- potential buyers of a pre-construction building;
- professional developers selling pre-construction buildings.
Types of pre-construction building sales
The sale of a pre-construction building is defined as a sale where the seller undertakes to erect a building within a period of time specified in an agreement.
There are 2 types of pre-construction sales:
- forward sales, in which the seller undertakes to deliver a building upon its completion to a buyer, who in turn undertakes to accept delivery of the building and pay the agreed price on that date. As such, it is only at the time of completion that ownership is transferred from the seller to the buyer;
- future-completion sales, in which the seller immediately transfers to the buyer their rights to the land and, where applicable, ownership of existing constructions. The buyer becomes the owner gradually as the construction progresses and pays in tranches as the work moves forward.
Scope of application of the legislation on the sale of pre-construction buildings
In order to fall under the specific legal provisions on the sale of pre-construction buildings, an agreement must satisfy 3 conditions:
- the building must be for residential or residential and professional purposes;
- the seller must have secured powers as project owner;
- the sale must be effected in consideration for payments or deposits of funds to be made before construction is completed;
Reserving a pre-construction building
As with the ordinary sale of a building, the sale of a pre-construction building may be preceded by a preliminary agreement, known as a reservation agreement. Unlike in an ordinary sale, a contract of sale agreement is not necessary to reserve the object before the notarial deed of sale has been signed;
The reservation agreement creates obligations for each of the parties to the contract. Indeed, as consideration for a security deposit paid into an account opened in the name of the reserving party— i.e., the buyer, the contract beneficiary—the seller—i.e., the party making the reservation—undertakes to reserve the building or a portion of the building for the buyer. The amount of the security deposit may not exceed 2 % of the provisional price.
The funds will then be unavailable until the sales agreement has been signed. The funds are returned to the depositor if the final agreement is not concluded, for reasons attributable to the seller, within the period of time provided for in the preliminary contract, or if the proposed agreement reveals significant differences compared to the preliminary agreement (e.g. if the final sales price exceeds the initial estimates by more than 5 %, or if certain fixtures/features have not been provided).
Information that must be included in a sales agreement for a pre-construction building
Sales agreements for pre-construction buildings can only be concluded if the authorisations required for the projected construction have been issued by the competent administrations.
They must be concluded by notarial deed and contain the following information, failing which they will be deemed null and void:
- the identity of the owner of the land and the constructions;
- the date of issue of the administrative authorisations and the terms and conditions under which they are granted;
- a description of the building or part of the building being sold, and the degree of completion agreed upon;
- the price and payment conditions;
- deadline for delivery of the building;
- and, for future-completion sales, a guarantee of full completion of the building.
Documents to be attached to the sales agreement
Agreements for sales of pre-construction buildings must also contain the following appendices, failing which they will be deemed null and void:
- construction plans with façades, the plans for the various levels of the building, and a sectional plan of the building;
- a description indicating the contents and technical features of the building, as well as the materials to be used;
- and, in the event of a commonhold construction, the commonhold regulations.
Moreover, the nullity of the agreement may only be invoked by the buyer, but only before the work is completed.
End of construction work
The building is considered completed when the structures have been built and the fixtures/features that are essential for the use of the building have been installed.
Completion of a building sold under a forward agreement is confirmed by the parties or by a qualified person. The confirmation is formalised in a notarial deed produced by the same notary with whom the original deed of forward sale was filed.