Preliminary purchase and sale: what it is and what it entails
A “preliminary contract of sale,” also called a “compromise,” is–like an offer to purchase–a contract that obligates the parties to sell and purchase a specific property through the final “contract of sale ” (purchase agreement).
This is a key step within the process that leads those interested in purchasing to actually become the new owner of the property in question.
In the next few paragraphs we will better understand what this step is, what it is for, and how it should be handled.
What is a preliminary purchase and sale agreement or compromesso
The preliminary real estate purchase and sale agreement usually follows the purchase proposal that the buyer makes to the seller of the house, should the proposal in question be accepted.
If the proposal does not bind the two parties by bonds of any kind and can be dissolved, revoked, rejected or contracted at any time through a real estate counterproposal , the compromise or preliminary is a true binding commitment between buyer and seller.
This, in fact, is the substantial and most important difference between proposed real estate purchase and preliminary sale. With the latter, the buyer and the seller formally commit to continuing the actual purchase and sale of the property: even if the buyer is not yet for all intents and purposes the new owner of the house, the compromise is the document that certifies that soon-or at any rate within the stipulated timeframe-he will be.
Useful documents for the preliminary of purchase and sale
Much of the documents you will find listed below do not relate solely to the real estate compromise, but rather are required of both the buyer and the seller as early as the proposal stage. Thus, it is likely that, having arrived at this stage of buying and selling, all these documents are already available and readily available to both parties.
However, here is a summary of the documents needed to formalize the preliminary purchase and sale agreement:
Documents concerning the house for the preliminary sale
- Cadastral plans;
- the act of provenance;
- the technical report of urban and cadastral conformity (required for the Deed but it is recommended to procure it for the preliminary)
- The building’s Energy Performance Certificate;
- Condominium documentation (if needed);
- Any copies of lease agreements (if needed and required in case of sale of leased property).
The documents concerning persons for the preliminary sale
- Valid identification documents;
- tax codes;
- certificates of marital status;
- Any certificates of divorce;
- Personal and tax data of the real estate broker.
Is it necessary to make a deposit or down payment during the preliminary purchase and sale?
No, as confirmed by Article 1326 of the Civil Code, it is not obligatory to make a deposit or down payment during the buying and selling stage, so not even during the preliminary. However, it is rare for a purchase and sale to be conducted without at least a down payment being made for protection and guarantee.
Usually this, moreover, is not paid during the real estate compromise, but well before, that is, at the stage of the purchase proposal. The most common case, in fact, is when a buyer accompanies the proposal with a security deposit, which will later become-at the time of the deed-a down payment to finalize the purchase altogether.
Usually down payments, to show the seller from the buyer the right credibility, cover at least 5-10% of the value of the property, but they can also be lower percentage, about on 2-3%. Down payments, when paid, are usually 20 or 25 percent of the value.
Be careful, however, not to confuse down payment and real estate down payment. Although both can be paid by the prospective buyer to the seller as early as the proposal stage, the former goes to protect both parties, while the latter serves as an actual down payment for the purchase of the house and does not serve as a guarantee.
What does it mean? That the deposit protects in case either party terminates the purchase and sale, after the compromise or an irrevocable purchase proposal. If the prospective buyer backs out, the down payment stays with the seller. If it is the homeowner who backs out instead, the buyer could demand up to double the deposit given as security.
Thedown payment, on the other hand, always reverts to the person who paid it, even if the contract was broken by the prospective buyer himself.
In any case, to succinctly answer the question posed by the paragraph, we can say that it is not mandatory to make deposits or down payments during the compromise.
This is either because they have already been paid at the proposal stage, or because the seller and buyer have decided to proceed differently.
Is it mandatory to register the preliminary of sale?
Registering the preliminary of purchase and sale is mandatory and must take place:
- Within 20 days after the stipulation of the same;
- within 30 days in the event that the conclusion of the document took place in the presence of a notary public.
Below are the average costs of contract registration:
- Fixed registration tax (does not vary according to the value of the property) of 200€;
- registration tax corresponding to 0.5% of the deposit and 3% of the down payment;
- 16€ revenue stamp for each 100 lines of document;
- revenue stamp for each attachment included within the document.
According to the law, the costs of registering the real estate agreement fall on the person who buys the property, unless seller and buyer agree otherwise–in fact, the parties often agree to split the costs, at least those concerning taxes and revenue stamps.
How much time elapses between compromise and deed?
This time distance is not regulated by law and depends on the agreements made between seller and buyer. Typically, this is about a 5-6 month wait, but this standard does not apply to every case.It is good to use the preliminary sale as an opportunity to best establish even these bureaucratic and logistical issues in a clear and transparent manner.