What does an apartment presale contract look like?

Before concluding the main contract, the buyers should familiarize themselves with all the documents, check the information about the property, its legal status and much more. In order to comply with the agreements between the parties, an apartment presale contract is concluded.

Concluding a presale contract with a notary is the safest, most reliable and legally correct way to acquire a living space. But not many people understand what a presale contract is, why it is necessary and how to draw it up correctly.

What is a presale contract?

A presale contract is a document confirming the intentions of the seller and the buyer to conclude the master contract for the sale of real estate at some point. Such an agreement is concluded for several reasons:

• the contract is pre-checked and notarized, so the interests of both parties are protected;
• the seller can prepare all the necessary documents and the property itself for sale in a leisurely fashion (remove furniture, complete debts for utilities, etc.) without the need to look for a buyer anymore;
• the buyer has enough time to receive the amount necessary for the purchase from the bank;
• upon making a deposit, both parties receive certain guarantees that the deed will take place.

To sign the presale contract, it is necessary to provide the presence of all parties. If the object is owned by several people in equal shares, all the owners should come to conclude the transaction. The same applies to buyers. If the property is sold by a married person, there should be written permission from the husband/wife.

An apartment presale agreement can be concluded if the seller has a complete package of the following documents:

• passport;
• taxpayer ID number;
• marriage/divorce certificate;
• documents of entitlement – certificate of title, certificate of accession to the heirship, deed of gift, sales contract.

Besides, all property owners should have original documents. If the apartment has three owners, each of them should be present personally at the conclusion of a presale contract with their passports and TINs.

When signing the presale contract, you should carefully review all the documents, check the data in them, make sure that all photos are pasted into the passport. The notary should check the apartment in all the registers – whether it has been pledged, whether it is under arrest, etc.

What is the difference between a presale contract and a master one?

The main difference between the presale contract and the master one is that the preliminary one does not give rights and obligations related to the acquisition of property. Such an agreement confirms the intentions of the parties, but at the same time does not actually bind to anything.

Advance agreement

An advance agreement for sale of apartment is often confused with a deposit agreement. But in fact, there is a significant difference between these two types of contracts. An advance payment is the amount that the buyer transfers to the seller as part of the upcoming payment. At the same time, the advance payment does not have a security function. The buyer can accept it at any time before the conclusion of the master contract, and the seller can give it at any time. Put it otherwise, an advance agreement for sale of apartment does not bind the parties in any way, but only confirms the fact that the buyer has already contributed part of the required funds. If, after making a down payment, one of the parties refuses to buy/sell an apartment, then penalties are not applied to it.

The down payment can be used by the seller to pay off utility bills.

Deposit agreement

The deposit is transferred from the buyer to the seller separately from further payment under the master contract. This is done in order to confirm the commitment of both parties. For example, a buyer has found a suitable housing option, but there are still several applicants for this object. In this case, before the conclusion of the main agreement, a deposit agreement is signed for the purchase of an apartment, which performs a security function. If the seller sells the apartment to another person, they will have to return the deposit in double size. Thus, this agreement was invented in order to provide for the parties’ compliance with the agreement.

Important to know

The presale contract should contain the following information:

• complete information about the seller and the buyer (full name, passport data, year of birth, TIN);
• all obligations of the parties to conclude this agreement;
• the amount of the deposit or down payment;
• information on the exact date of the signature of the master contract – usually the term for which it should be concluded is indicated;
• the exact cost of the property;
• circumstances under which it is possible to terminate the contract without having to pay fines;
• complete information about the property – total area, number of rooms, address, technical inventory bureau plan, etc.

Experts strongly advise against set too low apartment price to reduce tax payments. In many cases, this desire to save several hundred dollars results in irreversible consequences. For this reason, it is recommended to indicate the amount that will be transferred to the seller in the presence of a notary in the presale agreement.

Sometimes the parties make mistakes and inaccuracies while concluding a new contract: they do not comply with its form, do not clearly indicate information about the living space, confuse a deposit and down payment, forget to agree on the value of the property and other important aspects. All this can lead to extremely unpleasant consequences – for example, the rescission of contract or even to legal proceedings. In order to avoid this, it is important to clearly and in detail indicate everything, check the information of the parties. At the same time, the presale agreement should protect the interests of both the seller and the buyer.

How and in when can a presale contract be terminated?

The presale contract expires in the following cases:

• the master contract terms have passed;
• the master contract has been concluded;
• the presale contract was terminated.

There is a general rule that a presale agreement cannot be terminated unilaterally without any reason, otherwise there is no sense in such a document. However, the parties can agree and indicate the grounds for the termination of contract with or without penalties in the contract. Mostly the reasons for the termination of the contract without penalties are situations that cannot be influenced in any way and cannot be foreseen. For example, a deposit contract is drawn up for the purchase of an apartment, but the buyer wants to get a loan for housing. However, at the last moment, the bank that had previously approved the mortgage, refuses to provide it.

Often, unilateral termination of the contract is possible, but only with penalties. The deposit is returned to the buyer or the seller gives the deposit double. If, after the conclusion of the presale contract, the buyer learns that the seller has deliberately hidden important information about the apartment, without informing of the shortcomings or inaccuracies in the papers, the buyer may demand termination of the contract with payment of the penalty set in the contract.

There are situations when the seller terminates the contract unilaterally, but at the same time refuses to return the deposit/down payment, let alone pay penalties. In this case, the buyer should petition to civil court. The court will consider all the circumstances of the case, examine the evidence and make a decision. If the presale contract was drawn up correctly, the court will in any case decide in favour of the complainant, and the seller will be obliged to return the money at double rate, and pay the litigation costs.