Property Sale-Purchase Agreement: Everything You Need to Know

In property transactions, the sale-purchase agreement for a property is the central document by which ownership passes from the seller to the buyer. It may look like a mere formality, especially where the parties have already agreed on the price, the handover date and the method of payment. In reality, this contract has significant legal and financial effects, and poor drafting can lead to losses, deadlock or disputes.

Whether the sale concerns a flat, a house, a plot of land or commercial premises, the contract must be prepared with care. It is not enough for the parties to agree verbally. The documents, the land register, title, any encumbrances, the tax position, the condition of the property and the clauses setting out each party's liability all have to be checked.

At Buju, Stanciu & Asociații, we assist clients with real-estate and urbanism, document checks, the drafting and negotiation of contractual clauses, as well as disputes arising after the sale. The role of a real-estate lawyer is to protect the client's interests before risks turn into real problems.

What is a property sale-purchase agreement?

The property may be a flat, a house, a plot of land, commercial premises, an industrial building or a share in a property. The notary's role is to authenticate the deed, verify the identity of the parties, certain statutory requirements and the documents needed for the contract to be concluded.

The notary, however, is no substitute for a lawyer. The notary must ensure that the deed is lawful, but does not strategically negotiate the clauses on behalf of one of the parties. The lawyer looks at the transaction from the standpoint of their own client's interests: identifying risks, proposing protective clauses, explaining the obligations and checking that the documents reflect reality.

Why does the sale-purchase agreement matter?

The contract does not merely set out the price and the identity of the parties. It governs the entire mechanics of the transaction: what is being sold, in what condition the property is handed over, when payment is made, when possession passes, what warranties the seller gives, what obligations the buyer has and what happens if either party fails to perform.

A well-drafted contract reduces the risk of differing interpretations. If the parties have agreed that the seller will vacate the flat by a given date, this must be stated clearly. If movable assets are also being sold - furniture, appliances, equipment - they must be listed. If payment is made through a bank loan, clear deadlines and conditions must be provided for. Most disputes arise not because the parties acted in bad faith from the outset, but because certain details were left unclear. In real estate, details cost money.

The parties to the contract: seller and buyer

The seller is the person transferring ownership of the property and must prove that they are the owner and are able to sell. Where the property is held in co-ownership, the consent of all co-owners is required. Where the property is jointly owned by spouses, further consents may be necessary. The buyer is the person who pays the price and acquires ownership; they must check what they are buying, pay the price on time and comply with the conditions undertaken.

Where one of the parties is a company, the corporate documents must also be checked: who has signing authority, whether any internal approvals are required, whether the property forms part of the company's assets and whether there are any restrictions on selling or buying. At this point, a review under corporate law and company law overlaps with the property transaction.

The essential elements of the contract

1. 01

   Identification of the parties

   Full details of the seller and the buyer. For individuals, the details in their identity document. For legal entities: company name, registered office, unique registration code, legal representative and the capacity in which they sign.

2. 02

   Precise description of the property

   Address, cadastral number, land register number, surface area, land-use category, intended use, share of the associated land, common parts and outbuildings. For flats - the share of the common parts, the associated land, parking spaces or storage units. For land - boundaries, access to a public road, planning status and easements.

3. 03

   The price and method of payment

   The price must be stated clearly, together with the method of payment: in full on signature, by bank transfer, by mortgage loan or in instalments. Where payment is made through a loan, the contract must provide for what happens if the bank does not approve the financing. Where a deposit is paid, the terms for its return or retention must be set out.

4. 04

   Handover of the property

   The handover date, the condition in which the property is handed over and the documents or items delivered with it: keys, access cards, remote controls, technical documents, utility contracts. A handover report is advisable, particularly for flats, houses or commercial premises.

5. 05

   Warranties given by the seller

   The seller warrants, where this is the agreement, that the property is free of encumbrances, that there are no hidden disputes or earlier promises to sell, and that they are entitled to sell. Where there is a mortgage, an attachment or a dispute, these must be disclosed and clearly dealt with.

