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What is a promissory contract, in real estate?

The promissory contract is a legal document which, while not mandatory in the purchase or sale of a property, safeguards the rights and responsibilities of both parties involved until the definitive agreement – the public deed.


Amongst the advantages inherent to this agreement, it is necessary to mention the speed of formalizing the binding document between the promissory-seller and the promissory-buyer, making the date of the future deed, its agreed terms and values official.

Casas do Barlavento encourages the signing of a promissory agreement when the essential conditions to go to deed are not in place:

• The property does not have a license for use or habitation;
• The construction of the property is not complete;
• All property owners have not expressed an interest in selling the property;
• The buyer does not have the necessary funds for the purchase;
• The buyer is still waiting for housing credit approval.

Usually, when signing the Promissory Contract, a deposit is paid. The deposit consists of an agreed amount, delivered by the prospective buyer to the seller for the acquisition of the property. The amount of the deposit must be included in the promissory agreement, as an additional clause, so that its value is deducted from the total amount of the property purchase. When the agreement is not complied with, most sanctions fall on how this deposit is handled. If certain conditions that are not described in the contract, the general rules of the Civil Code will be applied:

• If the potential buyer defaults, the other party will keep the deposit;

• If the breach is from the seller, the refund of the deposit to the buyer is double the amount;

• When both parties are in breach of contract, the solution must pass through the restitution of the deposit in simple terms.

• There is also the possibility of the injured party appealing to court to request enforcement of the contract.

Here below is all the information that should be included in the promissory contract:

• Identification of the stakeholders (buyer and seller): name, address, marital status, citizen's card or passport, taxpayer's number;
• Identification of the property (typology, location, the existence of parts included (such as land or garage),
registration matix and property description;
• Value of the deposit, property price and form of payment;
• Predicted deed date and penalties to be applied if it is not carried out within the agreed period;
• Construction license or proof of request of the same in the City Hall;
• Disposal clause, stating that the property will be sold free of any charges - such as mortgages or liens.

Casas do Barlavento warns both potential buyer and seller of some details that must be taken into consideration before signing this contract, in addition to the above information:

• The buyer may include a clause that voids breach of the contract in the event of failure to obtain a mortgage;
• Since
provisional registrations are documents that are difficult to get, please check the registry office in your area for an estimate of the date of emission. This information can influence deed deadlines;
• There must be an indication, in the contract, that the building is in a normal habitable condition.

For more information about buying or selling real estate, contact Casas do Barlavento. We will be available to assist you.