Deposit and Preliminary Sale-Purchase Agreement: What to Know Before Paying
By Vladislav Mocanu
CEO, Managing Partner
17.06.2026
In the real estate market, many transactions begin with a quick payment to "reserve" an apartment, house or plot of land. The problem is that people often pay before they understand what they are signing: a preliminary sale-purchase agreement, a reservation agreement, a receipt, an advance payment or a deposit.
The label used by the parties is not always enough. What matters is the content of the document, the obligations assumed and the consequences if the transaction does not close.
The label used by the parties is not always enough. What matters is the content of the document, the obligations assumed and the consequences if the transaction does not close.
Deposit or advance payment?
The difference is important. An advance payment is usually paid towards the price and may be refundable if the transaction does not take place, depending on the cause and the document’s terms. A deposit also has a security function. If non-performance is attributable to the party that paid the deposit, that party may lose the amount. If non-performance is attributable to the party that received the deposit, that party may be required to return double the deposit.
The preliminary agreement must be clear
A serious preliminary agreement should precisely identify the property, price, deadline for signing the final contract, documents to be provided, obligations of each party, treatment of amounts paid, refund conditions and consequences of non-performance. Vague wording such as "the parties will agree later" creates risk.
Do not pay before checking
Before paying any amount, it is important to verify whether the person receiving the money has the right to sell, whether the property is free from restrictions, mortgages or disputes, whether the documents are in order and whether there are technical or cadastral issues. Paying too early may weaken the buyer’s negotiating position.
Common risks
Most disputes arise when it is unclear whether the amount is an advance payment or a deposit, when the deadline for signing the final contract is not precise, when the seller cannot provide the required documents or when the buyer discovers risks after paying.
Conclusion
In real estate transactions, the first document signed is often the most important. It fixes the parties' positions and may determine whether money is returned, lost or doubled.
Mocanu Legal assists clients in drafting and reviewing preliminary sale-purchase agreements, reservation agreements and documents concerning deposits or advance payments, so that the initial payment is made on safe terms.
The difference is important. An advance payment is usually paid towards the price and may be refundable if the transaction does not take place, depending on the cause and the document’s terms. A deposit also has a security function. If non-performance is attributable to the party that paid the deposit, that party may lose the amount. If non-performance is attributable to the party that received the deposit, that party may be required to return double the deposit.
The preliminary agreement must be clear
A serious preliminary agreement should precisely identify the property, price, deadline for signing the final contract, documents to be provided, obligations of each party, treatment of amounts paid, refund conditions and consequences of non-performance. Vague wording such as "the parties will agree later" creates risk.
Do not pay before checking
Before paying any amount, it is important to verify whether the person receiving the money has the right to sell, whether the property is free from restrictions, mortgages or disputes, whether the documents are in order and whether there are technical or cadastral issues. Paying too early may weaken the buyer’s negotiating position.
Common risks
Most disputes arise when it is unclear whether the amount is an advance payment or a deposit, when the deadline for signing the final contract is not precise, when the seller cannot provide the required documents or when the buyer discovers risks after paying.
Conclusion
In real estate transactions, the first document signed is often the most important. It fixes the parties' positions and may determine whether money is returned, lost or doubled.
Mocanu Legal assists clients in drafting and reviewing preliminary sale-purchase agreements, reservation agreements and documents concerning deposits or advance payments, so that the initial payment is made on safe terms.
