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Promise of sale agreements: what are they and for how long are they valid?
Promise of sale agreements, or as commonly referred to in Malta, 'konvenji', have become a staple and autochthonous feature of Malta's real estate market. By means of a promise of sale, one party promises to transfer an immovable to another party at a determined price, whereas the other party promises to buy that immovable and pay the agreed price. A 'konvenju' therefore envisages a convergence of two unilateral promises into a bilateral private agreement. These agreements contemplate a timeframe, agreed upon by the parties, within which said parties' promises are to be performed. This timeframe allows the parties to place themselves in a position whereby they are able to appear on the final deed of sale of the property. Thus, during this period, the parties would acquire any necessary financing or development permits, examine the root of title of the property, or redeem any burdens on the property such that it is sold free and unencumbered.
Enforcing a promise of sale: what happens if the promise of sale expires without the property being sold?
If the parties do not appear on the final deed of sale of the property within the timeframe agreed upon in the promise of sale agreement, the promise of sale agreement expires. The parties can no longer enforce the promise of sale by obliging the other party to honour its promise. Moreover, upon expiration of the promise of sale, the parties revert back to the state they were in prior to the promise of sale (the 'status quo ante'). Judgements of the Maltese courts have held that consequent to this, any amount paid on the promise of sale agreement on account of the price by the party promising to buy shall be returned thereto.
These repercussions can however be avoided if the parties agree to extend the timeframe of the promise of sale, allowing more time for the purchase of the property to materialise. The question which this begs, however, is the following: what happens if one party wishes to extend the promise of sale, and therefore keep the property deal alive, and the other party refuses? Would the latter party be allowed to occasion the expiration of the promise of sale, thus allowing him to back out of his obligations with impunity?
Legal procedure for enforcing a Promise of Sale (Article 1357)
Article 1357 of the Maltese Civil Code is intended to protect and keep abreast the right of the party who wishes to carry out his promise, when such party is confronted with the other party's unwillingness to appear on the deed of sale within the agreed timeframe. This provision requires that the party intending to carry out the promise of sale presents, before the expiration of the promise of sale, a judicial act (typically in the form of a judicial letter), to be served on the other party, requesting the latter to carry out the sale of the property as agreed. Should the defaulting party not adhere to this request, the other party is required to file a lawsuit, within 30 days from the expiration of the promise of sale, requesting the court either to order the defaulting party to appear on the deed of sale, or if such sale cannot be carried out, or order the defaulting party to pay damages.
In practical terms, therefore, when one of the parties to a promise of sale agreement is faced with the impending expiration of such agreement due to the other party's unwillingness to extend same, two steps must be followed for the promise of sale not to fall through. Firstly, a judicial act must be presented in court, the practical effect of which will be to extend the effect of the promise of sale by a month. Within that month, the defaulting party may comply and appear on the deed of sale of the immovable. Otherwise, the other party would be left no choice but to institute a court case against him.
Can a typo prevent enforcement of a Promise of Sale?
The intricacies involved in the enforcement procedure under Article 1357 of the Maltese Civil Code were scrutinised in the judgement dated 15th July 2025, in the names Pentagon Properties Limited vs Reverend Joseph Zammit et. The parties to that case had entered into a promise of sale agreement, wherein the plaintiff company promised to buy from the defendants, who promised to sell to the plaintiff company, a property in Gozo. The promise of sale had been in force for over 3 years, when one of the defendants, a promised seller, refused to extend the agreement further.
At that juncture, the plaintiff company adopted the procedure under Article 1357, and appeared to have ticked all the boxes. It filed a judicial letter requesting that the defendants appear on the deed of sale, and when they failed to do so, it filed a lawsuit within 30 days, so that they are ordered to so appear by the court.
However, it was on the inadequacy of the procedure followed by the plaintiff company that the defendants heavily relied on in their defence. The defendants pointed out that the judicial letter meant to be filed before the expiration of the promise of sale did not contain the correct address of the tenement to be sold: it had the correct locality, the correct street, but the incorrect house number. Thus, the defendants argued that since the procedure in Article 1357 was not correctly followed, the promise of sale was to be considered expired, and cannot therefore be enforced.
While the court of first instance skirted around this dilemma, the Court of Appeal addressed it directly. It considered that the law merely required that the judicial act presented called upon the other party to carry out the sale. The law did not impose any formalities as to how the object of the sale is to be identified. Neither does the law require any reference to the price or the terms and conditions of the promise. All the law required was that the act clearly identifies what was to be sold in terms of the promise, which identification can be made indirectly by referring to the promise of sale, or directly by mentioning the object being sold. What mattered was that the recipient could identify, without any doubt, the object it was being called to sell or purchase.
Applying this reasoning, the Court of Appeal held that the procedure followed was valid. It opined that the letter contained the correct details of the promise of sale, the parties, and the street where the tenement is located. There was no other promise of sale operative between the parties, and thus there could not be any doubt as to which property was being referred to. The Court opined that while it is expected that judicial acts are carefully drafted, it should not allow parties to circumvent their obligations because of small mistakes. The Courts are not in favour of exaggerated formalisms, and lean towards saving judicial acts wherever they can.
Having found that the procedure followed was valid, the Court of Appeal concluded that the acts of the case should be remanded back to the court of first instance, so that it could decide the merits of the case, including whether or not to uphold plaintiff company's request to have the defendants ordered to carry out the sale.
Conclusion
A number of lessons can be learned from the judgement in Pentagon Properties Limited vs Reverend Joseph Zammit et. First and foremost, when confronted with a refusal to extend a promise of sale, a party must act promptly and in due time to make sure that his rights at law are conserved. Secondly, whilst the procedure envisaged by the law to keep the promise of sale alive is a strict one, parties cannot profit from small drafting mistakes to bypass commitments. Last but not least, while Maltese courts tend to consider nullity as an extreme measure, in any case, judicial acts are to be drafted with extreme caution and diligence, these being the foundations for the enforcement of people's rights.
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.
