When it comes to buying a property, many people are paying (too) little attention to the purchase offer.
Buyers have often been looking for their desired apartment or property for a long time, and once they finally found it, things usually have to move quickly. If, as in many cases, a real estate agent is engaged with the brokerage of the property, this agent might be interested in working towards the prompt signing of a purchase offer by the buyer.
Legal effects of the purchase offer
It should be noted that such purchase offers are usually already legally binding under Austrian law. Upon acceptance of the signed purchase offer by the counterparty, a legally binding contract is concluded, and the buyer is obliged to buy the property at the conditions set out in the purchase offer and to pay the purchase price. A withdrawal from the purchase offer might only be possible under certain (very limited) conditions.
Therefore, if the buyers have already submitted a purchase offer to a seller, it is advisable to wait and see whether the seller accepts it within the period set out in the offer. Another offer submitted by the buyer for another property during this period could potentially lead to two effective purchase agreements, if both offers are accepted by the respective seller.
Legal examination of the property before signing the purchase offer
Due to the binding effect of the purchase offer mentioned above, it is advisable to carry out the legal examination of the object of purchase already before signing the purchase offer. The land register shows the owner of the object, whether certain encumbrances (such as mortgages, residential or usufructuary rights) are attached to it and whether condominium ownership of the property has already been established. In the case of condominium ownership, the utility value appraisal and the condominium ownership contract must be checked and reviewed from a legal perspective. Furthermore, the accessory status of any parking spaces, cellars or private gardens sold with the property should be reviewed. Likewise, inquiries should be made about existing usage regulations, since these are often not evident from the land register. Further points to be checked before signing of the purchase offer are the running expenses of the property, the amount of the reserve, any apportionment keys deviating from the law regarding the costs, possible upcoming renovation work, the dedication of the property as well as obtaining information about building and use permits.
If such detailed legal examination of the property is not carried out before the purchase offer is signed, there is a risk that these issues are only identified once the purchase agreement is drafted by a lawyer, which is usually too late given that the purchase offer is already legally binding. If the buyer then wishes to withdraw from the purchase offer, this might only be possible in the context of time-consuming and expensive legal action with an uncertain outcome.
In one case from our consulting practice, the exposé on an attic apartment sent by the broker to the buyer set out that a device for air conditioning units was already prepared. The buyer relied on this statement and signed the purchase offer in the belief that he would be able to install air conditioning units in the apartment. However, it turned out that all other co-owners of the property did not give their consent for the installation of the air-conditioning units, which meant that the installation of the air-conditioning units was not permitted.
Purchase offer constitutes the basis for the purchase agreement
The purchase offer already defines the essential points for the purchase agreement to be concluded subsequently and is therefore the basis for the purchase agreement. The sample forms of purchase offers provided by real estate agents or available on the Internet are often extremely concise and do not govern all issues that are relevant in connection with the purchase of a property. Or they contain provisions that are disadvantageous for the buyer, such as a comprehensive exclusion of warranty, which (for the average buyer) is not always obvious as such. For example, sample forms often stipulate that the property is purchased “as seen”. In the contract negotiation phase, the seller could then argue that a warranty exclusion (which is generally permissible between private parties) has thus been agreed. In all these cases, discussions are inevitable when drawing up the purchase contract, as the points relevant from the buyer’s point of view are not governed in the purchase offer or are governed to his disadvantage. The purchase offer should therefore only be signed if it covers all relevant issues. It is advisable not to rely on verbal promises and therefore to include them in the purchase offer.
Necessity of reservations and conditions
Daily practice shows that the buyer’s financing bank might not issue a binding commitment to finance the purchase object until it has been provided with a draft of the purchase agreement for the property. Therefore, a purchase offer should also contain a reservation or condition according to which the offer shall not be valid if the buyer is not able to obtain financing from its bank. Without such a provision, the buyer would be bound by his offer and could be sued for being held to sign the purchase agreement even though he does not receive a financing commitment from his bank. In addition, legal examination of the property may require further reservations and conditions.
In general, it should also be noted not to be pressured by brokers or sellers to sign a purchase offer, even if it is suggested that there are several other interested parties and that the object could otherwise be quickly taken.
It is also advisable that the buyer’s lawyer is drafting the purchase offer and not to adopt samples from the Internet or from brokers without checking them from a legal perspective. In any case, the purchase offer should contain the purchase price, freedom from encumbrances, the lawyer that is drafting the purchase agreement, bearing of costs, warranty, time limit of the offer and reservations.
As next steps, based on the purchase offer, the purchase contract is drafted, and the contract is signed in front of the notary so that the ownership of the buyer in the land register can be registered.
The above statements also apply mutatis mutandis to a rental offer. Given the risks described above, it is advisable to seek legal advice at the beginning of the transaction and before signing the purchase offer.
No liability is assumed for the correctness and up-to-dateness of the legal contents of this website. In particular, the presentation of the information does not constitute legal advice or is suitable to replace legal advice in case of concrete questions. If you have any questions, please do not hesitate to contact attorney MMag. Maximilian Höltl.