this process, several legal steps must be followed, including the signing of a document called Promise to sell or Sales agreement.

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Although these two terms are often used interchangeably, they have major differences that are essential to know in order to understand the rights and obligations of the parties. In this article, we are going to explore the main differences between the Promise to sell And the Sales agreement, and explain to you how these contracts work in the context of a real estate transaction.

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The promise to sell: what is it?

A unilateral promise to sell

La Promise to sell is a legal document in which the seller undertakes to sell a property at a fixed price, provided that the buyer accepts the offer. In other words, it is a contract unilateral, because only the will of the seller is shown. This type of contract requires the seller to sell, but it is not yet binding on the buyer, who may choose not to buy the property.

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In a unilateral promise to sell, a security deposit is often paid by the buyer to demonstrate their seriousness. This deposit is generally equivalent to 5 to 10% of the selling price. In case of withdrawal by the buyer without legitimate reason, this deposit may be kept by the seller, but if he decides not to sell, he will have to pay damages to the purchaser.

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The immobilization allowance

When the buyer signs a promise to sell, he may be required to pay a immobilization benefit to reserve the property. This compensation is a sum of money that “blocks” the sale. If the buyer decides not to buy, he will lose this amount, unless force majeure occurs. Conversely, if the seller retracts before the signing of the authentic instrument, the buyer can recover the compensation or, in some cases, ask for damages.

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The withdrawal period

Once the Promise to sell signed, the buyer benefits from a Withdrawal period of 10 days. Ce Withdrawal period starts from the day after the buyer receives the promise to sell, which allows him to cancel the sale without having to justify a reason and without financial penalty. However, the buyer must be informed of this period in the contract, otherwise it may be extended.

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The sales agreement: what is it?

A bilateral contract

Contrary to the Promise to sell, the Sales agreement Is a contract bilateral, which means that it engages both parties: the seller and the buyer. By signing a Sales agreement, the buyer agrees to buy the property, and the seller agrees to sell it to him. This contract is therefore a more advanced step than the Promise to sell.

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Suspensive clauses

One of the essential aspects of Sales agreement is the insertion of suspensive clauses. These suspensive conditions make it possible to make the execution of the sale dependent on the fulfilment of certain conditions. For example, a suspensive clause may stipulate that the sale is subject to the buyer obtaining a loan. If this condition is not met, the contract will be cancelled and the buyer will be able to get his security deposit back.

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The security deposit

When signing the Sales agreement, a security deposit is generally paid by the buyer, generally in the order of 5 to 10% of selling price. This deposit is a guarantee of seriousness and trust. However, if the buyer withdraws without good reason, this amount may be lost. The security deposit is also a guarantee of security for the seller, who is assured that the buyer is genuinely interested in buying the property.

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The compromise and the signing of the authentic act

The Sales agreement is usually followed by the signature ofauthentic act, which formalizes the sale. THEauthentic act is drawn up by a notary, and that is when the sale becomes irrevocable. Before the signing of this act, the sale may still be cancelled under certain conditions, such as the non-completion of suspensive clauses.

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The essential differences between a promise to sell and a sales agreement

Commitment of the parties

The first major difference between Promise to sell And the Sales agreement lies in the degree of commitment of the parties. In a Promise to sell, only the seller is committed, while the buyer is not yet linked to the transaction. On the other hand, in a Sales agreement, both parties are firmly committed to completing the sale, subject to the completion of suspensive clauses.

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Withdrawal period

The buyer benefits from a Withdrawal period of 10 days as part of a Promise to sell, which is not the case in a Sales agreement. Once the Sales agreement signed, the buyer is committed, unless a suspensive clause does not happen, making the cancellation of the sale possible.

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Indemnities and consequences in case of withdrawal

In a Promise to sell, if the buyer retracts within the 10-day withdrawal period, he loses nothing, unless a immobilization benefit has been paid. On the other hand, in a Sales agreement, the buyer may lose his security deposit if he renounces the purchase without valid reason, or if the suspensive conditions are not met.

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Registration with the tax office

Another important aspect of these contracts concernsregistration with the tax office. In fact, when the sale is concluded by a Sales agreement, the real estate agent or the notary ensures that the transaction is registered with the tax authorities, which allows the transfer of ownership to be formalized.

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Conclusion

Although the terms Promise to sell and Sales agreement are often confused, they refer to two very different types of contracts.

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La Promise to sell only engages the seller, with the possibility for the buyer to withdraw within 10 days, while the Sales agreement is a bilateral contract in which both parties are involved.

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Before signing such a contract, it is essential to fully understand the legal implications, especially with regard to suspensive conditions, the security deposit and the possibility of withdrawal. One real estate agent competent can assist you to help you make the right choice and secure your real estate project.

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