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Forms of contracts for the purchase of real estate from the primary market

Forms of contracts for the purchase of real estate from the primary market

The purchase of a residential property from the primary market is associated with the need to complete many formalities. Agreements that the client concludes with the developer at various stages of the investment play a key role in this process.

Reservation Agreement

The purpose of the reservation agreement is to express the willingness to acquire a given property. It is signed prior to the conclusion of the preliminary and development agreement. For the client, it is a kind of guarantee that the apartment in question will not be sold to another person. Attractive offers from developers are very popular, therefore booking a flat or a house in the form of an appropriate contract is the most reasonable move.

The construction of the reservation agreement is based on the principle of freedom of contract. It has no definition in Polish law. In practice, two types of this document are distinguished, namely:

  • a reservation agreement containing elements of the preliminary agreement - under this agreement, the parties have the right to pursue claims in the event of failure to perform certain obligations,
  • a reservation contract without elements of a preliminary contract - it is only a declaration of purchase of the property, and therefore its termination does not entail any consequences.

Due to the lack of legal regulations, there is no single top-down model of the reservation agreement, but it is assumed that it should contain such elements as:

  • date and place of its conclusion,
  • data of both parties,
  • transaction information - including real estate information,
  • the duration of the reservation,
  • the price of a flat or house,
  • the amount of fees: reservation fee, down payment or advance payment,
  • confirmation of payment of the reservation fee, down payment or advance payment,
  • developer's statement on the legal status of the premises,
  • signatures of the parties to the contract.

On this occasion, it is worth pointing to the differences between the booking fee, deposit and advance payment. The booking fee is non-returnable - if the client decides not to purchase the property, it is forfeited to the developer. In turn, in the case of an advance payment, the developer is obliged to return the entire amount in the event of failure to comply with the contract. With the down payment, the case is that failure to perform the contract may result in the injured party claiming a double amount of the deposit. The exchanged fees are included in the sale price, provided that an appropriate provision was made in the reservation agreement.

Preliminary agreement

The preliminary contract is an agreement under which the parties undertake to sign a designated contract - this is what Art. 389 of the Civil Code. With regard to the purchase of real estate from the primary market, it is a developer contract. The validity of the preliminary contract depends primarily on its content - it must contain essential provisions of the final contract. The regulations do not specify the clear wording of this document, but it must contain:

  • the date and place of the contract,
  • data of the parties to the contract,
  • description of the real estate with its transaction price,
  • the amount of the advance or deposit,
  • deadline for signing the relevant contract,
  • signatures of the parties to the contract.

In addition, it is recommended to include in the preliminary contract, inter alia, records relating to modifications to the property under construction or interest on arrears in payments made by the buyer.

When concluding a preliminary contract, one should remember about the possibility of introducing additional provisions to it and that it is not required to conclude it in the form of a notarial deed. Of course, for many reasons it pays off to sign the said contract with a notary public, because it then provides the basis for an entry in the land and mortgage register and for judicial enforcement of the final contract. In such an arrangement, the developer cannot sell the property to another client at a higher price. Failure to perform the provisions of the contract by one of its parties gives the other party the right to withdraw from the contract.

Development contract

The development agreement obliges the developer to transfer ownership of the property to the buyer. The principles of its operation are defined in the Act of 16 September 2011 on the protection of the rights of the buyer of a flat or single-family house, commonly referred to as a developer agreement. According to its provisions, the most important elements of the development agreement are:

  • date and place of conclusion of the contract,
  • data of the parties to the contract,
  • real estate acquisition price,
  • information on real estate with particular reference to:

- plot area,

- legal status of the property,

- property location,

- location of the premises in the building,

- the size of the premises and the layout of the rooms in it,

- scope and standard of finishing works,

  • the date on which the ownership rights to the real estate will be transferred to the buyer,
  • the amount and terms or conditions for the payment of cash benefits by the buyer to the developer,
  • information relating to:

- housing escrow account,

- bank or insurance guarantee,

- building permits - permit number and designation of the authority that issued them,

- the date of commencement and completion of the development investment,

- rules for withdrawing from the contract,

- the amount of interest and contractual penalties,

- how the area of ​​the property is measured,

- the date and method of notifying the buyer about the receipt of the property,

- receipt of the information prospectus with attachments by the buyer and familiarization with their content,

- the developer's obligations (construction of a building, separation of a flat, transfer of ownership rights, etc.).

Note: the development contract must be in the form of a notarial deed, otherwise null and void.

Sales agreement

The last type of contract when purchasing real estate from the primary market is a contract of sale signed at a notary. On its basis, the buyer becomes the legal owner of the property. The document must primarily include:

  • statements on the completion of the provisions of the developer agreement,
  • description of the legal status of the property,
  • description of the documents required to establish separate ownership of the premises,
  • settlement of amounts paid by the buyer at various stages of the investment,
  • rules for the use of common parts of the property.

The property buyer may encounter various contracts. It is worth knowing in advance what they are and what they refer to.

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