Provisional Guarantee of the Outcome of the Negotiations

Direct negotiations on real estate also invariably remain provisional since the agreement between the property vendor and buyer is not valid unless it is publicly registered. The parties thus invariably endeavour to guarantee the provisional result of the negotiations by means of suitable measures, directly or through the cash flow – even if such result is not formally valid:

  • Buyer retention
    • Larger properties: letter of intent (LOI)
    • Smaller properties: reservation agreement
    • seldom: publicly registered preliminary agreement (obligation to conclude a main agreement)
  • Instalment (usually to the broker)
  • Presentation of an irrevocable bank payment bond by the buyer
  • Preparation of the financing arrangements of the prospective buyer as an indication of his willing to acquire the property
Print / Share: