The Promise of Sale Agreement by Dr Notary Clinton Bellizzi B.A., LL.D.

Last Updated on 03 January 2012

 

A Promise of Sale (POS) is 2 unilateral promises: a promise to sell and a promise to buy

 

In sale of immovable property there needs to be an agreement in writing (private writing) specifying:

 

1:	Parties:  Buyer & Seller
2:	Object:  Immovable
3:	Price / Consideration
4:	Validity
5:	Other conditions
6:	Registration

 

 

1:  The Parties

 

Identification of parties: by means of ID cards/passports, father's name and surname, mother's name and surname, place and date of birth and current address with telephone number and email.

 

If Sellers are non-Maltese Citizens/residents or intend to leave the island before filing the following year's Income Tax return (June) a special Tax Clearance from the Commissioner of Inland Revenue (CIR) has to be applied for Sellers to authorise Notary to apply in their name.

 

If Buyers are non-EU residents, or EU residents who have not resided in Malta for over 5 years  or do not intend residing in Malta as their ordinary residence then an Acquisition of Immovable Property (AIP) application must be filed (POS to include this condition).

 

Current Minimum requirements:  €101,551 for flats/maisonettes and €169,205 for any other property; exceptions: Special Designated Areas (SDA).

 

 

2:  Object

 

Precise identification and description of the property to be transferred including any rights/servitudes, restrictions, accessories.  Ideally, one should have a copy of the Seller's title deed and take the description from it - one cannot sell more than what one actually owns.

 

 

3:  Price/Consideration

 

One has to determine exactly what the consideration for the sale is - amount, currency, modality of payment - Balance of Price on final deed?; Part Exchange; split pricing for movables / works (fiscal implications)

 

Deposit: not a requirement at Law - customary to deposit 10% as a sign of goodwill on part of Buyer

Deposit vs Earnest (Kapparra).

 

 

4:  Validity

 

If nothing is mentioned in the POS - term is for 3 months ex lege.  However, if no time limit is set and the POS is made subject to a suspensive condition (eg:  Development / Building Permits) then Courts have interpreted this time limit to start running from when the suspensive condition verifies itself.  If any of the parties does not appear on the final deed for no reason valid at Law – a Judicial letter demanding specific performance must be sent before the expiration  of the term.  Court case to be filed within 1 month otherwise POS is technically and legally expired - this procedure should NOT be used to extend the time limit in bad faith.

 

 

5:  Other conditions

 

• Seller to give warranty of peaceful possession and real enjoyment in all sales – seller confirms that the property is really his/hers and there are no third parties who can raise any claims over the property
• Soundness of structure and in line with building permits (Architect's report)
• Bank Loan
• AIP
• Development Permits
• Good title to property
• Brokerage fees
• Substitution by third parties (assignment of rights)

 

 

6:  Registration

 

Parties to POS are to authorise Notary to register agreement with CIR in their name within 21 days.  Payment of 20% of Duty on Documents due with registration.  Any extension to original POS is also to be registered within 14 days.  Any amendments to POS (price, property, parties) is to be notified in writing to CIR prior to publication of Final Deed.

 

Conclusion as Usual

Category:  Purchasing property in Malta

Where is:  http://77greatestates.wordpress.com/2010/06/01/purchasing-property-in-malta/

Posted in: Purchasing Property in Malta