Among the various concepts that exist in the world of real estate, the preliminary contract is one of the most important. What it is and when it is used?
A preliminary contract is a contract that assumes the obligation to conclude another, main contract later. A preliminary contract is valid if it contains essential components of the main contract.
A preliminary contract allows the buyer to secure the purchase of the property, when they and the seller have already reached an agreement regarding the sale, however before the actual conclusion of the sales contract, it is still necessary to arrange certain documentation. This includes cases where there are rights of pre-emption associated with the real estate, when approval of the legal transaction is required by the administrative unit or the center for social work, when inheritance proceedings are still ongoing… In the sale of real estate, the preliminary contract can also be used when the buyer is interested in buying a property that is still under construction or development, and the completion and delivery of the property will take some time.
With a preliminary contract, the buyer ensures the purchase of real estate at a certain price and under certain conditions, as specified in the preliminary contract. When signing the preliminary contract, the buyer usually hands over a certain amount of the purchase price to the seller. The main sales contract is concluded when the conditions are met, as determined by the preliminary contract, or within the period specified in the preliminary contract.
In order to be valid, the preliminary contract must contain essential elements, but usually it contains a description of the property, the price and payment plan, a statement of the reason for concluding the preliminary contract, the deadline for concluding the main contract, the responsibilities of the buyer and the seller, and the conditions for withdrawing from the contract. At the request of an interested party, the court orders the other party, who does not want to conclude the main contract, to conclude the main contract within the time limit set by the court.
The purchase agreement for the real estate must be concluded in writing. The regulations on the form of the main contract also apply to the preliminary contract, so the preliminary contract must also be concluded in writing.
In accordance with Slovenian law, the preliminary contract is legally binding for both parties. The obligation that the parties assume with the contract is that the main contract, the sales contract, will be concluded later on.