The usual documents involved in such transactions are as follows:
- Letter of intent (not mandatory but commonly used)
- Notarial deed (mandatory for transcription purposes)
- Security documentation, if any (e.g., mortgages, pledge agreement, bank account or share pledge)
The following documents are usually prepared for purchases of buildings under construction (Article 1601-1 and the following articles of the LCC):
- Construction plans
- Description of the technical characteristics and data of the building and the materials to be used
The main warranties given by a seller to a buyer are as follows:
- Quiet and peaceful possession of the property
- Warranty against latent defects of the property (garantie des vices cachés)
- Warranty in case of eviction from the premises
- Warranty in case of pollution
According to the provisions of the LCC, parties are legally bound as soon as they execute the letter of intent (Compromis de vente). If this document reflects the parties’ reciprocal consent to sell and acquire and indicates the real estate asset and the price, the letter of intent is considered as a sale.
As a rule, the letter of intent commits the parties to complete the sale before a notary within a certain time, subject to the conditions precedent that the parties agree upon.
The letter of intent usually provides for a penalty clause pursuant to which the party that fails to execute the notarial deed would be indebted to pay (usually 10%) of the purchase price to the other party.
If there is no letter of intent, the sale is legally binding upon execution of the notarial deed relating to the sale (Acte notarié de vente).
The transfer of ownership usually takes place upon execution of the letter of intent, if the parties have executed such document before the notarial deed.
However, parties may insert a clause in the letter of intent stating that the title will only be transferred upon execution of the notarial deed.
If there is no letter of intent, the title is transferred upon execution of the notarial deed.
The buyer usually pays for the following:
- Notary fees
- Registration fees for a total amount of 6% of the property sale price. This fee is composed of 5% of the registration fees increased by 2/10th, which brings the total 6% of the property sale price
- Transcription fees of 1% of the property sale price
- Where applicable, agent fees (generally range from 2% to 5% of the purchase price)
Please note that an additional tax (surtaxe communale) corresponding to 50% of the registration fees (i.e., 3% of the property sale price) may be applicable on the sale of certain real estate (e.g., commercial buildings) located in the territory of Luxembourg City.