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Signing the Promise of Sale (Konvenju)
Once your offer has been accepted, it is time to put everything into writing in the presence of a notary. This process is known as the signing of the promise of sale (konvenju). If you do not have a notary, conduct some research on reputable notaries, or you could ask any relatives or friends for a recommendation. Some sellers may recommend using their notary; however, by law, the choice of a notary is entirely up to you and should be based on selecting one with whom you feel comfortable entrusting your work.
While notary fees are regulated by law and calculated using the electronic calculator available on the Notaries of Malta website (https://www.notariesofmalta.org/members/calculators/bills/), certain fees may vary depending on specific circumstances—such as the property’s value, the loan amount, the root of title, public registry searches, and other aspects of the transaction.
Since notaries maintain a neutral and unbiased role during this process, it may also be advisable to consult a lawyer before signing the promise of sale. A lawyer’s role is to fully protect your interests, where a simple legal consultation can save you thousands of euros down the line.
At this stage, the notary’s primary responsibility is to draft the promise of sale, which legally binds you and the seller to an agreement. While the specifics may vary from one transaction to another, a promise of sale typically includes the following:
Details of Both Parties: Information about the seller and the buyer.
Property Information: The property address, property type, the level of finishing, whether any ground rent is applicable, and other relevant details.
Deposit Payment: The deposit amount, payment terms, and who will hold the deposit (e.g., seller or notary). While it is common practice to pay a 10% deposit of the purchase price upon signing the promise of sale, this is not a fixed rule and is open to negotiation. Additionally, as banks typically finance up to a maximum of 90% of the property’s price, the remaining balance must be covered by your own funds. You can also negotiate the timing of this payment with the seller.
Property Price: The agreed-upon price of the property,
Validity Period: The validity period of the promise of sale and when the final deed signing will take place. When the purchase is financed through a bank loan, a promise of sale typically has a validity period of 6 months. However, this period can vary depending on the terms agreed with the seller and notary.
Subject to the Bank Loan Clause: In cases where the bank does not lend you the required amount, the promise of sale becomes null. Since the agreement specifies a timeframe for the purchaser to be covered by this clause, you should discuss with the bank beforehand how many weeks are needed for the issuance of the sanction letter (Facility Letter) to reflect this in the promise of sale.
Subject to Approved Permits and Legal Searches: In the case of pending permits, the notary should include a clause stating that the promise of sale is subject to the granting of the necessary permits, protecting the buyer by rendering the agreement null if the Planning Authority denies approval.
Subject to the Housing Authority’s Approval: If you have applied for a Housing Authority scheme to purchase a property, such as the 10% Deposit Payment Scheme, the promise of sale must include a clause stating that the sale is subject to the Housing Authority’s approval for that scheme.
Date of Completion: If the property is in shell form or being sold on plan, the promise of sale should specify the completion date.
Easements and Servitudes on the Property
Subject to Conforming to all Planning and Sanitary Laws
Subject to Planning Permission: If planning permissions are required for any development or necessary alterations forming part of the purchase negotiation, including regularisation or sanctioning, the promise of sale should include a clause stating that it is subject to the successful obtainment of such permissions.
Subject to Electricity and Water Meters: If the property is being purchased during the construction phase or on plan, a clause stating that the sale is subject to the installation of electricity and water meters should be included. This clause ensures that the Planning Authority can issue a compliance certificate, confirming that the works have been carried out according to the approved permits, with proper craft and in compliance with current regulations.
Subject to a Maximum of 5% Discrepancy in Measurements: For properties purchased on plan, the law permits a maximum discrepancy of 5% in measurements. Therefore, a clause should be included stating that if the discrepancy exceeds 5%, you have the right to terminate the promise of sale, thereby rendering the agreement null and void.
Other Clauses Required by Law: In addition to the aforementioned clauses, the law also requires other clauses in a promise of sale, such as the seller’s warranty of peaceful possession and the absence of latent defects in the property.
Other Conditions: Include any agreements made between you and the seller (if applicable), such as a list of agreed-upon finishings.
On the day of the promise of sale signing, you should have:
Chequebook for the Deposit Payment: Although it is common to pay the deposit by a personal cheque or banker’s draft, you can also make payments through a bank transfer. In the case of a bank transfer, contact your bank in advance to ensure that your transfer and credit limits are increased and sufficient to cover the amount payable on the day. However, it is always advisable to clarify this with your notary in advance, as notaries have the right to decide which types of payments are preferable or acceptable for their practice. Cash payments exceeding €10,000 are illegal under the regulations of the Financial Intelligence Analysis Unit.
An ID card, passport, or any other official document used for personal identification
Payment for the stamp duty
On the other hand, the seller is required to present a copy of the original acquisition document for the property being sold as proof of ownership. Additionally, the seller may need to provide other documents, such as a block plan, personal identification documents (e.g., ID card or passport), and any other required paperwork.
Upon signing the promise of sale, you must provide the deposit, typically 10% of the total property value. This amount, however, may vary depending on the agreement you have with the seller. The notary normally retains the deposit until you sign the final deed of sale; however, in some cases, the seller may request that the deposit be transferred directly to them. At this stage, you should pay the stamp duty, which amounts to 1% of the total property value.
Keep in mind that once you sign the promise of sale, you cannot back out of the purchase without losing the deposit unless there is a valid reason. Such valid reasons could include the bank’s denial of the home loan or the seller’s failure to get approval for pending permits—provided these clauses are included in the promise of sale.
Therefore, before signing, take your time to read the preliminary agreement carefully and thoroughly. Bring someone with you to review the promise of sale to highlight any important details you may have missed. Although this step may seem daunting, a trusted notary will help ensure the process goes smoothly, so do not hesitate to ask questions during the process.
The notary should register the promise of sale within 21 days. Once registered, you and the seller will receive a postal notification from the Inland Revenue. If you do not receive the notification a few days after the 21-day period, contact the notary to confirm that everything is in order.
Step-by-Step Guide for First Time Property Buyers
This step-by-step guide is also available for download through the button below.
