Withdrawal from housing transaction after an offer
The sale of a share of stock in housing company is regulated by Housing Transactions Act and real estate trading by Code of Real Estate. These transactions differ significantly from each other and it is therefore important to know which provisions apply to your own situation.
Withdrawal from housing transaction
The sale of a share of stock in housing company is considered as purchase of movable property. The law does not have specific formal requirements for housing transaction, therefore in principle even an oral agreement is valid.
Accepted offer considered a housing purchase
An offer and an accepting response will be required for concluding a contract. After that, the deal is already done.
If, for example, the buyer refuses to complete the transaction, the seller could ultimately claim the purchase price from the buyer in the court. The parties must always be careful with their tenders.
If you do not want to commit to a deal, you should not make any kind of an offer.
It is reasonable for the seller to be satisfied with a down payment or a contractual penalty when the buyer retreats
If the one party changes his mind in relation to trade, in practice, it is not reasonable for the other party to go to court to claim payment.
It is common to use contractual penalty, i.e. the standard compensation which the refusing party has to pay to the other party in case of non-conclusion of the sale.
On the other hand, the down payment can be used as “collateral” for the sale. If the buyer withdraws from the trade, the seller can keep the down payment.
According to the law, the maximum amount for the standard compensation or the down payment is 4% of the purchase price. If the seller is a private person and the buyer a consumer, the parties may, however, agree that the withdrawal from the trade corresponds to the actual damage suffered.
If the seller has received a down payment, he/she must not receive competing offers (with or without a down payment). If the seller does so, the offers with down payments will not be binding.
Withdrawal from real estate transaction
Real estate transactions are comprehensively regulated. The trade must always be made as required by the Code of Real Estate, and a mere offer is not binding in the same way as in the sale of a share of stock in housing company.
A mere offer does not require you to buy a real estate
Also, a possible precontract of an intended sale of real estate must be made according to the formal requirements by the Code of Real Estate. If the parties have concluded such a precontract, it will oblige to the conclusion of the final contract.
In general, real estate transactions are carried out in the same way as transactions of a share of stock, that is, the buyer makes an offer, the seller accepts it and the parties conclude the final contract of sale.
In a real estate transaction an offer does not oblige to the conclusion of a contract, and the party withdrawing from the sale will not necessarily end up liable for compensation.
Compensation might have to be paid even without a precontract
If a transaction has been agreed but a precontract has not been made, the party who refuses to conclude the transaction shall pay reasonable costs incurred by advertising, familiarization with the real estate and other activities necessary related to the transaction. The contract of standard compensation is therefore not binding on the parties.
In practice, in real estate transactions, the prospective buyer can cancel his offer and does not necessarily have to compensate the seller for anything. In transaction of a housing share, the compensation would normally be 4% of the purchase price.