Future real estate transfer agreements need not take the written form

The Supreme Court confirmed that the written form is not mandatory when entering into a future agreement on the transfer of real estate.

In the case at hand, the appellate court had concluded that the parties had not validly entered into a future agreement on the transfer of real estate, due to lack of the written form. The appellate court based its ruling inter alia on Sec. 560 of the Civil Code which requires the written form for legal transactions by which a right in rem to real property is being established or transferred.

The claimant disagreed with this legal opinion and filed an appeal on a point of law with the Supreme Court against the judgment of the appellate court.

The Supreme Court, while conceding that it was understandable for the appellate court to prefer the written form for a future agreement if the subject matter of the future performance anticipated therein is the transfer of real estate, seeing as this protects the rights of both the seller and the buyer and their legitimate expectation in the future sale, put great emphasis on the fact that one must not forget how the subject matter of the future agreement in such a case is not a direct undertaking to engage in the concrete sale of real estate – in fact, the subject matter of the future agreement is “merely” the undertaking to enter within an agreed time period into the transfer agreement proper. That transfer agreement will then serve as the basis for the performance in which the parties to the “preparatory” agreement are interested.

Pursuant to Sec. 559 of the Civil Code, anyone is free to choose the form of their legal transactions in the absence of any restriction of this freedom of choice in contract or in law. In the case of future agreements, the Civil Code does not stipulate the written form as being obligatory, so that the invalidity of a future agreement cannot be inferred from the absence of the written form. With a view to the above, the Supreme Court quashed the judgment of the appellate court and returned the matter for a new hearing.

Judgment 33 Cdo 72/2021 by the Supreme Court of 27 May 2022

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