Offers to buy or sell real estate are documents that are often hastily drafted by those involved in property transactions, whether they are acting as agents or making the offer themselves, in order to secure a property that is on the market as quickly as possible.
However, without a specific contractual arrangement, the parties cannot unilaterally withdraw from their agreement being finalised by means of a notarised deed. As a result, as soon as the offer to buy or sell – describing the property and indicating the price – has been accepted by the other party, it is impossible for either side to release themselves from their obligation without running the risk of a forced sale and/or the payment of compensation.
In practice, refusal to sign the notarised deed of sale is not unusual. In such circumstances, there are legal means of ensuring that the party in default does comply with their commitments.
The principle: enforcement or damages
First, the injured party can seek to have the sale enforced by the Court of First Instance, which can order the other party to complete the transaction. This will not be possible if ownership of the property offered for sale has already been transferred to a third party by a lawfully recorded notarised deed of sale, but this can be anticipated and prevented by implementing certain protective measures as quickly as possible.
If the other party persists in their refusal, the judgment of the court will prevail and act as the notarised deed of sale. However, this will mean that any transaction on the property is suspended for the duration of the proceedings, delaying the sale. In this situation, the injured party should make an additional claim for the harm suffered, given the unlawful refusal to act of the party in default.
An injured party who does not seek to enforce the sale can also refer the matter to the court to claim damages, without necessarily pursuing the transaction. This is the only alternative if, in the meantime, ownership of the property has been transferred to a third party by a lawfully recorded notarised deed of sale. The level of damages will either have been determined at the offer stage (and generally coincides with the amount of the deposit) or will be set by the judge on the basis of the harm actually suffered.
Exceptions: the repudiation clause and the family home scenario
Naturally, forced completion of the sale and claims for compensation cannot be enforced against a party who does not wish to complete the sale if a lawful repudiation clause has been included in the offer or preliminary agreement.
Indeed, there is nothing to prevent the parties from making a contractual provision for them to change their mind, with or without consideration; similarly, conditions precedent can be included in the offer and enable either of the parties to withdraw from the transaction if they are not fulfilled.
In general terms – although it is not always the case – offers with a repudiation option provide for compensation for the fact that transactions on the property are suspended to be paid by the party that decides to exercise it. In reality, because freedom of contract prevails, there are as many different situations as parties who provide for them, unless one of them effectively removes the substance of their essential obligations under the offer.
More specifically, it is important to be aware of the particular situation where the property concerned by the offer is the family home. As such, it enjoys special protection, theoretically preventing one of the spouses from selling it without consultation. Any sale that disregards this principle will be null and void.
Nonetheless, there can be some flexibility around the protection of the family home in favour of the primacy of the parties' agreement to a property transaction, for example by allowing the transfer of the bare ownership of the property despite the lack of consent of the spouse in the offer of sale.
It is therefore essential to be vigilant at the point of drafting or accepting an offer of sale or purchase that sets out and determines the parties' respective rights and duties throughout the sale process in the absence of any agreement to the contrary.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
