Financing condition in the compromis: how to protect yourself as a seller

The financing condition in the compromis decides whether your sale becomes final, or whether it can still fall through because the buyer does not get a mortgage. As a seller you can rarely refuse this clause, but you can help decide how it is worded. In this article you will read which arrangements to have written down before signing, so you quickly know where you stand and your home does not stay blocked for months.

What the financing condition means for you as a seller

In Belgium, a compromis (the preliminary sales agreement) is a full sale. As soon as buyer and seller agree on the property and the price, both parties are bound. A condition precedent puts that sale temporarily "on hold": it only becomes final if the buyer obtains a loan within an agreed period. If the buyer does not get that loan, and proves it in the way the contract requires, the sale lapses. Nobody is at fault, no compensation is owed and the buyer gets the deposit back.

For you, the biggest cost of this condition is not the risk itself, but the time. As long as the condition runs, your home is sold subject to conditions. You may not sell it to another candidate, even one who offers more. If the sale still falls through after a few weeks, you start over, often with a home that was already shown as "sold" on the property portals.

Two principles work in your favour. The condition exists to protect the buyer, so the buyer can also waive it and go ahead with the purchase anyway. And a buyer who prevents the condition from being met, for example by not submitting a loan application or by submitting an incomplete one, cannot in principle rely on it. What happens when a buyer does back out is covered in our article buyer pulls out after the compromis. Here we look at the step before that: the clause itself.

Five points to have written into the clause

A vague financing condition ("subject to obtaining a loan") gives the buyer a lot of room and gives you little to hold on to. So have these points included explicitly:

• A fixed end date. Not a period "until the bank decides", but a specific date. After that date the buyer can no longer rely on the condition.
• The loan amount. State the maximum amount the buyer wants to borrow. That way the buyer cannot drop the sale because a bank refuses a higher amount than was ever needed.
• The loan terms. Agree that it concerns a loan on normal market terms. Otherwise a buyer could turn down a reasonable offer because the interest rate is not quite to their liking.
• The proof. Set out what proof the buyer must provide if the loan does not go through, for example a written refusal from one or more banks. Also agree on the minimum number of banks the buyer has to approach.
• The notification. Decide how and to whom the buyer reports that the loan has been granted or refused, and what happens if the buyer says nothing. Many compromis agreements state that the condition is then deemed fulfilled. That gives you certainty as soon as the period has expired.

These points are not a sign of distrust towards the buyer. They make the agreement clear for both parties and prevent arguments later on.

How long can the period be?

The law does not set a fixed period. It is a trade-off. A short period gives you certainty quickly, but a bank needs time to process a file and have the property valued. A period that is too tight therefore increases the chance that the buyer misses the date and you have to start over anyway.

So ask the buyer how far along their loan file is. A buyer who has already talked to their bank and can show an agreement in principle or a detailed simulation can usually live with a shorter period. A buyer who has not contacted a single bank yet will ask for more time, and that also tells you something about how solid the offer is.

Keep in mind that the period of the condition fits into the wider timeline up to the deed. You can read more about that in how much time between compromis and deed in Belgium.

An offer without a financing condition: always better?

On paper, an offer without a condition precedent looks like the safest choice. As soon as you sign, the sale is final. Yet it is no guarantee that the money will arrive. A buyer who drops the condition but still fails to get a loan is in default. You can then claim damages or demand that the sale goes ahead, but both routes take time and, in the worst case, end up in court.

So do not only look at whether the condition is there, but at how solid the buyer's financing is. An offer with a short, well-defined condition from a buyer with a strong file can be worth more than an offer without a condition from someone who has never spoken to their bank. How to weigh offers against each other is explained in an offer on your home: how to negotiate as a seller. The deposit is also a sign of how serious a buyer is. In the deposit in a compromis you can read what amount is usual and where it is held until the deed.

A realistic price makes the condition less of a risk

There is a link that many sellers overlook. The buyer's bank usually has the property valued itself before granting a loan. If your asking price is clearly above that valuation, the bank may lend less than the buyer needs. The loan then does not come through, and the sale falls through on the financing condition, even though the buyer really wanted your home.

A well-founded asking price reduces that risk. A free valuation of your home gives you a first benchmark before you put the property on the market. A local estate agent who knows the recent sales in your area can refine it further and check, with every offer, whether the buyer's financing is realistic.

The role of your estate agent and notary

The compromis is usually drawn up by the estate agent or by the notary. A good agent asks prospective buyers about their financing as soon as they make an offer, words the financing condition precisely and keeps track of the deadline, so you do not have to chase bank letters yourself. If in doubt, have your notary review the draft compromis before you sign. Changing a clause before signing costs a conversation; afterwards it costs a negotiation.

Not every agent follows this up equally carefully. Through ImmoMakelaarVergelijker.be you can compare up to 3 local, BIV-licensed estate agents for free and without obligation. Compare estate agents in your area and ask them how they check buyers' financing.

Finally: certainty is in the details

The financing condition is part of most sales and is not a problem in itself. The difference lies in how it is worked out: a fixed date, a clear loan amount, and arrangements on the proof and on the notification. With those four elements you know on a fixed day whether your sale goes ahead. Get support from an agent who screens buyers and follows up the file. Comparing estate agents is the fastest way to find one who actually does that.