4 Terrible Consequences of Unnotarized Pre Real Estate Contract

Buying real estate is a complex issue that does not tolerate mistakes! Every wrong step could cost you greatly. For this reason, it is important that all elements of the preliminary contract, and then the main contract, are accompanied by a serious approach, accurate and verified data, and a balanced legal framework – which will provide both the buyer and the seller with maximum protection. And that’s the only correct way.

The first step in drawing up a valid real estate contract is the preliminary contract. With this contract, the parties are not obligated to sell the real estate and pay the purchase price, but to conclude the main contract within a certain period.

How can I be legally protected by a preliminary contract?

In order for the preliminary contract to produce a legal effect, it is necessary that it is complete in terms of content and certified by a competent public notary. Contracting parties often do not certify that contract because it is “simpler” and to avoid seemingly unnecessary costs. However, court practice is rich with disputes that arose precisely from the non-certification of the preliminary real estate contract, and the costs that were tried to be avoided are multiplying!

An unverified preliminary real estate contract does not have court protection

When the preliminary contract is not certified, it does not produce a legal effect – as if it was never concluded! Hence, there is no obligation to conclude the main contract later. You will not be able to force the conclusion of the main contract even by filing a lawsuit in court! This is because the preliminary contract must be concluded in an identical form as the main contract. Potential litigation can be disastrous to your interests, even when it is litigated in your best interest. Your life investment in that case will be on the verge of failure.

An uncertified preliminary contract does not guarantee that the seller is the owner of the real estate

In the preliminary contract, data about the apartment (ownership, address, square footage) and data from the cadaster (registration number and lot number) are specified. In addition, in order to make sure that the seller is the owner of the property, the preliminary contract also includes information on when and how the property became the property of the seller.

Before proceeding with the certification, the notary public will inspect the real estate cadaster and officially determine whether the data from the preliminary contract correspond to the factual situation. Only when he officially determines that the information from the preliminary contract is true, he will perform the verification – which gives you a formal guarantee that the seller is really the owner of the real estate in question. The goal of the above is to register the pre-record of the change of ownership of the apartment in the real estate cadaster, which is public information available to everyone, as an additional form of security for all contracting parties. Thus, the security of your investment has been raised to an incomparably higher level, than a mere insight into the electronic database of the real estate cadaster.

You will be exposed to the risk of multiple sales of the same real estate

By certifying the preliminary contract, you are doubly protected. First, public notaries have the obligation to inspect the unique register of sold real estate during the certification, so you will be sure that the real estate you are buying has not been previously sold by the seller. After certifying the pre-contract, public notaries are obliged to enter information about the transaction in the mentioned register, so you can be sure that the seller will not conclude a preliminary contract or sales contract with someone else, which is another important insurance!

Down payment provisions do not produce a legal effect

If the preliminary contract is not certified, it is null and void, so its down payment provisions do not produce legal effect either. This means that the seller will have to return the amount that was given as a deposit according to the rules on acquisition without grounds if the buyer abandons the conclusion of the sales contract. In addition, the seller will be obliged to pay the buyer interest starting from the moment of payment. On the other hand, the buyer will not have the right to ask for the double amount he gave as a deposit if the seller refuses to conclude the sales contract.

As you just had the opportunity to read, the preliminary contract must be concluded without a single flaw, so that in the event of an unforeseen turn of events, you would not put yourself in a situation where you are walking on the edge of a precipice. All the consequences of not verifying the preliminary contract lead to irreversible losses of material and immaterial resources.

P.S. The certification of the preliminary contract does not require additional certification costs because half of the fee is paid during the certification of the preliminary contract, while the other half is paid during the certification of the main contract for the sale of real estate. It will only “cost” you time, which is certainly a “cheaper” option compared to the terrible consequences that can arise from not verifying the preliminary contract. Do not allow yourself to become part of the court practice.

For more information on this or any other legal, tax, or business topic, write to us at [email protected] at any time or call us at phone number +381113281914 every working day from 08:30 to 16:30.

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