Preliminary Agreement in Geneva: Content, Conditions, Costs, Pitfalls

In Geneva, the preliminary sale agreement (compromis de vente) designates the stage between agreement on the price and the signing of the deed of sale. The term comes from French law, which does not give it the same legal scope as Swiss law.

This article covers the preliminary agreements used in the canton: what they commit you to, what they contain and what they cost. The deposit paid on signing, time limits, withdrawal and preliminary checks are covered, drawing on federal law on property sales and Geneva's regulations on notaries and the registration of deeds.

What is a preliminary agreement in Geneva?

A preliminary agreement in Geneva is a promise to sell and to buy (bilateral sale promise) executed before a notary, the expression itself not corresponding to any instrument of Swiss law. This deed obliges both parties to sign the sale.

The word comes from French practice, where a sale promise is equivalent to a sale as soon as the parties reciprocally consent on the thing and the price (art. 1589 du code civil). A reader who transposes this scheme to Geneva is wrong on two points.

• Form. In France, a preliminary agreement is valid in the form of a private (unnotarised) agreement; in Geneva, a document signed between individuals without a notary binds neither party to sell nor to buy.
• The right of withdrawal. France grants ten days of withdrawal to the non-professional purchaser (art. L. 271-1 du code de la construction et de l'habitation); Geneva has none.

What is the difference between a reservation agreement, a sale promise and a deferred-completion sale?

The difference between a reservation agreement, a sale promise and a deferred-completion sale is whether the sale can be obtained through the courts, and, between the two notarial deeds, the point at which ownership transfers. Only a deed executed before a notary binds the party who withdraws.

Document	Form required	What binds the parties	Fate of the deposit	Order-of-magnitude cost	Usual time frame
Memorandum of agreement or reservation agreement	Unnotarised written document	No obligation enforceable in court	Modest payment, with no value as a withdrawal fee unless stated otherwise (art. 158 al. 1 CO)	No notary's fee	Not set by law
Promise to sell and to buy	Notarial deed, on pain of nullity (art. 216 al. 2 CO)	Obligation to sign the deed of sale, enforceable in court	Deposit close to 10% of the price, credited against the deed	Notary's fee reduced to a third (art. 12 al. 1 REmNot) and registration duty of 1 ‰ of the market value (art. 50 al. 1 of the Geneva act on registration duties, LDE)	From a few weeks to a few months
Deferred-completion sale	Notarial deed (art. 216 al. 1 CO)	Sale already concluded, transfer of ownership deferred to the agreed date	Deposit credited against the sale price	Registration duty of 3% (art. 33 al. 1 LDE) and full notary's fee under the tariff (art. 10 al. 1 REmNot)	Date fixed in the deed
Deed of sale	Notarial deed (art. 216 al. 1 CO)	Transfer of ownership by entry in the land registry (art. 656 al. 1 CC)	Balance of the price paid on the day of signing	Registration duty of 3%, full notary's fee and land registry costs	Final signature

The reservation agreement holds a property for the time needed for a technical survey, without commitment. The sale promise suits a buyer whose financing has yet to be confirmed, because it accommodates conditions precedent while still binding the seller. The deferred-completion sale suits a seller who wants immediate certainty.

Is a preliminary agreement without a notary valid?

No, a preliminary agreement signed without a notary is void in Geneva: sale promises relating to a building are valid only if they have been executed in notarial form (art. 216 al. 2 CO).

What the law says (art. 216 al. 2 CO): « Promises of sale and pre-emption, purchase option and repurchase agreements relating to a building are valid only if they have been executed in notarial form. »

The sanction is nullity of the contract, for failure to observe the required form (art. 11 al. 2 CO). Neither party can obtain signature of the deed of sale on this basis, and any sums paid are returned, since the purpose of the payment was never fulfilled (art. 62 al. 2 CO).

No Geneva provision assigns the choice of notary to the seller or the buyer: the parties designate the notary together, and the notary approached is obliged to act (art. 2 al. 1 de la loi sur le notariat, rsGE E 6 05). Their duty to advise applies to both parties, covering the legal scope, the tax consequences and the cost of the deed signed (art. 8 LNot).

A downloaded preliminary agreement template, a PDF form filled in between private individuals or a handwritten agreement all produce the same result in Geneva: no obligation to sell, no obligation to buy. The content of the deed is built up clause by clause with the notary.

What does a sale promise contain in Geneva?

A sale promise in Geneva contains nine sections, from identification of the parties to the annotation of the purchase option in the land registry.

