Preliminary agreement for the purchase of a flat: what it should contain, template – 2019 update

Concluding a preliminary agreement (umowa przedwstępna) is a common practice in flat sales transactions. Thanks to it, both parties can safeguard their respective interests before the final agreement transferring ownership of the property is signed. We explain what to bear in mind when drawing up a document of this type.

• Good protection for the transaction
• There is no perfect recipe for a preliminary agreement
• With a deadline or without?
• The difference between an advance payment and a deposit
• Should it be signed before a notary?

Good protection for the transaction

Finding a flat that exactly meets our expectations takes a lot of time and effort. When we finally manage to find one, we want to “reserve” it so that nobody buys it out from under us, or so that the seller does not decide to change the price to our disadvantage before the notarial deed (akt notarialny) is signed. The best solution is then to draw up a preliminary agreement, which will ensure that the dream flat soon becomes ours.

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A preliminary agreement obliges both parties to the transaction to conclude the promised agreement (umowa przyrzeczona), that is, in practice, the notarial deed transferring ownership of the flat from the seller to the buyer. This increases the likelihood that the transaction will succeed.

There is no perfect recipe for a preliminary agreement

Although the Civil Code defines a preliminary agreement, there is no single template for such a document. Its wording depends mainly on what the two parties have agreed. It should, however, necessarily contain the most important information that will ultimately appear in the promised agreement, in particular: the details of the seller and the buyer, the subject of the agreement (type of property, its address and area, land and mortgage register (księga wieczysta) number, type of ownership, owners, any encumbrances, etc.), the price and form of payment (in a single payment or in instalments, in cash or by transfer, any advance payment or deposit), and the deadline for concluding the final agreement.

With a deadline or without?

Polish law does not require a preliminary agreement to state the deadline for concluding the promised agreement, although it is better to do so, because without such a provision the whole process may drag on seriously or even end in failure. Claims arising from a preliminary agreement become time-barred after just one year. To avoid unnecessary complications, it is best to set this deadline in advance and to do so as precisely as possible.

The difference between an advance payment and a deposit

Provisions on paying an advance payment (“zaliczka”) or a deposit (“zadatek”) are a common element of preliminary agreements. Both words are mistakenly regarded as synonyms, whereas in legal terms they differ significantly.

A “zaliczka” (advance payment) is not regulated in the Civil Code. It is a percentage of the amount determined by the parties to the agreement (usually 10%). If the transaction does not achieve its intended purpose (in this case the conclusion of a notarial deed transferring ownership rights to the flat), the advance paid is refunded in full regardless of the circumstances.

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A “zadatek” (deposit) can also be of any amount. The difference, however, is that if the seller withdraws from the transaction, the buyer can claim back as much as twice the sum paid. The exception is a situation in which non-performance of the agreement is the fault of neither party, or both parties are equally responsible for it. In that case the deposit should be returned in the original amount.

Should it be signed before a notary?

It is worth concluding a preliminary agreement in the form of a notarial deed. True, this entails additional costs, but this form protects each party more effectively. It makes it possible to seek the conclusion of the final agreement in court. Moreover, if the notary makes the appropriate entry in the land and mortgage register of the property (Section III, claims for transfer of ownership of the property), we will be able to demand conclusion of the agreement even from a future owner.