Preliminary property sale contract: practice

A preliminary property sale contract organizes the key arrangements before the final contract is signed. This is especially important for transactions involving plots, houses or property with encumbrances. A well‑prepared document reduces risk and makes the sale closure safer.

Update: 5 March 2026

In brief:

• A precise description of the property and encumbrances is the foundation of safety.
• A notarial form increases protection when you want to enforce the final contract.
• Deadlines and documents should be described to avoid delays before closing.

Preliminary property sale contract — scope

The subject can be an apartment, house, plot or land. Describe the property clearly and indicate whether the sale includes additional elements (e.g., a share in an access road). The more precise the description, the less room for future disputes.

Documents and legal status of the property

Before signing, verify:

• the land and mortgage register and ownership entries,
• mortgages, easements or other encumbrances,
• land‑use designation in local plans or administrative decisions,
• access to a public road and utilities.

For plots and land it is also key to check whether the property can be used as intended by the parties.

Property, plot, house — differences

For plots, describe the area, boundaries and access to a public road precisely. If the property is to be built on, the land‑use designation or the possibility of obtaining a zoning decision is important. For houses, the technical condition, equipment and any defects should also be specified.

Form and legal effects

The form of the contract matters. As a rule you will encounter written contracts, but for larger transactions a notarial form is safer.

Notarial preliminary contract

In practice a notarial preliminary contract provides stronger protection and increases the possibility of effectively enforcing the final contract.

Deposit, advance payment and security

A deposit and an advance payment are common in preliminary contracts. A deposit serves as security and can have serious consequences if the contract is not performed. An advance payment is usually refundable. The parties may also agree a contractual penalty or other safeguards, but they should be described clearly and unambiguously.

Contractual penalty and damages

A contractual penalty or damages can strengthen security, but they require precise clauses. In practice the trigger conditions and the amount are key to avoid interpretive disputes.

If you want to understand these mechanisms, see the guides on deposit/withdrawal fee and contractual penalty.

Property with a mortgage or encumbrance

If the property is encumbered with a mortgage, the contract should describe how it will be repaid and when the bank’s consent to release will be obtained. A good practice is to list which documents confirming repayment or release must be delivered before signing the final contract. Such clauses reduce the risk of delays at the end of the transaction.

Non‑performance and claims

If one party refuses to sign the final contract, the form of the preliminary contract, the clauses and the evidence of conditions being met are crucial. In practice you may seek damages or the conclusion of the final contract — it all depends on the circumstances and the document’s wording.

Enforcing the final contract

The possibility of enforcing the final contract is strongest with the proper form and precise clauses. In other cases, damages claims are more common.

Most common mistakes

Most problems stem from imprecise clauses. In practice the risky areas are:

• no clear description of the property and its encumbrances,
• a final‑contract deadline without conditions and documents,
• unclear rules for mortgage repayment or release,
• no agreement on who delivers specific documents.

Checklist before signing

• verify the land and mortgage register, encumbrances and access road rights,
• describe the legal and technical status of the property clearly,
• set conditions for repaying the mortgage or other security,
• specify the document schedule and final‑contract deadline.

How to minimize risk

The best protection is a precise description of key arrangements. In practice it is worth:

• setting a realistic final‑contract date,
• describing conditions for repaying the mortgage or encumbrances,
• indicating which documents must be provided,
• confirming the settlement method between the parties.

Final‑contract deadline and preparation

The deadline should be realistic and account for time needed to collect documents, repay encumbrances or obtain financing. In practice it is worth stating who is responsible for preparing documents for the final contract and which actions must be completed before signing. Such clauses help avoid disputes about who “caused” the delay.

If the topic concerns a sale, see also the guide on property sale tax and notarial costs when buying an apartment.

Note: this text is for information only and does not constitute legal advice.