Updated: 01/08/2022
If you visited a real estate as a potential buyer, you might noticed that the seller or the agent both wanted you to commit as fast as you can. They may wanted you to to give deposit or to sign a letter of intent, maybe both. While the overall picture of the real estate (or the enthusiasm of your co-owner) may strengthen the impression that you will miss an opportunity if you don’t commit as soon as you can, the worst decision can be made in this phase of real-estate buying.
As much as being fast is important to you to make commitments the less safe it can be legally. It is also true the other way: if you give too much importance to regulate every single detail in the course of making an offer you may miss a good buy. The truth is at halfway, but by using the appropriate methods you don’t have to give up on being fast and legally safe at the same time. The following variations can occur in the course of making an offer:
In this case a well-written letter of intent with grief money can be a good solution. Such well-written letter of intent includes the data of the seller and the buyer, data of the real-estate, purchase price, the expressed intent to buy and sell. It should also include the deadline for concluding the final sale & purchase agreement, the date of signing and the signature of the parties with the signature of two witnesses (or only the parties’ e-signature if they undersign an e-document).
The grief money is not handed over while signing, but if parties fail to conclude the final sale & purchase agreement before the deadline, the party who is responsible for such failure shall pay the grief money to the other party.
The title deed of the real-estate has to be examined even before the signing a letter of intent without deposit. If there is no time or possibility to do that, the minimum requirement is to ask for a written statement of the seller regarding the real estate’s legal status to her best knowledge and to stipulate that if later the title deed shows otherwise you can lower the price or terminate the letter of intent without paying the grief money.
Deposit can be given before the final agreement which is fairly common. In this case you cannot skip checking the title deed and talking to a lawyer before you pay the deposit. While giving deposit can be a substantial financial risk for you it is highly recommended to hire a lawyer to write or overview the letter of intent. The letter of intent can be signed along with the signature of two witnesses (or only the parties’ e-signature if they undersign an e-document).
If the failure to conclude the final agreement is the responsibility of the seller she shall pay you the deposit two times. In practice such termination can lead to legal disputes so it is recommended to pay the deposit to you lawyer escrow account instead of the seller’s bank account to be extra safe. The escrow agreement shall contain the stipulation that the lawyer is only permitted to transfer the deposit to the seller if the final agreement concludes.
You will need a pre-contract if you would prefer to pay the deposit on complex conditions or you already agreed on terms which require exact phrasing and these terms shall be incorporated in the final sale & purchase agreement as well. Formally the pre-contract has to be written and countersigned by a lawyer and should be signed in front of a lawyer (or do remote signing).
The terms of the pre-contract cannot be left out from the final agreement, only if both parties agree to. Otherwise all stipulations of the pre-contract shall be incorporated to the final sale & purchase agreement. In opposition to the letter of intent, the countersigned pre-contract has legal traits that exclude or make difficult to challenge the agreement afterwards.
Even you want the fast, the safe or both solutions at the same time my office will reduces your legal risks to the minimum. For further information or offer contact me:
📞+36304572289
📧drszalai@drszalailegal.hu
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