In purchases and sales of immovable property, the parties often agree to complete the sale not immediately but at a later date. This relationship, established for reasons such as payment of the price in instalments, the building not yet being complete or the approval of a loan being awaited, is secured by a preliminary sale agreement for immovable property.

Form requirement

The validity of contracts giving rise to an obligation to transfer ownership of immovable property is subject to official form. A preliminary sale agreement for immovable property must likewise be executed before a notary in the form of a notarial deed. An ordinary written agreement signed between the parties, or a document on which only the signatures have been certified by a notary, is not valid as a preliminary sale agreement. The price paid on the basis of an invalid agreement may be reclaimed under the provisions on unjust enrichment; however, transfer of the immovable property cannot be demanded.

Annotation on the title deed

A preliminary sale agreement may be annotated in the title deed register. The annotation makes the right of the promisee enforceable also against third parties who subsequently acquire rights over the immovable property. If no annotation has been made and the promisor transfers the immovable property to someone else, the promisee’s claim is, as a rule, converted into a claim for compensation only. It should also be borne in mind that the annotation loses its effect at the end of the period laid down by law.

Action for cancellation of title deed and registration

If the promisor refuses to complete the sale, the promisee may, provided that they have performed their own obligation or tendered performance, bring an action for cancellation of title deed and registration and request that the immovable property be registered in their name. The court judgment takes the place of the sale transaction. The general limitation period applies to this action; the start of the period is determined by reference to the performance date agreed in the contract.

Pre-paid housing sales

Sales in which all or part of the price of a dwelling that has not yet been built or completed is paid in advance or in instalments are, where they qualify as consumer transactions, subject to the provisions on pre-paid housing sales in Law No. 6502 on Consumer Protection. In these contracts:

• Detailed pre-contractual information is mandatory.
• The consumer has a right of withdrawal within a certain period without giving any reason.
• The delivery date of the dwelling and the limits of the compensation payable if the consumer rescinds the contract are regulated by the Law.

Assessment

A preliminary sale agreement is an instrument that protects the buyer over a long waiting period; however, this protection works only if the agreement is properly established. A promise that is not executed before a notary as a notarial deed and not annotated on the title deed often leaves the buyer, in practice, with nothing more than a lengthy lawsuit to recover the price.