Understand the Compromis De Vente / Koopovereenkomst

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When it comes to buying real estate in Belgium, making sure you fully grasp the property sales contract is essential.

Indeed, not fully understanding the document you will sign can lead to financial losses, including the forfeiture of deposits, payment of penalties, unexpected costs, legal expenses, and potential poor investment decisions.

We've heard countless stories of people making costly mistakes when signing their property agreement in Belgium. We want to help you avoid the same experience.

We'll give here a very brief overview regarding the property sales contract in Belgium ; if you want a full checklist, please check our property pack for Belgium.

What is the Compromis De Vente" (French) / Koopovereenkomst (Dutch) in Belgium?

In Belgium, the property purchase agreement, locally known as the "compromis de vente" in French or "koopovereenkomst" in Dutch, is a key document in real estate transactions.

This agreement is essentially a contract where both the buyer and the seller agree on the terms of the property sale, including the price.

This document is legally binding. Once signed, both parties are committed to the transaction. It's a guarantee for both the buyer and seller, as it outlines the terms of the sale and provides legal recourse if either party defaults.

For instance, if the buyer fails to fulfill their obligations, the seller can retain the deposit or seek legal action. Similarly, the buyer is protected if the seller backs out.

For international buyers or non-residents, the process is generally the same, but there might be additional financial considerations, like exchange rates or international transfer fees.

The signing of this agreement typically occurs early in the purchasing process. It's after the buyer has made an offer and the seller has accepted it, but before the final deed of sale is signed. This agreement lays the groundwork for the final deed, which is executed in front of a notary.

Regarding the deposit, it's a common practice in Belgium to pay a deposit when signing the property purchase agreement.

This amount can vary, but it's typically around 10% of the purchase price. This deposit serves as a security for the seller and is usually held in an escrow account until the completion of the sale.

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What should be included in the property purchase agreement in Belgium?

In Belgium, the property purchase agreement, or "compromis de vente" (French) / "koopovereenkomst" (Dutch), is governed by Belgian property law.

This agreement should be comprehensive and include several key elements to ensure its validity and protect the interests of both parties.

The agreement typically must contain:

The specific law governing these agreements is the Belgian Civil Code, which outlines the necessary legal framework for real estate transactions.

Mandatory clauses typically include:

- A clause stating that the sale is contingent on the buyer obtaining a mortgage (if applicable).

- A clause specifying the consequences of either party withdrawing from the agreement.

- A description of the state of the property, including any known defects.

Additional clauses might address:

- Arrangements for any necessary repairs.

- Agreements about fixtures and fittings included in the sale.

Conditions or contingencies can be included in the agreement, such as:

- A successful home inspection.

- The sale being subject to the buyer obtaining financing.

- A clause that the sale is contingent upon the buyer selling their current home.

In Belgium, it's not mandatory for a property purchase agreement to be authenticated by a notary at the initial stage.

However, the final deed of sale, which is the conclusive document transferring ownership, must be signed in the presence of a notary.

Regarding real estate agents, if involved, they usually facilitate the negotiation and drafting of the preliminary agreement. They ensure that the agreement meets legal standards and reflects the terms agreed upon by both parties.

However, their involvement does not replace the legal requirement of having the final deed signed in front of a notary.

What's the signing process like?

In Belgium, the process of signing a property purchase agreement, or "compromis de vente" / "koopovereenkomst", is a crucial step in a real estate transaction.

Here's a detailed look at how this process typically unfolds:

Both the buyer and the seller are required to sign the agreement. It's a bilateral contract, meaning it involves mutual commitments from both parties. The buyer and seller can be individuals or multiple people.

For example, a couple can purchase a property together, or multiple heirs can sell a property they own jointly.

Both parties need to provide identification (such as passports or ID cards) and any other relevant documents concerning their legal status or the property. This includes proof of ownership for the seller and financial documents for the buyer, especially if a mortgage is involved.

The signing process usually follows these steps:

Physical presence of both parties is not always required, especially with the advent of digital signing methods.

There's typically no strict deadline for signing the agreement once terms are agreed upon, but it's in the interest of both parties to do so promptly to secure the transaction.

Once signed, the agreement is valid immediately. Its validity lasts until the final transfer of ownership, which is completed with the signing of the deed of sale in front of a notary. Registration with local authorities is done at this final stage, not after signing the initial purchase agreement.

