Agreement to sell, option or offer to purchase: what is the difference?

Buying or selling a property is a long-term commitment that should not be taken lightly!

When a buyer has to make a final choice, they may need some time to consider whether the property will meet their needs. In this case, they can ask the seller not to sell it to anyone else during this period: this is known as a promise of sale or purchase option.

There is also the offer to purchase, whereby the buyer submits an offer to the seller, who may accept or reject it. This may seem straightforward, but be careful: in both cases, it constitutes a genuine commitment that may bind either the buyer or the seller.

So how should you proceed when using these options? What precautions should you take?

PROMISE OF SALE OR PURCHASE OPTION : the seller makes the commitment

It is not easy for a prospective property buyer to choose from all the properties they view. Sometimes things move quickly: after several unconvincing viewings, they may come across a property they truly fall in love with.

However, they must make a quick decision to avoid missing out on this opportunity. To gain some additional time to consider while ensuring that the owner does not sell the property to someone else, the buyer may use a promise of sale (or purchase option).

Important! A purchase option is a genuine contract representing a commitment on the seller’s part: if the buyer decides to exercise the option, it then becomes a bilateral contract.

In this case, the purchase will be completed under the same conditions as those set out in the option. Negotiations are over: it is as though the option becomes the preliminary sale agreement. The sale will therefore become final on the date the option is exercised. This is why it is important to think carefully and pay close attention when drafting the purchase option. You can always ask your notary or estate agent for standard templates.

What about the seller?

The seller is the only party bound by the purchase option: they are responsible for not selling their property to anyone else during the period covered by the document. They are simply giving the prospective buyer additional time to consider. There is no guarantee that the sale will ultimately be completed. The buyer may change their mind at any time, even when the consideration period comes to an end.

The seller must also ensure that the conditions of the option are satisfactory, because if the buyer decides to complete the sale, the stipulated conditions will be final and irrevocable.

A purchase option therefore represents a risk for the seller, as it effectively removes a property from the market for a specified period. Think carefully before making a commitment.

There are different types of options (paid or free of charge, transferable or non-transferable, exclusive or otherwise,…), so remain vigilant. Always remember that it is best to seek advice from your notary or estate agent before signing anything.

OFFER TO PURCHASE  : the buyer makes the commitment

An offer to purchase works the other way round: it is the buyer who makes the commitment by offering the seller a price, which the seller may accept or reject. It is important to clearly define the period for which the offer remains valid. Otherwise, the buyer would be bound indefinitely. There is no standard form for an offer to purchase: it may, for example, be made by letter or email. In the event of a dispute, a document signed by both parties always remains the most reliable evidence!

In all cases, the offer to purchase must contain at least the following information:
– The buyer’s full name and identity details,
– Address and type of property (do not hesitate to include any ancillary features of the property, such as a parking space, cellar, etc.),
– Price offered,
– Period for which the offer is valid,
– Any reservations, comments and conditions precedent (such as obtaining a mortgage or confirmation of compliance with planning regulations)
– Date and signature.

Think carefully before making a commitment because, if the seller accepts the offer to purchase, the sale will become final unless both parties mutually agree to cancel it or one of the conditions precedent is not satisfied.

In conclusion

The promise of sale/purchase option and the offer to purchase therefore represent a genuine commitment for either the buyer or the seller. A purchase option gives the buyer time to consider without making a commitment, but they must pay close attention to its conditions because they will then have to purchase the property under the stipulated conditions.

In the case of an offer to purchase, the buyer undertakes to proceed with their offer if the seller accepts it.

What happens next? 

THE PRELIMINARY SALE AGREEMENT

The preliminary sale agreement is usually signed at the notary’s office. It ensures the full legal certainty of the sale and makes it enforceable against third parties (the bank, public authorities,…). Furthermore, by signing the preliminary sale agreement at the notary’s office, you will benefit from accidental death insurance covering your heirs up to a maximum of 250,000 euros, as they are obliged to purchase the property (unless otherwise agreed or challenged through the courts). It is therefore always better to sign the preliminary sale agreement at the notary’s office rather than at the estate agency. It is customary for the buyer to pay a deposit of approximately 5 to 10% when signing the preliminary sale agreement.

THE NOTARIAL DEED OF SALE

The notarial deed of sale completes the sale and is generally signed at the buyer’s notary’s office.  This is when the final payment is made and the keys are handed over.