Cancel the purchase and sale contract of a property

Cancel the purchase and sale contract of a property

To protect the seller, but also the buyer, the Italian legislative system provides for the possibility, in some cases, of being able to cancel a contract for the sale of a property.

The cancellation of the contract can be requested by the party who believes their rights have been violated and this can take place in different ways depending on the state in which the negotiations between the two parties are: when only a proposal has been made, or after the signing of the preliminary agreement (compromise), or even after the signing of the actual contract.

Reasons why you can request the cancellation of the contract

What are, first of all, the reasons why you may want to cancel a real estate contract? It may happen that one of the two counterparties considers that there are unclear aspects, misconduct of some kind, shortcomings, inaccuracies … in short, that the accounts do not add up and therefore it is better not to proceed. In this sense, the law provides for actions that protect both sellers and buyers, and this both during the evolution of the various phases of the negotiation, and when the actual contract has already been stipulated: in the latter case, the notarial deed may be revoked.

It is therefore a question of understanding to what extent the parties can be considered protected and what are the necessary conditions to be able to take advantage of these forms of protection, which differ according to the progress of the negotiation.

Withdrawal from the purchase proposal

If the negotiation takes place through an intermediary (real estate agency), usually the buyer makes a purchase proposal by delivering a check as a deposit. This proposal is irrevocable for 14 days and the seller is clearly free to accept it or not. If the proposal is accepted, the negotiation becomes more profound, even if substantially there is still nothing so binding for the parties.

What is certain is that there is the need to conduct “games” having adequate behaviour based on sound principles of fairness and diligence. Moreover, a lot also depends on the agreements made with the real estate agency. Sometimes, for example, the seller undertakes to pay the commission even just for the fact that the agency is able to procure a customer: if the seller, for his own reasons, decides to reconsider at the last moment, this must not fall on the work of the intermediary, who must, in any case, be paid. In other cases, however, it can be expected that the agency receives its percentage only once it arrives at the time of the notarial deed.

Returning to the question of fairness, if after the purchase proposal, accepted by the seller, one of the two parties suddenly decides to take a step back, thus damaging the other party, now convinced of the success of the negotiation and that perhaps, in the meantime, has renounced other occasions, there may be the conditions to be able to request compensation for damage. The withdrawal is not allowed, for example, if the seller, in order to accept the proposal, has in the meantime refused others that could still be interesting, or if the buyer has in the meantime found a potential buyer for the house in which he lives. And which, at the same time, must necessarily be able to sell.

Pre-contractual liability

Negotiations are not always carried out thanks to the support of a real estate agency or an intermediary in the sector. Even in these cases, however, certain legal obligations arise between the parties.

During the various stages of the negotiation, but in particular, from the acceptance of the purchase proposal onwards, the two counterparties are required to behave correctly, what is commonly defined as “acting in good faith”. This means, first of all, having to provide all useful information to the counterparty so that the latter can have all the data and elements necessary to be able to calmly assess whether and how to proceed.

If the basic rules of “good faith” are violated, pre-contractual liability is triggered which determines the right to claim damages. To give an example, discovering at a certain point that the house object of the negotiation is subject to constraints that had not been mentioned, or that it is abusive or without habitability, can undoubtedly constitute a good reason to block everything and demand compensation.

Within certain limits, as long as the parties do not in fact create a more than legitimate expectation on the imminent conclusion of the negotiation, both are free to withdraw even without an apparently valid reason.

The situation changes when the negotiation, on the other hand, reaches a more advanced stage: in this case, if the reason is no longer valid and if, therefore, the above principle of “good faith” is violated, then can be called to answer for it through compensation.

Preliminary sales contract: when can it be cancelled?

When the compromise, also known as a preliminary contract, is signed, a real legal bond is established from which it is possible to withdraw only if there are reasons of a certain type.

To give an example, if the preliminary agreement does not indicate the seller in a precise and correct manner (suppose only one spouse, when in reality the property belongs to both), or if the price is defined according to the square footage, but based on a subsequent control this turns out to be lower, or in any case in many other cases in which problems of this kind arise, then it is possible to request the cancellation of the compromise.

Even in the case of the purchase of a property under construction, a hitch may occur that makes such cancellation necessary: ​​for example, when the builder does not issue the surety required by law to guarantee the deposit received.

Cancellation of the actual contract (deed cancellation)

In some cases, it may happen that the conditions are created to request the revocation of the notarial deed, in practice the cancellation of the actual contract. In these circumstances, the deed remains valid in any case pending the sentence of the Judge. The procedure for requesting cancellation must be activated within certain deadlines (there is a limitation period of 5 years) and according to specific procedures.

The various cases of cancellation are explained in the Civil Code, and substantially refer to the following cases:

  • Willfulness and deception of one of the parties to the detriment of the other, perhaps withholding important information.
  • Physical or psychological violence perpetrated against the counterparty, in order to reach the definition of the contract.
  • Excusable and recognizable error in identifying the object of the contract.
  • Inability to understand and will of one of the two parties.

The Civil Code also contains further details regarding the nature of any error that may be at the basis of the request for cancellation of the sales contract.

These same requirements, in principle, are also the same that must exist in the event that one wishes to proceed with the cancellation of the preliminary contract.

If there are no more than valid reasons, then, as we have seen, the “injured” party has the opportunity to have some forms of protection. For example, the seller can withhold the depositor in the opposite case, the buyer can even ask for double the deposit paid. The termination of the definitive sales contract, on the other hand, takes place by the decision of the Court.

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