The transfer date: a binding agreement, not a formality
Signing the purchase agreement for a home is a celebratory moment for many people. The signatures have been made, the financing is in place and the moving boxes are ready. Yet there is one moment in the process that often gets less attention: the transfer date. We regularly see buyers and sellers consider this date flexible. Passing a week later, that should be possible, right? Legally, however, this is different. The transfer date is a binding agreement, and those who fail to comply with it run considerable risks.
What is the transfer date?
The transfer date, also known as the delivery date or passing date, is the time when ownership of the property officially passes from seller to buyer. This is done through the notarized deed of transfer. From that moment on, the buyer is the legal owner and bears the risk for the property. Taxes, insurance and utilities are also allocated to the new owner as of that date.
The transfer date is stipulated in the purchase agreement, making it an essential part of the agreement between buyer and seller. It seems like a formality, but in a legal sense it is the day on which both parties must fulfill their obligations: the seller must deliver, and the buyer must pay.
Legal framework: fatal deadline
Under Article 6:83 of the Civil Code ("BW"), exceeding a so-called fatal deadline constitutes immediate default. An agreed transfer date is usually regarded as such a fatal deadline. This means that the party who fails to deliver on that date is automatically in default, without notice of default being required.
Article 6:74 BW then provides that the person who fails to fulfill his obligations is liable for damages. The other party can then choose to still claim performance, dissolve the contract or claim damages.
In short, anyone who fails to meet the transfer date commits default.
Funding not secured? Communicate in writing!
In practice, the most common reason for delay is that the buyer's financing is not yet in place. This process can take time and the buyer is dependent on the bank. Still, that does not relieve the buyer of his obligation to deliver on time.
If the transfer cannot take place on the agreed date, it is advisable to ask the seller for a timely extension in writing. The purchase agreement often imposes certain conditions on an extension request. A phone call to the real estate agent is usually not sufficient. Usually, extension of time must be requested in writing, addressed to the seller. It is wise to state clearly therein:
- That there is still no response from the bank on the financing request;
- That the bank has indicated it will come up with a response no later than date x;
- and that a postponement of the transfer date is therefore requested.
Only when the seller expressly accepts the request is the date moved. Without written agreement, the original delivery date remains in effect - with all its consequences.
The consequences of late delivery
As mentioned, the seller has a number of options once the transfer date has passed. In addition, many purchase agreements contain a penalty clause. A classic example of such a penalty clause is a penalty of 10% of the purchase price in case of non-performance. For a house of Cg 500,000, this means a fine of Cg 50,000, often in addition to the possibility for the seller to claim additional damages. Not keeping a close eye on the transfer date can therefore have significant financial consequences.
The role of the notary
The notary supervises the legal settlement of the transfer, but cannot grant an extension without the consent of both parties. It is sometimes thought that "the notary will take care of it," but that is a misunderstanding. A change in the transfer date is only valid if the buyer and seller jointly (and often in writing) agree to it.
The notary also has an interest in meeting the agreed-upon date, as appointments have often already been scheduled, draft deeds prepared and registrations prepared.
The importance of clear agreements
The transfer date may seem like an administrative formality to many, but in reality it is an essential contractual agreement. Anyone who pays attention to clear deadlines, conditions for postponement and penalties for late delivery when entering into a purchase agreement will prevent the purchase of a dream home from ending in a legal dispute.
Conclusion
The transfer date is more than a date in the calendar: it is a binding obligation. It is usually taken too lightly, but the consequences are often enormous. Those who fail to deliver on the agreed-upon day risk a fine, an obligation to pay damages, and possibly even rescission of the sale. By communicating on time and in writing, and making clear agreements about delay and consequences of non-performance, buyer and seller can save themselves a lot of trouble.
As with any agreement, good agreements make all the difference.