The preparation of the purchase agreement entails several pitfalls that can jeopardize or at least slow down the entire transfer. In our article, we will try to unmask these pitfalls and focus on how to write a real estate purchase contract so that nothing will hold us back. Buying a property is not just a legal step, but also a major life decision, so it is a good idea to prepare for it with the help of experts.
What do the contract and its terms and conditions actually entail?
Accurate identification of the contracting parties is essential to the smooth running of any property purchase. Every valid real estate purchase contract must include at least two parties who have agreed to certain terms and, as a result, have signed such a contract. For the purposes of registration in the Land Registry, it is necessary to clearly specify the person selling and the person buying. It is important that the identification details of both parties are given, preferably taken from their identity cards.
What must be stated? Record the name, surname, birth number, permanent home address and, where applicable, the delivery address of the seller, as well as the name, surname, birth number, permanent home address and, where applicable, the delivery address of the buyer.
Just as it is necessary to describe the parties entering into the contract in detail in the contract of sale, it is also important to precisely define the object of purchase, i.e. the property to be transferred. When buying real estate, it is also necessary to pay close attention to the correct description of the thing to be bought, so that no confusion can arise. It is not enough to simply state the address where the property is located, but above all the data from the Land Registry, such as the plot number, the area of the land, house, apartment or other property, the number of the housing unit and other specifications that clearly define the property.
An important part of the property purchase agreement is the clause on the transfer of the property to the new owner. For example, it may read as follows: “The sellers undertake to hand over the property to the buyer, including all relevant keys, on a protocol within 10 working days of the submission of the proposal to authorise the registration of the title by the competent cadastral office.”
The contract of sale should include an obligation to draw up a handover report indicating any defects and the state of the common meters (water, electricity, gas). Defects not indicated in the protocol may be very difficult to claim later.
In the context of a property purchase, the handover often takes place after registration in the Land Registry, and this moment should be precisely defined in the contract. The contract should also make clear at what point the obligation to pay for the relevant media passes. This is sometimes stated more generally as follows: The sellers agree to pay all costs associated with the use of the property up to the date of handover and to pay any arrears of charges (including deposits) for the provision of services associated with the use of the property incurred up to the date of handover. The Buyer, in turn, undertakes to reimburse the Sellers for any overpayment of charges (including deposits) for the provision of services connected with the use of the Property incurred up to the date of handover.”
Compliance should be secured by a reasonable contractual penalty for each day of delay in handover. However, beware of exorbitant penalties that ultimately do not pay off for either party (see below).
Are you planning to buy or sell an apartment, house or land? We will prepare a legally flawless real estate purchase contract that will protect your rights and ensure a smooth transfer of ownership. We’ll take care of all the details – from the exact identification of the parties and the property to the handover clauses and any penalties.
The purchase of real estate usually includes the transfer of movable equipment if it is explicitly stated in the contract. The purchase contract should also specify exactly what is being transferred in addition to ownership of the home itself. There have been known cases where the buyer has automatically assumed that the seller will leave built-in wardrobes, kitchen units or specific appliances in the flat. An oral agreement is often inconclusive and therefore these facts should also be explicitly stated in the contract, e.g. in the form of a list.
In general, you should also be wary of any contractual penalties. Incorrectly set penalties can make the whole property purchase significantly more complicated and lead to unnecessary disputes. They can be excessive, unbalanced (e.g. only for the buyer’s breach) or, on the contrary, insufficient (not even covering the seller’s time costs).
All of the above applies to an apartment, a cooperative apartment (cooperative share), a house, but also to a limited extent to land.
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A property purchase agreement must be carefully drafted to avoid unnecessary complications in the transfer of ownership. Correct and complete identification of the contracting parties, including all identifying information, is key, as is an accurate description of the property being transferred according to the land registry data. An important part of the contract is also the agreement on the transfer of the property – when it will take place, in what condition and with what details (e.g. handover protocol, condition of the meters). The contract should explicitly state what is being transferred with the property (e.g. built-in furniture or appliances), as well as reasonable contractual penalties for breach of duty. A well-drafted contract minimises the risks associated with buying a property and helps protect both parties to the transaction.
Are you about to take out a mortgage? Then you must not miss our series of articles on Mortgage – Frequently Asked Questions and Answers.
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Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
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