6. 06

   Clauses on hidden defects and liability

   A property may have hidden problems: water infiltration, structural defects, faulty installations, cadastral non-conformities or buildings erected without a permit. The contract must set out the seller's liability for defects and how any issues discovered after signing are to be dealt with.

Documents required for the sale-purchase contract

The exact list varies depending on the type of property, but in practice the following are frequently required:

• The parties' identity documents
• The seller's title deed
• The land registry extract for authentication purposes
• The cadastral documentation
• The tax certificate
• The energy performance certificate, where required
• The certificate from the owners' association, for flats
• Documents evidencing payment of utilities, as the case may be
• Marriage certificate or matrimonial agreement, where relevant
• Corporate documents, if one of the parties is a legal entity
• Internal company approvals, if the sale or purchase requires them

The title deed may be a previous sale-purchase contract, a deed of gift, a certificate of inheritance, a court judgment, a partition deed or any other document by which the seller acquired ownership.

The land register and the importance of legal due diligence

The land register is one of the most important tools for checking the legal status of a property. It shows who the owner is, what rights are registered, and whether there are any mortgages, prohibitions, easements, disputes or other entries.

That said, the land registry extract should not be read superficially. It must be checked against the title deeds, the cadastral documentation and the actual situation of the property. A plot of land may be registered yet have no clear legal access to a public road. A flat may have a cadastral record, yet there may be problems with interior alterations. A house may appear in the documents, yet subsequent extensions may not have been authorised or registered.

The parties' obligations: seller vs. buyer

Each party has its own obligations. Where these are not clearly set out in the contract, most disputes arise. In short:

If the seller conceals material information, they may be held liable after the contract is signed. And if the buyer fails to obtain the loan, the consequences depend on the clauses of the contract or of the promise of sale and purchase.

The promise of sale and purchase

In many transactions, the parties first sign a promise of sale and purchase. It is used where the final sale cannot take place immediately: the buyer is awaiting loan approval, while the seller has to obtain documents, discharge a mortgage or complete certain formalities.

The promise must be drafted with the same care as the final deed: the price, the advance payment, the deadline for signing the final contract, the conditions for returning the advance, the penalties and each party's obligations. An advance paid on the basis of a weak promise can be difficult to recover - as with any contract, it is important to identify unfair clauses or unclear ones before you sign and pay.

Common risks in a property transaction

The most common risks include:

• Incomplete documents
• Discrepancies between the surface area in the documents and the actual one
• Mortgages or encumbrances that have not been discharged
• Ownership disputes
• Lack of consent from co-owners
• Earlier promises of sale
• Buildings not entered in the land register
• Missing permits
• Debts to the owners' association
• Lack of access to a public road
• Unclear clauses on the advance payment
• Unrealistic handover deadlines
• Difficulties with bank financing

These risks should not be treated as mere formalities. Each one can stall the transaction or lead to costly litigation.

How can a real estate lawyer help you?

A real estate lawyer reviews the documents, identifies the risks, explains the effects of the contract and negotiates the key clauses. Unlike a standard template, the lawyer's analysis is tailored to the specific situation: the title deeds, the land book, the promise to sell, the final contract, the clauses on payment, liability for defects, handover of the property and any litigation risks.

For the buyer, a lawyer reduces the risk of purchasing a problematic property. For the seller, it reduces the risk of challenges, subsequent claims or contractual liability. At Buju, Stanciu & Associates, we assist clients in real estate and urbanism, from reviewing the documents through to litigation.

Conclusion

A property sale and purchase agreement is more than a standard document. It is the instrument that establishes the transfer of ownership, the price, the parties' obligations, the warranties, the handover of the property and liability for any problems. A safe transaction starts with reviewing the documents and clearly understanding the clauses - agreement on the price alone is not enough. You need to check what is being sold, who is selling, what encumbrances exist, what risks are hidden and what happens if one of the parties fails to perform its obligations.

Frequently asked questions