By Dr David Chetcuti Dimech – Paralegal
Promises of sale are an essential stage to the conclusion of a contract of sale of immovable property. Many people will not immediately buy a house, for example – they will first enter into a promise of sale (konvenju), following which the final deed is executed and the actual sale takes place. This means that it is crucial for the individual to be aware of the rules governing the validity of promises of sale of immovable property.
For starters, the promise of sale is considered as a stand-alone contract. It must be in writing, and it must be registered with the Tax Departments. It can also be enforced. Indeed, article 1357(2) of the Civil Code makes it amply clear that, while the promise to sell is not equivalent to a sale, if it is accepted it creates “an obligation on the part of the promisor to carry out the sale, or, if the sale can no longer be carried out, to make good the damages to the promisee”. Indeed, it is not unheard of for someone to be sued because he failed to appear on a final promise of sale.
On the other hand, promises of sale can expire. In fact, they will invariably contain a clause determining by when the final sale is to be concluded, following which the promise expires and is no longer binding. If there is no such term, the law provides a three-month period within which the promise of sale is ‘alive’ and enforceable.
The Civil Code appears to regulate the ‘life’ of a promise of sale quite strictly. Article 1357(2) provides that:
“The effect of such promise shall cease on the lapse of the time agreed between the parties for the purpose or, failing any such agreement, on the lapse of three months from the day on which the sale could be carried out, unless the promisee calls upon the promisor, by means of a judicial intimation filed before the expiration of the period applicable as aforesaid, to carry out the same, and unless, in the event that the promisor fails to do so, the demand by sworn application for the carrying out of the promise is filed within thirty days from the expiration of the period aforesaid”.
From this provision it very clearly emerges that the promise of sale will expire if the promisor is not intimated judicially to fulfil his promise and that this intimation must occur before the date of expiry of the promise itself. But this is not enough. If, despite this intimation to honour his promise, the promisor fails to appear on the final deed of sale, the promisee must sue him in court before 30 days pass from the expiry date of the promise.
It would seem that the law imposes a strict framework regulating the validity of promises of sale and that, if the procedures in article 1357(2) are not followed, the promise of sale is dead and unenforceable.
What does this mean? If the promise is due to expire, but the sale still cannot occur due to some reason or other, the parties must agree to extend the promise of sale by a separate written agreement. The wording of the law seems to suggest that failure to do this and allowing the timeframes mentioned in article 1357(2) to pass without taking the required action is fatal to the promise of sale and results in its expiry. This means that a new promise of sale must be entered into, from scratch.
However, court judgments have at times held that the renewal of a promise of sale that technically expired is enough to bring that promise back from the grave – and so a fresh promise of sale is not required. The reason given for this is that in matters of contract law the will of the parties reigns supreme, and this extends to the resuscitation of expired promises of sale.