Making amendments to the contract after it's been signed is tricky. Both parties must agree to any changes. Amendments are usually formalized in writing and signed by both parties.

The timeframe for completing all necessary paperwork and approvals can vary.

Typically, it takes several weeks to a few months from signing the agreement to completing the sale. This period allows for arranging financing, conducting necessary inspections, and preparing the final deed of sale.

The notary plays a key role in this phase, ensuring all legal requirements are met and the property is properly registered.

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How is the payment handled when signing a property purchase contract in Belgium?

In Belgium, understanding the financial aspects of a property purchase agreement is crucial.

Let's delve into the specifics:

When you sign the sales agreement, also known as "compromis de vente" or "koopovereenkomst", you're typically required to pay a down payment. This is usually around 10% of the purchase price, but it can vary.

The typical down payment for a property sale is around 10%. This amount is seen as a commitment to the transaction and is held until the sale is finalized.

Apart from the down payment, there may be other upfront fees or costs. These could include administrative fees or costs related to the preparation of the agreement, although these are not always applicable. It's important to clarify this with your real estate agent or attorney.

The down payment is generally not paid directly to the seller. Instead, it's usually paid to a notary or placed in an escrow account. This ensures the security of the transaction for both parties.

The down payment is typically due upon signing the sales agreement. The exact timing should be specified in the agreement.

There are tax implications to consider. Belgium imposes a property transfer tax ("registration tax") on real estate transactions, which varies depending on the region (Flanders, Wallonia, or Brussels-Capital) and can range from 6% to 12.5% of the property's value. This tax is usually paid at the time of the final sale, not at the signing of the purchase agreement.

The down payment amount can sometimes be negotiated with the seller, but since 10% is customary, there might be limited flexibility.

If the sale falls through, whether the down payment is refundable depends on the terms of the agreement.

Typically, if a sale falls through due to a failed inspection or unmet financing contingency (both of which should be specified in the agreement), the down payment may be refundable.

Generally, the down payment should come from your personal funds. Mortgage loans are usually not used for down payments because the mortgage itself is typically finalized after the sales agreement is signed.

An attorney or real estate agent can assist in handling the payment process. They ensure that the payment is made correctly and securely, often liaising with the notary.

You should definitely request a receipt or confirmation of payment when making the down payment. This serves as proof of your commitment and protects your interests.

For the buyer, the major tax implication is the property transfer tax mentioned earlier. For the seller, there may be capital gains tax implications, especially if the property is not their primary residence.

However, Belgium's tax system has specific conditions and exceptions, so it's important to seek advice from a tax professional.

What are the potentials risks and pitfalls?

You might be interested in reading our article about the common risks and pitfalls surrounding a property transaction in Belgium.

Understanding the risks and pitfalls associated with a property purchase agreement in Belgium is crucial for both buyers and sellers.

In Belgium, once the property purchase agreement (compromis de vente/koopovereenkomst) is signed, it's legally binding, and neither the buyer nor the seller can simply withdraw without potential consequences. There's no statutory cooling-off period like in some other countries.

Withdrawal is typically only possible if there are specific conditions or contingencies in the agreement that aren't met.

For instance, a common condition is the buyer securing financing. If the buyer can't obtain a mortgage and this was stipulated as a condition in the agreement, they can usually back out without penalty.

If one party fails to fulfill their obligations without a valid reason as outlined in the agreement, they may face penalties.

For the buyer, this could mean losing their down payment. For the seller, it could involve compensation for breaking the agreement. The specifics depend on the terms of the contract.

In some countries, like the UK or Australia, there's often a cooling-off period during which the buyer can change their mind. In Belgium, this isn't the case. The agreement is binding from the moment it's signed, emphasizing the need for careful consideration before signing.

One of the main risks for buyers is the property having undisclosed defects. For sellers, a risk is the buyer not being able to secure financing, especially if no financing contingency is included in the agreement. Both parties face the risk of the other party not fulfilling their contractual obligations.

Disputes arising from the agreement are usually resolved through negotiation, mediation, or, as a last resort, litigation. If defects are discovered after signing but before the final sale is completed, resolving this issue depends on the terms of the agreement and the nature of the defects.

If the defects are serious and undisclosed, the buyer may have grounds to seek a remedy, which could include renegotiation of the sale price or even annulment of the agreement in severe cases.

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.