In January, we hosted a webinar addressing the key innovations proposed under Book 7 with respect to sale, lease and construction agreements relating to immovable property. This article reflects the presentation on sale agreements relating to immovable property and sets out the most relevant changes introduced by the draft legislation.
1. Definition and qualification
Book 7 defines a sale agreement as a contract under which the seller undertakes to transfer ownership of a good to the buyer in exchange for a monetary price. Both elements of this definition are to be construed in broad terms.
The concept of a “good” encompasses not only immovable property in the strict sense, but also in rem rights of use and future goods. Likewise, the notion of a “monetary price” is not limited to cash payments and covers any form of monetary consideration.
In addition, Book 7 clarifies that the rules on sale agreements apply mutatis mutandis to contracts granting an in rem right of use in exchange for a monetary price. The question arises: what does “mutatis mutandis” mean? In addition, does it follow that the new rules on sale agreements do not apply “mutatis mutandis” to agreements granting in rem rights of use free of charge?
Book 7 contains a number of qualification rules in case the contract pursuant to which the ownership of a good is transferred, relates to a good that has yet to be made/produced.
A contract relating to the transfer of a good to be manufactured or produced in exchange for a monetary price is, as a rule, qualified as a sale agreement. This is only different where the buyer provides a substantial part of the raw materials or where the good is manufactured specifically for the buyer’s individual needs (save for standardised goods with predetermined options or limited standard modifications, such as off‑plan purchases).
Similarly, a contract whereby a party undertakes to construct an immovable construction and to transfer ownership or an in rem right of use over the land or volume in which the construction is realised, in exchange for a monetary price, is expressly qualified as a sale agreement.
Where a contract combines the transfer of an existing good with an assignment against payment of a price, its qualification must be determined in accordance with the rules on mixed contracts set out in Book 5.
2. Validity requirements
Under the former Civil Code, the seller of an immovable property could seek annulment of the sale if the price resulted in a loss (benadeling / lésion) exceeding seven twelfths. Book 7 replaces this complex rule with a simpler and more transparent threshold.
Under the new regime, annulment may be sought where the seller suffers a loss exceeding 60%. In addition, the action for annulment must be brought within two years from the date of the sale. Once this period has expired, the sale can no longer be challenged on the basis of loss (benadeling / lésion).
3. Transfer of ownership and risk
Book 7 confirms the principle that ownership of a good, including an immovable property, is transferred solo consensu, i.e. upon the mere conclusion of the sale agreement.
However, a significant change concerns the transfer of risk. Under the draft legislation, the risk of loss or damage to the good is no longer transferred at the time ownership passes, but at the time of delivery. As a result, in case the good is destroyed by force majeure before delivery and before payment of the purchase price, the buyer can no longer demand delivery, but is released from its obligation to pay the price.
4. Seller’s indemnification obligation
Just as under current law, Book 7 also requires the seller to compensate the buyer for damages resulting from both the seller’s own actions and those of a third party with respect to the property sold.
Book 7 confirms that the seller's indemnification obligation against his own acts applies to any disruption to the use or enjoyment of the property due to the seller, including legal claims brought by the seller, this regardless of whether such disruption or claim arose before or after the sale.
The seller's indemnification obligation against acts of a third party only applies in case of legal claims brought by a third party relating to the property dating from before the transfer of ownership. The seller is not liable for mere factual disruptions caused by third parties, such as works carried out by neighbouring property owners. Nor is the seller required to indemnify the buyer for legal claims that were expressly disclosed prior to the sale. Indeed, in such case, the buyer is deemed to have accepted the associated risk.
5. Seller’s obligation to deliver the good in accordance with the sales agreement
One of the most notable changes introduced by Book 7 is the integration of the obligation to deliver and the hidden defects regime into a single obligation: the obligation to deliver a good that is in conformity with the sales agreement.
This obligation extends not only to the good itself but also to its accessories.
Delivery may be physical, symbolic or intellectual. Where the buyer already has possession of or access to the good, for example as a tenant, delivery can take place by simple agreement between the parties.
Unless otherwise agreed, the seller bears all delivery‑related costs. Book 7 specifies that in case of a sale agreement relating to an immovable property, all costs legally required for the sale of the property concerned, including the costs relating to the searches regarding the property’s legal status, proof of the seller’s capacity and the certificates or documents that the seller is required by law to provide to the buyer, are to be borne by the seller.
According to Book 7, a good is considered to be in conformity if it meets both the contractual specifications and what the buyer may reasonably expect, thereby taking into account the law, custom, good faith, the nature of the property, the buyer’s expertise and the overall circumstances.
The seller is liable for conformity defects that existed at least in embryonic form at the time of delivery, even if they only become apparent afterwards and even if the seller was unaware of them. The buyer bears the burden of proof in this respect.
The seller’s liability is limited to defects that arise within ten years from delivery. The buyer must notify the seller of a defect within a reasonable period after it has been discovered or should have been discovered. What constitutes a reasonable period depends on the circumstances of the case (in particular, the nature of the goods, the nature of the defect of conformity, the parties’ capabilities, and commercial practices). A simple notification suffices; no legal action is required at that stage.
Claims for lack of conformity become time‑barred two years after notification, although this limitation period is suspended during sufficiently serious negotiations between the parties and during judicial or adversarial extrajudicial expert investigations.
Should you have any questions or wish to discuss how these changes may impact your transactions, please contact one of our lawyers below.
