Frequently Asked Questions

What is a promissory purchase and sale agreement?

Definition

It is common for the parties to enter into a promissory sale and purchase agreement (PSPA) in order to set out the conditions which must be fulfilled prior to the acquisition of the real estate.

PSPA is a formal agreement whereby the seller and the buyer oblige themselves to sign a definitive purchase and sale contract within a certain timescale and price.

Form and registry

The PSPA has to be drawn in writing and can, under certain circumstances, be registered with the Real Estate Registry Office to protect the buyer against any subsequent applications to register mortgages or other encumbrances against the real estate.

Content

The content of the agreement is negotiable. However, essential elements include:

  • Identification of the parties, including their nationality, date of birth and marital status;
  • The exact identity of the property (including the cadastral information); and, in the case of buildings, details of the building permits (authorisation of use, including its number, date and issuing entity);
  • Price;
  • The date the definitive contract will be signed.

 

Deposit

As a rule a deposit is stipulated in a PSPA thal will correspond to a certain amount of money (typically 10% of the total value) paid upon signature.

If the seller fails to fulfil his duty to sell will have to pay double the deposit received.

If it is the purchaser, he loses the deposit made.

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