Agreeing on a selling price is only the first stage in a property transaction. The vendor and purchaser then have to sign a “compromis de vente” or “promesse de vente” to formalise other terms and conditions. Confusion can sometimes arise between the “promesse de vente” and the “compromis de vente” which are two different contracts that are signed once an offer has been accepted.
The “promesse de vente”
One of the contracts that the parties may sign is the “promesse de vente.” This is a unilateral sales contract which means it doesn’t bind both parties in the same way. In this contract, the vendor undertakes to sell the property to the buyer. In other words, the vendor commits to sell his/her property to said purchaser usually for a pre-determined period. In this type of contract, the vendor is not permitted to find another buyer. On the other hand, the purchaser is still allowed to find another property, during this pre-determined period.
However, subject to any conditional clauses outlined in the contract, a penalty is payable if the purchaser withdraws from the sale after the cooling off period (a sum equivalent to 5 to 10% of the selling price) to compensate the vendor for freezing the sale of the property for the duration of the contract. This same penalty payment also applies to the “compromis de vente,” another type of property sales contract. The “promesse de vente” can, therefore, be understood as a type of “option” to purchase for the buyer who, if he/she withdraws, will have to pay the vendor for the exclusivity he/she was granted.
In order to be legally valid, the agreement must be registered with the tax authorities. Furthermore, it must be “officially certified (by a notary) or privately drawn up and registered at the tax office within 10 days of signature. The registration fees usually amount to EUR 125. In addition, if the exclusivity period exceeds 18 months, the contract must be signed at a notary’s office.”
The “compromis de vente”
Another type of contract exists, commonly known as the “compromis de vente.” It is a “synallagmatic sales agreement.” Unlike the unilateral nature of the aforementioned “promesse de vente,” the “compromis de vente” is binding for both the seller and purchaser. The legal term “synallagmatic” means a “reciprocally binding obligation.” This document therefore constitutes an agreement to proceed with the sale, subject to the fulfilment of any conditional clauses included in the contract (obtaining a mortgage, for example.) As with the “promesse de vente,” if one of the parties wishes to withdraw from the contract, after the cooling-off period, he/she will be liable to pay a penalty charge.
But unlike the “promesse de vente,” the “compromis de vente” can be signed at an estate agent’s or a notary’s office.
However, notaries always like to draw attention to a key point: in the event of a dispute regarding the fulfilment of any conditional clauses, both parties will remain bound by the “compromis de vente,” unless otherwise agreed or decided by a court ruling, whereas in the case of a unilateral “promesse de vente,” if the purchaser decides against exercising his/her option to buy, the parties are under no further obligations.