Preliminary contract

The preliminary contract as a business tool in the investment process

The preliminary contract for the purchase of a real estate is not a legal necessity. In practice this contract is part of the “customs“ the real estate business. As it was mentioned the written form is necessary for the validity of this contract. What is important that this contract does not have a translative effect, the contract does not make you owner of the property. Only the notarial deed have that effect. So You could ask yourself why bother with this preliminary contract. The answer is complex. But consider you need time to make a due diligence investigation of the property and the seller, or you just need the time to gather all the money or finally you choose to bye a house which is not fully constructed yet. So that is why the business practice use this preliminary contract to manage all the modalities of the deal which can be quite complex. And all those modalities are subject to negotiation. That is why you need a professional advice from the very beginning of the process. Because when you need a court pleadings things could be very complicated. A barrister cannot help with a bad investment choice. Every negotiation would need a lot of compromises that could occasionally unacceptable. This is a small briefing another posts would normally follow. But take this as a tip. Every preliminary contract has a business case who governs his logic. The task of the solicitor, ar the barrister acting as a solicitor is to provide with the best legal protection available. But it should be emphasysed the best protection is the reputation of the seller.