Written purchase offers: when does acceptance create a binding contract?

What is a purchase offer?

In a purchase offer, the buyer indicates that they wish to buy a particular property at a specified price and on specified terms. It is often passed to the seller by an estate agent, and is frequently made on a pre-printed form.

Being bound by the offer

Under the Hungarian Civil Code, a person who makes an offer to conclude a contract is bound by it. If an offer that has already taken effect sets a deadline for acceptance, the buyer generally cannot withdraw it during that period. In other words, once the offer has been made, the buyer cannot simply walk away either.

Why acceptance matters

A contract is created by the parties' matching declarations of intent. If the offer and the written acceptance identify the parties, the property and the purchase price, express the intention to buy and sell, and cover every issue that either party clearly identified as essential, the sale and purchase agreement may be concluded. The declarations do not need to be in the same document.

The plan to have an attorney draft a later contract does not in itself mean that there is no obligation until then. Depending on the wording, however, it may also be a mere statement made in negotiations, or a preliminary agreement.

For electronic messages, the written form must be examined separately: a simple e-mail cannot automatically be treated as either written or unsuitable. Whether the content can be retrieved unchanged, and whether the identity of the person making the statement and the time it was made can be established, also matter.

If the sale and purchase agreement has been concluded, this can have serious consequences:

• the parties are bound by the agreement and may only withdraw unilaterally on a statutory or contractual basis;
• if either party later refuses to proceed, the other may demand performance in court;
• if money was paid under a valid earnest money clause, the earnest money rules may also apply; however, an offer deposit handed to an estate agent does not automatically become earnest money paid to the seller.

Acceptance or a new offer?

If the seller departs from the offer on an essential point, for example by asking for a different price, this is a new offer. A non-essential addition may, under certain conditions, form part of the acceptance. A late acceptance generally does not create a contract, but the law contains exceptions to this as well.

So why do you need an attorney?

For registration in the land register, the contract must be set out in a notarial deed or a document countersigned by an attorney. An accepted purchase offer is therefore generally not enough on its own for the buyer's ownership to be registered, but it may already create obligations between the parties. The document suitable for registration must cover what such forms usually leave out: handover of possession, encumbrances, security for payment and attorney escrow.

What to watch out for

• Only make an offer whose terms you can actually meet, especially in terms of financing.
• If you are buying with a loan, make loan approval a condition of the offer.
• State in the offer how long you are bound by it.
• As a seller, only accept an offer if all its essential terms suit you.
• If in doubt, seek legal advice before signing. Having an offer reviewed costs far less than a dispute later.

This article is for general information only and does not constitute legal advice. For advice on your specific situation, please get in touch.