Sums paid by the buyer at the time of the preliminary contract for the sale of real estate

Indemnity in a promise to sell

The promesse de vente is the most common deed used when the preliminary contract for the sale of a residential property is signed at the notary's office. It is an asymmetrical contract. The seller is committed to selling his property, while the buyer is free to decide whether or not to buy during a certain period, known as the option period.

To compensate for the immobilization of the seller's property, the buyer generally pays an indemnity called “immobilization indemnity”. The amount of this indemnity is freely calculated between buyer and seller, but in most cases it is 5% of the sale price. Another custom (always contractual), which is not an obligation, is for the buyer to pay only 50% of this sum when signing the promesse de vente, even though he is committed to the full amount.

What happens to the compensation?

• If the buyer decides to purchase, the immobilization indemnity is deducted from the final sale price.
  
• If the buyer decides not to buy, the seller retains the immobilization indemnity as compensation for the immobilization of the property.
  
• If a condition precedent is not fulfilled, the entire amount is returned to the buyer.
  

The security deposit in a compromis de vente

Unlike a promesse de vente, a compromis de vente is a binding agreement between the seller and the buyer. The compromis de vente is the most common type of contract when the real estate agent is responsible for drafting the preliminary contract for the sale of a property.

TIP: when the real estate agent draws up the preliminary contract for the sale of a property, have it validated by your notary before signing it.

The compensation is called a “security deposit”, as it guarantees payment of the sale price by the buyer.

Amount of the deposit

As with the promesse de vente, the deposit is not mandatory. However, it is customary for this amount to be 5% of the sale price of the property. It is also an indicator of the buyer's commitment and solvency.

What happens to the deposit?

• If the sale goes ahead, the amount of the indemnity is deducted from the sale price.
  
• If the buyer withdraws without valid reason, the seller retains the deposit.
  
• If a suspensive condition is not fulfilled: the amount is returned to the buyer, except in the case of fraud or dilatory tactics attributable to the buyer.
  

Points to note

The sums paid are deposited with the notary or real estate agent to protect both parties.

Conclusion: a financial commitment to be controlled

The payment of a sum at the time of the preliminary contract for the sale of real estate guarantees the buyer's commitment and seriousness in a real estate transaction. Whether in the form of adown payment or a security deposit, these amounts represent a real guarantee of security and seriousness between seller and buyer. It's important to understand the rules to avoid any nasty surprises. If in doubt, don't hesitate to contact a notary or a real estate professional to help you through the process.