Purchase offer for property: when does it become binding?

Anyone wishing to buy an apartment or a house is often asked to sign a purchase offer at an early stage. This can give the impression that it is merely a non-binding expression of interest and that the contract itself will be concluded later at the lawyer's or the notary's office in any event.

That can be an expensive misconception.

A purchase offer is binding in principle

A sufficiently definite purchase offer is an offer to conclude a contract of sale. If it sets a period during which the offer binds, the buyer as a rule cannot simply withdraw it during that period.

If the seller accepts the purchase offer within the period provided, a binding contract of sale may already come into existence. Drawing up a detailed contract later then regularly no longer serves the decision whether to buy, but the closer arrangement and the registration in the Land Register of a transaction that has already been agreed.

1. ViewingNothing has been decided yet.
2. You sign the purchase offerbindingDuring the binding period you as a rule can no longer get out of your own offer.
3. The seller acceptsbindingThe contract of sale may already have come into existence at this point.
4. Contract at the lawyer's or notary's officeUsually governs only how it is carried out, no longer whether.
5. Registration in the Land RegisterOnly now does the apartment belong to you.

With property in particular, the label “purchase offer” should therefore be treated with caution. What matters is not the heading of the document but its content.

What has to be settled in the purchase offer?

For a contract of sale to come into existence it is as a rule enough that the parties agree on what is being sold and on the price. Even when buying real property it is not necessary that every ancillary point has already been settled.

Which also means that a relatively short form prepared by the estate agent can reach considerably further in law than it appears to at first sight.

Before signing, it should be clear in particular which property or which condominium unit is actually being acquired, what price applies and whether the acquisition is to depend on certain conditions.

Deal with the financing beforehand

It is particularly problematic if the financing is not yet finally secured.

If the purchase offer contains no corresponding financing proviso, a loan being refused later as a rule does not make the purchase offer fall away automatically. The buyer may therefore already be bound although the financing needed for the purchase is missing.

If the purchase depends on loan financing, this should therefore be set out expressly and clearly enough in the purchase offer.

The same applies to other points on which the acquisition is actually to depend, such as a particular position under building law, the merging of units, the vacating of the apartment or the clearing of certain encumbrances in the Land Register.

Can you withdraw from a purchase offer you have signed?

There is no general right of withdrawal.

For consumers there is an important special rule, however: where a declaration directed at acquiring an apartment, a detached house or corresponding real property is made on the very day of the first viewing, and the property is to serve an urgent housing need, a statutory right of withdrawal may exist under consumer protection law.

One should not rely on that, though. Whether the conditions are actually met has to be examined in the individual case.

Have it checked before you sign, not after

In practice, purchase offers are often decided on under considerable time pressure. With properties in high demand the impression quickly arises that one has to sign at once so as not to lose the apartment.

In law, however, signing is often already the decisive step.

Anyone who still wants to clarify individual points, or to make the acquisition depend on certain conditions, should therefore resolve those questions before signing the purchase offer and include the corresponding provisos expressly.

A brief legal check before signing is regularly far simpler than trying to get out of a purchase offer that has already been bindingly accepted.