How the preliminary contract is concluded: sample and procedure

Buying expensive property represented by cars or real estate is considered a complex and lengthy process. Often buyers have to raise funds, arrange a mortgage or perform other actions before concluding a direct contract. Even sellers are sometimes forced to postpone the transaction, as they need to check out of real estate, move furniture or perform other actions. Therefore, to guarantee the conclusion of the main contract in the future, a preliminary contract is used. It is a certain guarantee that after a certain period of time the parties will not refuse to sign the agreement. Under this contract, a deposit may be provided.

Features of the contract

A preliminary contract binds two people with some obligations until a direct deal is concluded. The rules for its preparation and use are described in Art. 429 Civil Code. The main features of this document include:

• according to it, both parties to the transaction undertake to conclude a contract after a certain period of time, on the basis of which the property will be transferred from the seller to the buyer;
• additionally, such an agreement may be drawn up for the provision of services or the performance of work, as well as in the execution of other operations and activities;
• acts as an independent agreement, and not as an annex to the main contract;
• the content may vary significantly, as it depends on the subject matter of the agreement;
• if one party refuses the transaction without good reason, then the second can force it to conclude a contract through a trial;
• often under the contract a deposit is transferred, which is not returned to the buyer if he refuses the transaction;
• if the seller initiates the termination of the agreement, then he returns to the other party a double deposit amount;
• if there is no possibility for any participant to conclude the main contract, then this is not the basis for invalidating the preliminary contract;
• A letter of intent is not an alternative to prior agreement.

Typically, such a document is generated and signed by the participants themselves, so they do not use paid notary services. If the essential conditions of the main agreement are not entered into the document, then it is easily recognized as invalid.

Main varieties

There are many types of prior agreement. They differ in the subject of the transaction, so the following varieties are distinguished:

• sale of real estate or car;
• rental of residential or non-residential premises;
• deliveries of certain goods;
• contracting;
• contract;
• the provision of services.

For almost any transaction, you can use the preliminary contract. Most often it occurs when buying real estate, as it is in this case that the parties need to perform certain actions before directly concluding a transaction. A sample preliminary contract can be studied below.

How is it made up correctly?

In order to correctly formulate this agreement, it is advisable to use a sample of the preliminary contract. Apartments are most often sold using this document. Mandatory terms of the agreement include:

• the subject of the contract, which may be represented by the property, car, certain works or services, and it is important to describe the subject carefully so that there are no difficulties with its identification;
• if the subject is an apartment, then its exact address, cadastral number, total area, number of rooms, external condition and other parameters are copied from official documents to the object;
• the price of the main contract, and it does not change even if the main agreement is drawn up after a considerable period of time;
• indicates third parties who can count on real estate, and if the seller hides the claims of relatives, this may become the basis for canceling the contract;
• rights and obligations arising from each participant after signing the document;
• situations are given in which early termination of the agreement is permitted without negative consequences for both parties;
• if a deposit is applied, its exact size, date of transfer of funds, as well as the procedure for transferring money are indicated;
• documents that are available from the seller and submitted for examination to the buyer are listed, and these include title documents, technical papers on the object, extract from the home book, extract from the USR and other important papers;
• the period during which the necessary actions must be performed by the parties so that it is possible to sign the main agreement;
• it is indicated which of the participants will incur additional costs arising from the conclusion of the transaction, for example, when registering the transfer of rights, using notary services or performing other actions, moreover, they are often divided equally between the two participants.

All essential conditions are necessarily transferred to the main contract, therefore, before signing the preliminary document, it is important to make sure that the data entered is correct. If the most important conditions are absent, the agreement is easily recognized as invalid. A sample of the preliminary contract for the sale of real estate can be studied below.

The benefits of contracting

If you use a preliminary contract for the sale of various property before entering into a transaction, both parties can get certain advantages from this process. These include:

• it is guaranteed that both parties will not be able to refuse the basic agreement for various reasons;
• if a deposit is applied at all, then it acts as additional security;
• it is impossible to unilaterally make any changes to the provisions of the contract;
• the buyer can be sure that on the previously agreed conditions he will be able to purchase the optimal apartment;
• if necessary, you can go to court to force the seller to conclude a transaction;
• if any participant avoids signing the main contract within the prescribed period without reason, then in the next 6 months you can go to court with a request to conclude a deal.

An agreement is signed only by persons who are really interested in concluding a transaction. It is advisable to use the model of the preliminary contract for the sale of real estate in order to include all the essential conditions in the document.

Risks of using the agreement

The use of a preliminary contract has several drawbacks. These include:

• the agreement does not need to be officially registered with the Rosreestr;
• there are risks when transferring a deposit, since it is important to correctly execute the transfer of money, otherwise it will be difficult to prove that the funds were received by the seller;
• It is difficult to recover a double deposit from the seller if he himself refuses the transaction without good reason.

Therefore, even the use of a preliminary contract with a deposit often leads to the fact that the transaction still breaks down. The document only serves as proof of the intentions of the parties, but the transfer of the apartment is carried out only on the basis of the main contract subject to state registration.

When is a contract declared null and void?

There are certain situations where a preliminary contract may be invalidated. These include:

• there are no essential conditions in the text;
• there are points that contradict the requirements of the law;
• no signatures of the parties;
• actually impracticable conditions are introduced.

Therefore, it is advisable to use the correct model of the preliminary contract when drafting this agreement. The document is recognized invalid only by a court decision. Therefore, the plaintiff will be able to insist on the compulsory signing of the main contract only if there are good reasons.

Nuances of applying a deposit

For additional security of the transaction, the parties often prefer to indicate a deposit in the text of the agreement. The features of its use include:

• its size is agreed upon by two participants;
• after signing the preliminary contract, the potential buyer transfers the indicated amount to the seller of real estate;
• money can be transferred in cash, and the correct receipt is the confirmation;
• the most relevant is to transfer money through a notary who is a witness to the process;
• if the seller refuses the transaction in the future and cannot prove that he has good reason for this, then you can require a double deposit amount;
• if the buyer changes his mind about buying a home, he will not be able to return the transferred amount.

Due to the additional guarantee, many people prefer to indicate a deposit in the agreement. A sample of the preliminary contract with the deposit is located below.

Features of a mortgage loan

Most often, a preliminary agreement is used in a situation where the buyer is required to obtain a loan to purchase real estate. For this, a suitable object is initially selected, after which a preliminary contract of sale is drawn up. The mortgage is then executed at the selected bank.

As soon as approval is received from the bank, the main contract is signed between the two parties. This method makes it possible to calmly deal with the registration of a mortgage loan without fear that the seller will be able to sell the property to other persons.

Validity

When drawing up the preliminary contract, the two parties make a reservation when the main contract will be concluded. Usually a month or six months is indicated. During this time, the parties may perform different actions:

• the buyer draws up a mortgage loan;
• the seller is engaged in the discharge of all family members from real estate;
• premises are freed from furniture and other items;
• necessary documents are prepared for the conclusion of the transaction.

If the preliminary contract of sale of the object does not contain the exact date when it is necessary to conclude the main contract, then it is considered that it is concluded for one year.

Money no object

It is not allowed to indicate any payment in the preliminary contract, since this document is intended solely for the official consolidation of the intentions of the parties.

The only exception is the use of a deposit, but it must be indicated in the clause of the contract, and if there is no specific wording, the transfer of money will act in advance.

Based on a preliminary agreement, the parties have an obligation to sign another contract in the future. The seller confirms that he is ready and wants to sell his property or other object to a second party. The buyer agrees with the terms of the transaction and guarantees that in a timely manner he will prepare the necessary amount for settlement with another participant.

Grounds for termination

The preliminary contract may be terminated subject to the conditions:

• the buyer cannot collect the necessary amount of funds by the right time;
• an agreement of the parties is drawn up;
• during the year, the parties are inactive, because they do not want to conclude a main contract;
• after the conclusion of the agreement, it is revealed that the property has significant shortcomings.

All the above situations should be prescribed directly in the contract.

Conclusion

A preliminary contract for the purchase of an apartment is considered an important document containing the intentions of the parties. It may include down payment information. When signing it, the possibility of concluding the main transaction in the future is guaranteed.

The agreement is not subject to state registration. If there are no essential conditions in it, then it is easily recognized as invalid.