Purchase and Sell Promise Agreement

The decision to buy a property is a journey with several steps and some of them are too important to be neglected.

After the entire process of searching for real estate to fulfill your wishes and objectives, which usually involves an extensive search and several visits, found the intended property, it is time to submit a proposal.

With the democratization of prices published on the Internet, property prices are less speculated and closer to the final value.

When submitting a proposal take this aspect into account and be objective.

Do not seek to enter a ping-pong of various proposals, wasting time and creating wear and tear of all stakeholders in the process, with the risk of losing the opportunity to make a good deal, while trying to make the best deal ever.

With your proposal accepted, the next step will be the conclusion of a contract in which the seller promises to sell to the buyer, and the buyer, promises to buy, under the conditions and values agreed in the negotiation. 

The conclusion of this contract, which brings to legal light the agreement and negotiation is commonly called CPCV - Contract of Promise of Purchase and Sale.

What is the Sell and Sell Promise Agreement (CPCV)?

The Contract of Promise of Purchase and Sale - (CPCV) is a written document, with legal value (Article 410 of the Civil Code) that formalizes the intention to buy and sell a particular immovable property, safeguarding the rights between those who promise to sell (promite seller) and by those who promise to buy (buyer promite).

In what situations should I make a CPCV of a still property?

The Contract of Promise Buy and Sale, is a document that concludes an agreement between the interveners, with certain conditions, which provides security and guarantees both parties a business commitment of purchase and sale, giving the property the state of reserved.

It is also through the CPCV that guarantees are provided on the signal paid by the buyer and that in the interest of both parties, the business is protected so that it reaches an end without mishaps.

What should be in a CPCV? 

• Identification of those involved in the business - with the identification of who sells and who buys.
• Identification of the property;

• Property price 
• Payment method;
• Indication of the value given as a sign;

• Date of forecast for the completion of the deed, usually between 60 and 90 days from the date of signature of the CPCV
• Identification of penalties to be applied to the buyer or seller in case of non-compliance.
• Duties and obligations of those who sell and who buy.
• Ensure that the property is free of any burden sands and charges;
• Ensure that the property complies with the necessary customary conditions;
• Equipment/appliances and other goods included (if applicable).

Advantages of subscribing to a CPCV

There are several advantages for both the seller and the buyer, signing a Purchase and Sale Promise Agreement.

In addition to allowing you to link and formalize a business quickly, between those who want to sell and buy, it also grants a set of guarantees and security to the business, allowing:

• The reservation of the property is formalized with legal form;
• Legal certainty is present in the event of non-compliance
• Ensures the formalization of the business within the agreed time;
• It links the actors in the effective implementation of the business, avoiding desists and decisions taken lightly, conferring greater seriousness and maturity throughout the process.

Secure the business and manage time until the deed.

Another advantage of cpcv is to function as a process of instruction and preparation of the deed, triggering several processes of meeting several mandatory documentation for the realization of the definitive contract - Deed.

Owners and buyers do not always have all the updated and original documentation to present at the act of deed, sometimes it is necessary to obtain documents from entities such as city hall, conservatoire, tax authority, condominium, among others.

It is also common for constraints to obtain availability of the amounts for the total payment of the property, either by the need to obtain a bank loan or by the need to obtain availability of the amounts necessary for the issuance of bank cheques, transfers, or Bank Distraction.

In addition to the questions on:

• Regularization or updating of documentation required for deed
• Reply on the approval of housing credit or other banking operations

There are also other factors, in which the CPCV brings advantages until it is possible to carry out the deed, namely:

• Completion of works in the property;
• Completion of the construction of the property;
• When it is necessary to sell an existing property to complete the purchase of the new property; 
• To safeguard the cancellation of charges or charges that may exist on the property.

Care to be taken before signing the CPCV

The CPCV shall be prepared and reviewed by a lawyer or solicitor, to ensure that it contains all the necessary elements and that it is within the legal procedures, to ensure complete security in the business, both from the perspective of the buyer and the seller.

It is important to be aware of the following points before signing the contract:

• Check in advance all documentation relating to the property, namely:

• Urban Building Booklet;
• Permanent Building Certificate;
• License to use;
• Energy certificate of the property;
• Housing Technical Data Sheet (where applicable);

• Communication on preference rights, depending on the type of property;
• Confirmation of all data on:

• identification of stakeholders,
• identification of the property
• Validation of the price of the property
• Forms and payment terms, including the signal to be delivered;
• The maximum period for the conclusion of the deed - which is on average 90 days.

• When the property is inserted in a condominium, one must obtain a statement of non-debt and verify last deliberations exist by the Assembly of Condominos through the consultation of Minutes.
• Confirmation of the amount of expenses arising from the acquisition of the property, such as taxes, namely IMT and Stamp duty and deed.
• The existence of terms of non-compliance with the contract shall otherwise apply to the general regime of Article 442 c.C.

• (in the event of non-compliance by the promite seller, the seller will have to return the double sign to the promite buyer. If the non-compliance arises on the part of the promitent buyer, the buyer loses the signal given at the time of the conclusion of the CPCV).

• Another relevant issue is the recognition of signatures, which although the parties may dispense with it, it is recommended that it be done, especially if it is not being mediated by a real estate agency.

CPCV conditioned

In specific situations, the Contracts of Promise of Sale, may be conditioned, that is, the promise to buy or sell will only take effect, if a set of assumptions and conditions that result from the negotiation are fulfilled.

In this way, it allows both parties, by means of the written agreement and conditions to go back in intention, and annul the contract, by means of not having fulfilled certain conditions.

This is a process that may involve a set of legal, legal and tax assumptions, so if there is a need to condition a business under the Promise of Sale Agreement, it must be under the supervision of a lawyer or solicitor.

There are many other issues in the field of promise-to-sell contracts, which are also relevant to conducting business safely. If you have questions - contact us!

At Urban Ready we will be happy to help clarify.