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How to prepare a real property sale/purchase agreement?


English

2013-08-28

Polish law governs the means of drafting a real property sale/purchase agreement.

 

First and foremost, it is important to remember that it has to be drawn up in the form of a notary deed under the pain of nullity. Before signing the real property sale/purchase agreement, the parties usually draw up also a preliminary sales/purchase agreement, where they enter into obligation of concluding the final agreement in the future.

 

Preparation of both agreements incurs additional costs, which accompany each sales/purchase process. The costs include, for instance:

 

• Land and Mortgage Register fee;

• notary's remuneration for the performance of certain acts in law;

• real estate agent’s commission – if the buyer uses their assistance;

• tax on the civil law transactions, paid always when the property is purchased on the secondary market.

 

What does the real property sale/purchase agreement entail?

The sale/purchase agreements oblige the seller to transfer the ownership rights to the real property to the buyer. The buyer is obliged to pay a previously specified sales price to the seller.

 

A number of contractual obligations and conditions may be formulated freely in such agreements, but there are certain obligatory elements, which cannot be excluded from it, or else the whole agreement will be null and void. It is a good idea to show the draft of the agreement to the legal advisor, or use the specimen provided for free by some reliable institutions such as Polska Federacja Rynku Nieruchomości, for instance.

 

1. The real property has to be defined as a Subject Matter to the agreement.

Basic information of the property should be also provided. Such information should include:

 

• the price of the property;

• Land and Mortgage Register number;

• total area of the property;

• detailed description of the parties to the agreement, including forenames and surnames, addresses of residence and stay, PESEL numbers;

• application for the appropriate entry in the Land and Mortgage Register, which should be submitted to the competent division of a District Court afterwards;

 

it is worth to mention here, that under the amended Act on Land and Mortgage Register and Mortgage, such application may be submitted via Internet.

 

2. Additional specifications

All additional information and arrangements concerning the transaction should be provided in order to ensure the proper conduct of the parties, particularly:

 

• statement concerning the specific date of delivery of the property;

• bank account number, where the payment should be transferred;

• specific information of how the payment should be made, i.e. in three equal installments payable at the end of each month;

• statement concerning the mortgaging and other possible encumbrances of the property, which should be found in section IV of the property’s Land and Mortgage Register.

 

It is important to mention, that the sale/purchase agreement cannot include the clause stating that the agreement shell be considered null and void in the case of lack of the price payment. Such a clause was defined by the Office of Competition and Consumer Protection as abusive.

 

3. Warranties and representations

Warranties and representation include statements and declarations of the contracting parties and are one of crucial elements of every sale/purchase agreement. A declaration has to be understandable in order to be effective, meaning that it has to have a clear and comprehensive legal result. Among the statements and declarations which should be found in a sale/purchase agreement, there are the following:

 

• there is no person registered for residency in the property;

• the property is free from any third-party encumbrances;

• all due payments related to the management and maintenance of the property were made;

• the property is the seller’s possession and did not serve as a Subject Matter to any other agreement;

• there is no ongoing administrative proceedings related to the property;

• entries in the property’s Land and Mortgage Register were not changed since the issuance of its excerpt.

 

Free specimen of real property sale/purchase agreement may be found in the Internet, and it is always worth to use information they provide. However, such contents should be consulted with an expert in order to avoid the potential mistakes and misunderstandings.

 

Mateusz Kozłowicz

 

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