Sale and purchase of land or a condominium: what to read first

Ownership of land or a condominium unit passes at the Land Office on the day of registration, and nowhere else. Between the day terms are agreed and that day, often months apart, the only thing binding either side is the sale and purchase agreement. It matters far more than most buyers assume.

The usual sequence is that the buyer pays a reservation deposit first, for fear of losing the property, and reads the agreement afterwards, treating the deposit as merely holding the place. In law it is usually earnest money, which can be forfeited. By the time the buyer finds a clause that is not acceptable, there is nothing left to negotiate with.

What should you read first before buying land or a condo?

• The property itself: title number, parcel number, area, the buildings, and everything agreed to be included — air conditioning, built-in kitchen, furniture.
• The price and the instalments, stating clearly that the reservation and the down payment form part of the price rather than sitting outside it.
• The date of registration of transfer. It has to be a fixed date or a measurable condition, with stated consequences if either side postpones.
• Who pays which fee and which tax. The Code splits the costs of the contract of sale equally unless the parties agree otherwise, and each tax has a person liable for it under the tax law, so in practice this has to be settled in the contract. It is the single most common argument on the day. Work the figures out before agreeing.
• What happens if the buyer's loan is refused: refund or forfeiture. This is the most important clause for any buyer relying on finance, and standard forms usually provide for forfeiture.
• The seller's warranties: that the property is free of encumbrances, that there is no litigation, no tenant or occupier, and no encroachment.
• What the seller must complete before the transfer date: discharging the mortgage, removing names from the house registration, clearing arrears of common fees, and removing anything encroaching.
• The consequences of default, which must be balanced. Not forfeiture against the buyer and a bare refund of principal against the seller.
• For a condominium, an obligation on the seller to produce the debt-free certificate from the juristic person on the day, without which the transfer cannot be registered.

What does the wording actually mean?

• "The reservation fee is non-refundable in any circumstances" includes the circumstance of the seller defaulting. It should be refundable in full where the cause is not the buyer's.
• "The seller may postpone the transfer date as necessary" means indefinitely, with no remedy. Set a maximum number of days and a right to walk away with the money back.
• "All fees and taxes are payable by the buyer" means paying the seller's taxes too, which in some cases are several times the transfer fee itself.
• "The property is delivered in its condition as at the date of this agreement" puts later defects on the buyer. Attach photographs and a condition schedule.
• "The buyer acknowledges that the property is occupied" means the buyer deals with the occupier, which can mean an eviction action lasting a year.
• "If the buyer does not obtain finance the buyer shall be in default" means losing the deposit because a bank said no. It should be a ground to terminate with a refund.

Which clauses should you refuse?

• Forfeiture of everything paid in any circumstances, including the seller's own default.
• Penalties running against the buyer only, with no consequence for the seller.
• No transfer date, or a date "to be notified later".
• A right for the seller to change the design, materials or floor area without adjusting the price — common in agreements for units still under construction.
• A blanket waiver of the buyer's rights over defects.

What does the law give you if the agreement is silent?

• An agreement to sell immovable property is enforceable only where there is written evidence signed by the party to be charged, or earnest money has been paid, or part performance has been made.
• Where the party who paid earnest money defaults, it is forfeited. Where the party who received it defaults, the Code requires only that it be returned. A double refund is a contractual term, not a statutory right, and without it the buyer recovers the deposit plus whatever loss can be proved. Put the term in the agreement on the day it is signed.
• A penalty that is disproportionately high may be reduced by the court to a reasonable amount.
• Ownership passes only on registration before the competent official. Paying in full or receiving the keys does not make the buyer the owner.
• The seller is liable for defects existing before delivery, unless the buyer knew of them at the time of sale; and that claim carries a short period of one year from discovery.
• The seller is liable where a third party disturbs the buyer's rights by asserting a pre-existing right over the property.
• Foreign nationals may hold condominium units only up to the statutory proportion of the total unit area in the building. Beyond it, the transfer cannot be registered.
• Registration of a condominium transfer requires the debt-free certificate from the juristic person of the building.

Checklist: what to confirm before paying a deposit

• Obtain the owner's copy of the title document and read every entry on the reverse.
• Check that the seller is the registered owner, and obtain the spouse's written consent where the seller is married.
• Check zoning, access, and the boundaries on the ground against the plan.
• Check for a mortgage or other encumbrance, and require discharge on the day of transfer.
• For a condominium, obtain the debt-free certificate and check the foreign ownership proportion.
• Calculate the fees and taxes payable on the day in advance, then write into the agreement which side pays what.
• Pay every instalment through a bank account, stating what the payment is for.
• Initial every page and keep a complete counterpart each.

This is the general position, not advice on your agreement, and it is not a template to use on your own. What has to be checked differs between bare land, a house with land, and a condominium unit. Send the title document and the draft before paying a reservation deposit.