You Might Be Thinking…

“Isn’t it enough to agree on the price and the subject? Why complicate things with extras?”
Because those “extras” may save you from serious trouble. For example, without a reservation of title clause, the seller may lose both the item and the purchase price if the buyer fails to pay.

Clients Often Ask Me…

• What is a reservation of title and when is it useful?

• How does repurchase or pre-emption work?

• Can a trial period be agreed?

• Is it possible to include a contractual penalty for breach?

• What other ancillary provisions does the law allow?

Ancillary Provisions in a Nutshell

The Civil Code allows parties to a purchase agreement to agree on various additions and conditions that modify or extend basic rights and obligations. These include:

• Reservation of title – the seller remains the owner until the buyer pays the full price.

• Trial period (inspection) – the buyer tries the item before final acceptance.

• Repurchase right – the buyer agrees to return the item at the seller’s request, and the seller refunds the price.

• Pre-emption right – if the buyer later sells the item, they must first offer it to the original seller.

• Contractual penalty – sanction for breach of duties (e.g. late payment).

• Price adjustment clause – allows the price to change according to external conditions (exchange rate, inflation).

Risks and Common Mistakes

• Vague wording – a reservation of title without a clear payment deadline is unenforceable.

• Mixing up concepts – people often confuse repurchase with withdrawal from the contract.

• Missing sanctions – without a contractual penalty, enforcing obligations is harder.

• Ignoring legal limits – not every provision is valid; some may be unenforceable.

Step-by-Step Guide

1. Decide what you want to protect (payment, price stability, ability to reverse the deal).

2. Choose the right tool – reservation of title, repurchase, pre-emption, etc.

3. Draft clearly and precisely – set conditions, deadlines, sanctions.

4. Verify legality – not every clause is allowed; legal advice is key.

5. Add a sanction mechanism – a contractual penalty motivates compliance.

Examples from Practice

• Car on installments – the seller agreed on reservation of title. When the buyer stopped paying, the car was repossessed.

• Apartment with pre-emption right – the seller ensured that if the buyer resold, the seller had the first option to buy back.

• Technology sale with contractual penalty – the buyer paid late and had to pay the agreed penalty.

Why Be Careful with DIY Templates

Many “purchase agreement template free” versions don’t cover ancillary provisions at all. As a result, the parties lose tools that could protect their interests, and contracts become one-sided.

Lawyer’s Recommendation

• For high-value items, always arrange a reservation of title or escrow.

• Consider contractual penalties – they motivate compliance.

• Don’t be afraid of ancillary provisions – they are safeguards, not complications.

Checklist of Ancillary Provisions

✔ reservation of title
✔ trial period / inspection
✔ repurchase or pre-emption right
✔ contractual penalty
✔ clear and precise wording

FAQ

Can I agree on any ancillary provision I want?
Only if it is not contrary to the law or good morals.

How does reservation of title work for real estate?
It is possible, but must be registered in the Land Register as a notation; otherwise, it is not effective against third parties.

Is a contractual penalty enforceable?
Yes, provided it is proportionate and clearly worded.