• Identification of the parties: full civil status, domicile and matrimonial property regime of each signatory.
• Description of the property: municipality, sheet and parcel number in the land registry, floor share for a condominium unit (PPE), registered easements.
• The price and its payment terms: total amount, deposit paid on signing, place of escrow for that deposit, balance payable on the day of the deed.
• The timetable: deadline for signing the deed of sale and the date of transfer of possession, this date governing the passing of benefits and risk to the buyer (art. 220 CO).
• Conditions precedent: events on which performance of the promise depends, with their deadline for fulfilment. A promise without conditions binds the buyer even if their financing falls through.
• The penalty clause: amount owed by the party who fails to perform their undertaking, usually aligned with the deposit.
• The warranty for defects: extent of the seller's warranty, an itemised list of known defects and any exclusion clause.
• Allocation of costs and taxes: who bears the notary's fee, the registration duties and the land registry costs.
• The purchase option and its annotation: term agreed up to a maximum of ten years, and the application for annotation in the land registry (art. 216a CO). Without annotation, the seller's undertaking is binding only as between the parties.

Conditions precedent carry most of the risk for the buyer: they decide the fate of the transaction when one piece of the arrangement is missing.

Which conditions precedent should be included?

Four conditions precedent cover most of the risk in Geneva: financing, administrative authorisations, the prior sale of the buyer's own property and the documented condition of the building.

As long as a condition is not fulfilled, the promise has no effect, unless the parties intend otherwise (art. 151 al. 2 CO).

• Obtaining financing: the clause names the amount of credit sought, the number of lenders approached, the response deadline and the evidence required, namely a written refusal.
• Administrative authorisations: the sale of a residential flat previously let is subject to authorisation when, by its rent or its type, it falls within a category of housing affected by the shortage (art. 39 al. 1 LDTR, rsGE L 5 20), and a buyer domiciled abroad is subject to a separate authorisation regime.
• The prior sale of the buyer's property: the clause sets a deadline and the minimum price below which the condition fails.
• The documented condition of the building: the clause makes the undertaking conditional on delivery of the condominium regulations, the renovation fund accounts and the minutes of meetings, with a review period.

Does a loan refusal release the buyer?

No, not by itself: a loan refusal releases the buyer only if the deed contains a financing condition precedent. Without this clause, the undertaking to buy remains intact and the penalty clause applies.

A clause that genuinely protects the buyer names the evidence of refusal to be produced, a written statement from the lender, and provides for the full refund of the deposit if the loan is refused. A clause that merely refers to « obtaining a loan » leaves it to the seller to assess whether the buyer genuinely tried to obtain one.

The property financing should be arranged before signing the promise, since the clause only protects a buyer able to show that they filed a complete application within the agreed deadline.

How much does a preliminary agreement cost in Geneva?

A preliminary agreement in Geneva costs around 0.3% of the property price for the tariffed items, and up to 0.5% including fees and disbursements, according to the Geneva Chamber of Notaries. The total adds together the notary's fee reduced to a third, the 1 ‰ registration duty and the land registry costs.

Five items appear on the statement handed over at signing, the last three only when they are due.

Item	Basis of calculation	Who receives it
Notary's fee	A third of the tariff for transfer deeds, with a minimum of 200 francs (art. 12 al. 1 REmNot)	The notary
Registration duty	1 ‰ of the market value, with no deduction for debts or charges (art. 50 al. 1 LDE)	The State of Geneva
Annotation in the land registry	A flat 255 francs when the deed provides for the annotation (art. 6 REmORFDIT)	The land registry office
Disbursements	Actual cost of documents advanced, 50 francs per certified true copy (art. 3 REmNot)	The notary, on behalf of third parties
Notary's fees	Freely set, invoiced separately from the fee (art. 1 al. 2 REmNot)	The notary

A flat sold for 1 000 000 francs produces the following breakdown.

• Fee for the transfer deed, four cumulative brackets: 5 200 francs
• Fee for the promise, a third of the above: 1 733 francs
• Registration duty, 1 ‰ of 1 000 000: 1 000 francs
• Annotation in the land registry: 255 francs
• Total: 2 988 francs, or 0.30% of the price

The 1 ‰ duty paid on the promise is not deducted from the 3% due on the sale, no offsetting being provided for between the two deeds.

The calculator below estimates this cost from the property price and breaks down each item.

This chart compares, item by item, what a sale promise costs and what the final deed of sale costs, for three property prices.

What costs remain payable on the day of the deed of sale?

