This article is intended to provide information for international buyers looking to purchase property in Malta…
The Konvenju (Promise of Sale)
Once you have found a property that you like, have placed an offer on it and negotiated a price that both parties are happy accepting, you will proceed to sign a promise of sale or preliminary agreement that is commonly referred to in Maltese as the konvenju.
As the English term “promise of sale” implies, the konvenju (or konvenjum) is a contract signed in the presence of a notary that describes the property and the terms of the sale in full detail. It is drafted by the notary and should contain details of the buyer and seller, the agreed price and payment terms, a detailed description of the property and adjoining tenements, whether any furniture will be included in the selling price, the period of validity of the konvenju, and the terms and conditions agreed upon by the parties.
The konvenju is not the actual sale contract itself, but an agreement that the prospective seller binds himself to selling the property to the prospective buyer who in turn binds himself to purchase it. So it is a promise of a sale that will happen in future if the provisions laid down in it are all met. The notary acts as an independent escrow and with the signed konvenju, he or she is being instructed to carry out the appropriate searches to verify the seller’s legal title in preparation for final contract signing. The length of the konvenju would normally be around 3 to 6 months or even longer if agreed so between the buyer and seller. In this interim period, the seller may be required to regularize certain aspects of the property or complete finishings that may have been pending, and the buyer may need to secure funding or make other arrangements to complete the purchase.
Deposit payments on Konvenju
On signing the konvenju, the buyer is required to pay the equivalent of 1% of the purchase price as provisional stamp duty. This is part payment of the full 5%, with the balance of this coming due on signing of the final deed. The buyer will also need to pay an agreed deposit, which is generally 10% of the final price of the property. The parties may agree that the deposit is passed on immediately to the seller or alternatively that it is kept by the notary until the sanction letter is issued by the buyer’s bank or until the final contract is signed. Any agency commission due to an estate agent that facilitated the sale would be due on signing the final deed, not on signing of the konvenju.
Conditions and Provisions that may be included in the Konvenju
In order to protect his interests, the buyer may request certain provisions to be included in the konvenju that will remove the obligation on him to purchase the property. These could include:
1. In case bank financing is not secured by the buyer.
2. In case the notary’s research reveals that the seller’s legal title to the property is not in order.
3. In case the notary’s research reveals that the planning permits of the property are not in order.
4. Any other condition agreed between the buyer and seller is not fulfilled to the buyer’s satisfaction.
If the property sale does not go through for any of these reasons, the buyer is entitled to a full refund of the deposit paid.
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