Real-estate Acquisitions: the Promise to Sell concluded under Private Deed is Sufficient for Obtaining a Ruling Having the Force of an Authentic Deed
By Cristina BOJICĂ, Partner, GRUIA DUFAUT Law Office and Teodora KOLETSIS, Senior Associate, GRUIA DUFAUT Law Office
The High Court of Cassation and Justice (ICCJ) has recently rendered a ruling that clarifies the procedure for obtaining a ruling having the force of a sale contract. By its ruling, the High Court has decided that a sale promise, concluded as a private deed has the same force as a promise concluded in authentic form.
As a general rule, there are two ways in which a party to a bilateral promise for the sale of real-estate property may obtain the authentic deed for the transfer of ownership over the real-estate property in question:
– either by voluntarily concluding a sale contract before a notary public
– or in court, if the other party refuses to conclude the sale contract before the notary public within the agreed period.
By Ruling no. 23, issued on 3 April 2017, published in Official Journal no. 365 of 17 May 2017, the High Court ruled that the authentic form of a promise to sell is not a mandatory condition for the courts to issue a ruling having the force of an authentic deed, when one of the parties sues the other party, who has “forgotten” to appear before the notary to sign the sale contract.
Legal Context
The ruling rendered by the High Court has clarified the unsteady judicial practice with regards to the form that a promise sell must have in order for the courts to render a ruling having the force of a sale contract.
Until now, judicial practice was divergent: while some courts required the authentic form of the promise in order to render a ruling having the force of a sale contract, other courts rendered such ruling even if the promise had been concluded as a private deed.
The High Court pointed out that, if the legislator had considered that the promise to sell must necessarily be concluded in authentic form, he would have mentioned it expressly in the legal text, as he had done for the promise to donate.
Moreover, the ruling of the High Court also has economic grounds. More precisely, the conclusion of a promise to sell in authentic form entailed additional costs, plus the legal expenses to be borne by the party asking the court to render a ruling having the force of an authentic deed (for example, the stamp duties, calculated according to the value of the promised property). Therefore, such additional costs may discourage those wishing to conclude a written document, with legal consequences.
The High Court of Cassation and Justice also noted that the promise to sell follows the general rules for the conclusion of contracts, which establish the principle of the common consent, according to which the mere agreement of the parties represents a valid contract. In practical terms, when the court renders a decision having the force of an authentic sale contract based on a promise to sell (whether concluded as a private deed or not), the judge checks the fulfilment of the general conditions of validity and the agreement of the parties. The court ruling thus rendered has the probative force of an authentic deed and fulfils the statutory solemnity requirements.
Therefore, to require a solemn, authentic for a promise to sell would be an excessive, costly and unjustified condition.
Conditions of Validity for the Promise to Sell
Regardless of the form of the promise to sell, before rendering a ruling having the force of an authentic deed, courts also checks the content requirements a promise must comply with, among which: The parties’ identity; The price and its calculation method; The down payment; The real-estate property subject to the promise; The term for the conclusion of the sale contract; The date when the promise was concluded; The signatures of the parties.
In accordance with the Code of Civil Procedure, the ruling of the High Court is compulsory for all courts, as of the date of its publication in the Official Journal, namely as of 17 May 2017.
Article published in 2017 /2018 Yearbook : Office, Logistic and Industrial Parks