Promissory Note of a Property Transaction

A promise to sell is a legal agreement between two parties—the seller and the buyer—in which the seller agrees to sell a specific property to the buyer for an agreed price at a future date. This agreement is commonly used in real estate transactions as a preliminary step before signing the final deed of sale.

The commitment to buy and sell generally includes the following elements:

Identification of the Parties (Seller and Buyer)

Full name, RUT, profession or occupation, and domicile of both parties: buyer and seller.
If they act on behalf of others, their capacity and the corresponding powers of attorney must be indicated.

Property Description (Property Background)

Precise details of the property being sold, including address, area, specific features, and other relevant information.
Identification of the special boundaries that appear in the property registry.
Details of the previous purchase and sale, including the notary, date, and repertory number.
Reference to the current and previous title of ownership, specifying the page, number, and year where it is registered in the Real Estate Registry (Conservador de Bienes Raíces).
The appraised value of the property.

Promise to Sell, Assign, and Transfer

The seller promises to sell, assign, and transfer the individualized property.
The buyer promises to purchase the property at the price and conditions stated in the promise.

Price and Payment Conditions

The total sales price is expressed in Chilean pesos.
The form of payment is indicated: cash, installments, mortgage credit, etc.
Payment terms and conditions, including due dates and installment amounts.
Indication if there is a price adjustment for the CPI (inflation).
Specification if the sale includes a deposit as a guarantee or reservation. This deposit may be non-refundable if the buyer does not comply with the conditions agreed upon in the promise.

Terms and Conditions

Deadline for signing the definitive purchase contract (deed of sale), with possible extensions if both parties agree.
Provision that signing the definitive deed is subject to the property's title deeds being in order, including delivery of legal documents for a Title Study by the buyer.
Other conditions or contingencies to be met prior to final ownership transfer.

Penalty Clause (Penalties in Case of Non-Compliance)

Possible compensatory penalties for non-compliance or withdrawal, typically a fine of 10% of the purchase price.
The promise may have the status of "enforceable title of collection," allowing enforcement even if one party withdraws.

Material Delivery of the Property

Date and manner in which the property will be delivered to the buyer.
Condition of delivery (occupied, unoccupied, etc.).

Special Clauses

Additional clauses may be included as needed, such as:

Financing Conditions: Terms related to buyer financing, deadlines for mortgage approval, and consequences if financing is not obtained.
Exclusivity Clause: Seller agrees not to negotiate with other buyers during a specified period, granting the buyer exclusivity.
Clauses on inspections, repairs, legal restrictions, or other important aspects specified by both parties.
Hidden Defects Clause: Protects the buyer in case hidden defects are discovered after signing, detailing claims procedures.
Termination Clause: Conditions under which either party may terminate the agreement before executing the public deed.

Formalities

The promise of purchase and sale must be in writing and signed by both parties.
It is recommended that it be drafted by an attorney to ensure legal validity.

Conflict Resolution

Choosing between arbitration or courts to resolve disputes depends on factors such as the nature of the dispute, party preferences, and characteristics of the judicial and arbitration systems.

Arbitration: Disputes are resolved by an arbitrator, often an expert, offering confidentiality and usually faster resolution though at a higher cost.
Courts of Justice: Public process with judges not necessarily experts on the matter; usually slower but initially less costly. Decisions can be appealed, adding time and expenses.

Additional Elements That Can Be Included

Guarantees offered by the seller on the property.
Possibility of withdrawal by the buyer.
Conflict resolution mechanisms.
Specification that the property will be sold ad corpus, as is, in its current state.

The promise of purchase and sale is a crucial document that formalizes the commitment between seller and buyer and establishes the foundation for the real estate transaction. Once all stipulated conditions and terms are met, the final deed of sale is signed, legally transferring the property. This deed is initially notarized and subsequently registered in the respective Real Estate Registry (Conservador de Bienes Raíces).

At Produncan Lands, we are experts in drafting promises and deeds of sale for real estate transactions. Contact us if you need advice!

For personalized assistance and to ensure legal certainty, consult a qualified attorney or contact Produncan Lands using the link above.