The costs that remain payable on the day of the deed of sale reach around 4% of the price, against roughly 0.5% for the promise: the preliminary contract represents only a fraction of the total cost.

The registration duty weighs the heaviest, at 3% of the value of any deed transferring ownership of a building situated in the canton of Geneva for consideration (art. 33 al. 1 LDE). The notary's fee is added in full, without the reduction to a third reserved for the sale promise.

What a Geneva buyer calls notary costs in fact combines the cantonal tax, the notary's fee and the land registry fees, with the cantonal tax forming the dominant share, around three-quarters of the bill, and the land registry fee the smallest.

What deposit should be paid at signing?

The deposit payable at signing is around 10% of the property price, according to the practice recorded by the Geneva Chamber of Notaries. No legal provision sets an amount; the figure is a matter of Geneva notarial practice.

The deposit goes to the seller or into the notary's escrow account, depending on what the deed provides. Escrow, where the sum remains blocked until the transfer of ownership, is the most protective arrangement, and swisNot's notaries describe it as the standard regime for the promise.

Blocking the funds protects the seller, whose claim to the penalty is covered, and the buyer, whose funds remain outside the seller's estate until signing.

What happens to the deposit if the sale does not go through?

The deposit is returned to the buyer when a condition precedent is not fulfilled, and is retained by the seller when the buyer defaults without a reason provided for in the contract.

A financing condition that fails deprives the promise of any effect: the notary releases the escrowed deposit, on the evidence set by the clause, a bank refusal statement produced within the agreed deadline. Bad faith reverses this outcome, a buyer who turns down any reasonable loan offer losing the benefit of their own clause (art. 156 CO).

The party who withdraws without a reason provided for in the deed is exposed to the contractual penalty, or to forced performance of the sale. swisNot's notaries describe how this works in French-speaking Switzerland: the seller has the default recorded by the notary, then claims the escrowed deposit as a contractual penalty, for a usual amount of 10% of the price. No text sets this rate; the parties are free to fix the amount of the penalty (art. 163 al. 1 CO).

These clauses are negotiated before the signing appointment.

This diagram sets out the two outcomes for the deposit: full refund when a condition precedent fails, payment to the seller when a party defaults.

Can you withdraw after signing?

No, withdrawing after signing is only possible with a withdrawal right (dédit) expressly stipulated in the deed: the promise to sell and to buy signed before a notary obliges the seller to sell and the buyer to buy, and a judge can compel the defaulting party to perform it. No cooling-off period runs after signing.

The party affected by the default has a choice set out in art. 160 al. 1 CO: they claim performance of the contract, or the agreed penalty, without combining the two unless otherwise agreed.

The idea that a promise can be bought out by paying a sum is wrong in most Geneva deeds. Withdrawing from the contract on payment requires a withdrawal right (dédit) expressly stipulated (art. 158 al. 3 CO); failing that, the sum paid at signing is not a dédit but a deposit, credited against the sale price.

The ten-day withdrawal period exists in no provision of Swiss law: it belongs to French law, which grants it to the non-professional buyer of a residential building (art. L. 271-1 du code de la construction et de l'habitation), and no federal or Geneva rule reproduces it.

What pitfalls should you avoid before signing?

Six pitfalls recur in sale promises signed in Geneva, all lodged in clauses that look routine.

• Exclusion of the warranty for defects. The wording « the buyer has visited and accepts the property as is » closes off most remedies, without covering fraudulent concealment (art. 199 CO). The reflex: have known defects listed by name.
• The financing condition with no boundaries. A condition that specifies neither the loan amount, nor the bank's deadline, nor the evidence to be produced leaves the seller to judge whether the buyer did what was needed.
• The unbalanced penalty clause. A penalty that strikes only one party, or that is added to damages, turns an administrative delay into a heavy sanction. The reflex: check that it is reciprocal and check its amount before signing.
• The unrealistic deadline. A timetable that is too tight places the default on whoever is waiting for a credit decision or an authorisation. The reflex: align the date of the final deed with the actual financing timeline and provide for an extension by notarial deed.
• Uncosted works and charges. A clause that places « works in progress » on the buyer's account with no list or cap exposes them to calls for funds discovered after signing. The reflex: require the minutes of the latest meetings, the statement of charges and the state of the renovation fund.
• The fate of the deposit left implicit. A deposit paid without the deed stating where it is held or under what conditions it is returned becomes the subject of the dispute. The reflex: place the sum in escrow with the notary and write out both scenarios for its return.

These six points should be checked on the draft deed: once the deed has been executed, an unbalanced clause can only be corrected through the courts.