Understanding the Compromis de Vente in Luxembourg

The compromis de vente (preliminary sales agreement) is a private contract signed between the buyer and the seller. It outlines all the terms of the sale, including the price, the description of the property, the date of the final deed, and any specific conditions.

Under Luxembourg law, the compromis is legally binding. You cannot simply change your mind after signing it without facing severe financial penalties (usually 10% of the purchase price).

Suspensive clauses are conditions that must be met for the sale to go through. If a condition is not met, the compromis becomes void, and the buyer gets their deposit back.

The Financing Clause This is the most common clause. It states that the sale is conditional upon the buyer obtaining a mortgage. It usually specifies:

• The maximum interest rate the buyer will accept.
• The amount of the loan.
• A deadline to secure the loan (typically 4 to 6 weeks).

If the bank refuses the loan, the buyer must provide an official refusal letter from the bank before the deadline to cancel the compromis safely.

Other Common Clauses

• Obtaining a building permit (if the buyer plans major renovations or construction).
• The sale of the buyer's current property (less common, as sellers often reject this).

While not legally mandatory in Luxembourg, it is standard practice for the buyer to pay a deposit when signing the compromis. This is usually 10% of the purchase price.

The deposit should never be paid directly to the seller. It must be transferred to an escrow account (compte séquestre) held by the notary or the real estate agency.

If the sale goes through, the deposit is deducted from the final amount due. If the sale falls through because a suspensive clause (like financing) wasn't met, the deposit is returned to the buyer. If the buyer backs out without a valid legal reason, the seller keeps the deposit as compensation.