Sell

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BE Selling Guide

In theory, a seller can set any price at which the property is to be sold. In practice however, most sellers resort to real estate agencies to value the property and recommend a selling price to the owner after considering the local real estate market, prices of similar properties and current pricing trends. In fact, BENESTATES as a real estate agency take out local press advertising, place property details on our website and/or feature the seller’s property on our publications.

Once a prospective purchaser has been identified, the next step for the seller is to enter into a Promise of Sale Agreement.

Promise of Sale Agreement

The Promise of Sale (POS) Agreement is a very important phase in the acquisition process in that it sets out the conditions under which the property shall eventually be purchased. The contract is typically concluded between the legal representatives of both buyer and seller based on prior negotiations.

Generally speaking, a standard promise of sale agreement includes:

1. Details of the contracting parties;
2. Detailed description of the property;
3. Details on payment of a deposit;
4. Minimum conditions surrounding the purchase;
5. Agreement on the remaining works to be undertaken (if any);
6. Clauses on payment due to the estate agent (if any);
7. Condition that on final deed, the vendor will warrant peaceful possession according to law;
8. Date by which the Final Deed needs to be signed;
9. Authority to the Notary to register the Promise of Sale Agreement with the Commissioner of Inland Revenue.

Customarily the promise of sale agreement has a term of validity of three (3) months; however, the parties are free to agree on a shorter or a longer period. If no time frame is indicated, the promise of sale agreement has a validity of ninety (90) days. During this period, all the conditions in the promise of sale on which the Final Deed rests must be fulfilled.

It is essential that one makes a distinction between the promise of sale and the Final Deed that completes the sale. This distinction is important both from an academic and practical perspective in that upon signature of the promise of sale agreement, there is no change in ownership, and the prospective buyer becomes the effective owner only upon the signature of the final deed of sale. Thus, following the promise of sale agreement stage, risk would still lie with the prospective vendor.

What happens during the term of the Promise of Sale?

During the three (3) month term, or as otherwise agreed upon between parties, both parties must ensure that the conditions on which the final deed of sale are fulfilled.

Usually, one of the conditions set in the promise of sale agreement is that the property is transferred in good title and that there are no court orders or third parties that may prevent the sale or the grant of an absolute and proper title. Another condition usually imposed is that, unless stipulated otherwise, the property is transferred with vacant possession. In order to ensure that this is really the case, the Public Notary and legal advisors of the purchaser would carry out the necessary searches. It is also customary for the buyer to subject the promise of sale agreement to the issue of a bank loan. In fact, signature of the Final Deed of Sale is usually made conditional on the issuance of a sanction letter by the bank which confirms that such loan will be granted to the buyer.

Since property may be sold even prior to completion, it is common that one of the conditions in the promise of sale agreement states that the property is to be completed by a set date. Failure of the owner to complete the property by the agreed date will usually terminate the obligation of the purchaser to appear on the Final Deed of Sale.

The Final Deed of Sale

Once all the conditions of the promise of sale agreement are satisfied, the public notary drafts the final deed of sale which is then signed by both parties. At this stage, the balance due (determined by taking into account the purchase price and any deposits paid on account) is paid to the vendor. In the case of a bank loan having been obtained by the buyer, the balance is not collected directly from the buyer but the seller is paid by the bank on account of the loan granted to the buyer. The keys of the property are then handed over to the purchaser or his representative.

In cases where a bank loan is taken out for the acquisition of the property, bank representatives appear on the Final Deed of Sale in order to sign the relevant documentation. In this case the Final Deed is usually divided into two parts, with an agreement made between the bank and the purchasers, and a second agreement made for the purchase of the property.