Contract clauses play a crucial role in real estate transactions, especially when working with real estate agents. It is important to understand the difference between declaratory and constitutive clauses. These two terms refer to different legal effects within the framework of a purchase agreement and have potentially far-reaching consequences for buyers, sellers, and real estate agents. In the following article, we will highlight the differences between these two types of clauses and illustrate their significance using the example of the so-called real estate agent clause in a purchase agreement.
A declaratory clause serves to confirm or clarify an existing legal situation without changing it. It therefore has no influence on the legal status, but merely clarifies it.
In contrast, a constitutive clause brings about a legal change or creates a new legal situation. It is legally binding and produces new legal consequences.
In the following, I will explain these terms in more detail in the context of the brokerage clause.
A declaratory brokerage clause in the purchase agreement, on the other hand, merely confirms that the real estate broker has carried out the brokerage. It serves only as proof of the brokerage, but does not establish a claim to commission in the purchase agreement itself.
The so-called constitutive brokerage clause in the purchase agreement often means that the right of withdrawal from the brokerage agreement no longer applies. This means that objections such as the expiry of the brokerage agreement can generally no longer prevent the claim to the brokerage commission from the purchase agreement.
An additional entry of the constitutive clause in the purchase agreement may increase the notary fees, which is not always in the interest of the owner and buyer. This is because it can increase the incidental purchase costs and the real estate transfer tax.
