Buying Property in Malta? Essential Contract Clauses to Safeguard Your Interests

Buying property in Malta is an exciting opportunity, especially for foreign buyers attracted by the favourable business terms and climate. Having been through this process several times myself, I’ve gathered some key insights—many of which I wish I’d known from the start.

It’s important to safeguard your interests by including clear terms and conditions in the Promise of Sale (Konvenju) and the Final Deed. These clauses help protect you from potential risks, ensure a smoother transaction, and minimise the chance of financial losses.

Key Clauses to Include in the Promise of Sale Agreement When Buying Property in Malta

1. Subject to Planning Permission
   This clause makes the sale conditional upon obtaining the necessary planning permissions for any intended modifications from Malta Environment and Planning Authority (MEPA). For example, if you plan to extend the property or change its use, securing this permission is essential. In one instance, the property I was acquiring needed planning approval as I intended to add more units. When the application was rejected, it was possible to exit the Promise of Sale agreement without losing the deposit. Without approval for additional units, the financials no longer worked, and the property would not have been a profitable investment. Including this clause is particularly wise for properties in protected zones, where restrictions are often tighter.
2. Subject to Clear Title
   Ensuring that the property has a clear title is essential. This clause protects you from potential issues such as undisclosed debts, legal disputes, claims against the property, or cases where the seller is not the legal owner. A thorough title search, carried out by a notary, confirms the property’s legal status and ensures you are purchasing from the rightful owner.
3. Subject to Surveyor’s Report
   Adding a condition for a professional survey ensures you can evaluate the property’s structural integrity and uncover any hidden defects. This is especially valuable for older properties or those requiring renovation. The surveyor’s report not only helps you decide whether to proceed with the purchase but can also serve as a basis for renegotiating terms. If significant issues are uncovered, you may be able to negotiate a lower price to offset the cost of necessary repairs.
4. Subject to Financing
   This clause makes the sale dependent on securing the necessary financing, such as a mortgage. It provides a safeguard, allowing you to withdraw from the agreement without penalty if financing is not obtained within a specified timeframe. Typically the time specified is between three and six months.
5. Subject to Vacant Possession
   Making sure the property will be vacant upon completion is key, particularly if it’s currently tenanted. This clause ensures you can take possession without dealing with any tenants or ongoing lease agreements.
6. Subject to Utility and Service Checks
   Verifying that all utilities (electricity, water, internet) are properly connected and functional is essential. This condition ensures there are no outstanding issues with utility services before finalising the purchase. It’s worth noting that adding a new meter can cost over €1,000, so confirming this in advance can save you from unexpected expenses.
7. Subject to Permits for Alterations or Use
   If you intend to alter the property or change its designated use, this clause ensures that the necessary permits are obtainable. Failure to secure such permits can lead to legal issues or financial losses.
8. Condition on Completion of Works by Seller
   When the seller has agreed to carry out specific repairs or construction works before the final deed, this clause ensures those commitments are met. It gives you the right to inspect and approve the completed works before proceeding with the purchase. To safeguard your position, prepare a detailed snag list and include it as an annex document to the Promise of Sale. This allows you, as the purchaser, to withhold completion until all agreed works are finished.

Adding an Arbitration Clause for Efficient Dispute Resolution

Including an arbitration clause in the Promise of Sale and completion contracts is highly recommended. I’ve used the Malta Arbitration Centre twice to resolve disputes and found it to be a fair and efficient process. Arbitration is often a faster and more affordable alternative to court proceedings, with typical cases resolved in a matter of months. In my experience, we reached a final decision within a year, but many cases are concluded even sooner. Sessions can be held online and in English, making arbitration particularly accessible for foreign buyers.

Compared to the Maltese court system, where documents must be submitted in person and attendance is required at each stage, arbitration is much faster. Importantly, the findings in arbitration are binding on both parties, providing a decisive and cost-effective resolution to disputes.

Duration from Promise of Sale to Completion

Typically, the time between signing the Promise of Sale and completing the final deed ranges from three to six months. This period allows for the fulfilment of all stipulated conditions, completion of due diligence, and arrangement of financing. Both parties should agree on this duration and include it in the agreement to ensure clarity and mutual understanding.

Extending a Promise of Sale Agreement

Sometimes, a Promise of Sale may need to be extended if the original timeframe is nearing its end and certain conditions remain unfulfilled. The extension is formalised through an addendum, signed by both buyer and seller, which outlines the revised terms and the new deadline. This approach prevents the agreement from expiring and provides additional time to address outstanding requirements without the need to renegotiate the entire contract.

Conclusion

For foreign buyers, including well-drafted clauses in your Promise of Sale and Final Deed is key to protecting not just your property investment but also your broader financial interests, such as avoiding unexpected costs or legal complications. These conditions provide the flexibility to withdraw if issues arise—such as planning permission being denied, structural problems coming to light, or difficulties with tenant eviction. By working with a reputabile notary and ensuring these safeguards are in place, you can approach the process with confidence, knowing you’re prepared for any potential obstacles.

Many of these lessons come from my own experience—often from not including these conditions and realising afterwards how much smoother things could have been. If you believe there are additional clauses or conditions that could be valuable, please share your thoughts in the comments. We’re committed to updating this article to help as many people as possible protect their investments and navigate the property market more confidently

At expatax.mt, we specialize in assisting international buyers navigate Malta’s property market. From finding the ideal property to connecting you with trusted legal and notarial services, we provide end-to-end support. Let us help you make informed decisions and secure your investment with confidence. Contact us today to start your journey toward owning property in Malta. Happy hunting!

Sources

Notarial Council of Malta

Malta Arbitration Centre

Malta Planning Authority