The different types of property sale

If you are wondering how to complete your sale, take the time to examine your options. In this article, discover all the key points on how a direct sale, a forward sale and a promise of sale work in real estate in Geneva.
Each method has its advantages and disadvantages. In all cases, under the Swiss Code of Obligations, sales of real estate are only valid if they are executed by a notarial deed drawn up before a notary.

The direct sale

When the seller and the buyer agree on a common date in the near future, this is a direct sale. The notary then prepares the deed of sale, setting out the conditions agreed by the parties.
Before the deed is signed at the notary's office, the buyer pays the full price of the property sold into an account opened in the notary's name. The notary reads the deed of sale to both parties, who then sign it. Once signed, the sale becomes truly effective when the change of ownership has been entered in the journal of the Land Registry, which the notary arranges shortly after the deed is signed. The notary then transfers the sale price to the seller. Land Registry fees, notary fees and transfer duties are payable by the buyer.

Direct sales are in fact fairly rare, as the parties generally need time to move, arrange the loan or terminate a lease, for example. In that case, a forward sale is used.

Advantages: Simple and quick sale
Disadvantages: Fees are payable immediately

The forward sale with right of purchase (droit d’emption)

It is important to know that a forward sale is also accompanied by a droit d’emption.
A forward sale is a contract of sale, but one involving a transfer of ownership deferred in time. The droit d’emption is a right to purchase. The seller and the buyer sign an initial contract at the notary's office, stating that on a given date (the term) the balance must be paid and the buyer will become the new owner. At the first signing before the notary, the buyer does not become the owner of the property but holds a right of purchase, a kind of reservation of the property in their name recorded in the Land Registry. They become the owner only at the time of the transfer of ownership, or once they have paid the full sale price.
To guarantee the right to purchase and to prevent any changes being made to the plot sold, the right of purchase in the buyer's favour is entered in the Land Registry.
The forward sale resembles a promise of sale, but it is much more rigid and precise.

Advantages: The buyer and the seller are well protected; it gives both parties time to get organised.
Disadvantages: No possibility of withdrawal; sale timescales can be long.

The promise of sale

The promise of sale is also a contract drawn up at the notary's office, committing the buyer and the seller to conclude a deed of sale at a later date. The promise of sale sets out all the conditions of the transfer (timescale, price, etc.).
The commitment is often subject to one or more conditions precedent (administrative authorisations or a mortgage to be obtained). The final contract of sale is signed as soon as the conditions are met.
The buyer usually pays the seller a deposit of 10% of the future sale price.

Advantages: The buyer retains the option of breaking the contract if they finally decide not to buy the property.
Disadvantages: The promise of sale protects the buyer and the seller less than the forward sale with right of purchase. The promise of sale is unbalanced for the seller: they can neither compel the buyer to purchase the property if the buyer changes their mind, nor commit to someone else.

Would you like to sell your property in Geneva? The Millenium Properties real estate agency supports you at every stage to bring your project to completion.