Buying or selling an apartment rarely happens in one step. It usually starts with interest in the property, continues with an agreement on price and key terms, and only then moves to the formal transaction documents. At this stage, many buyers and sellers ask what the difference is between an earnest money agreement and an apartment sale agreement, and which document should be used first.
Both documents relate to the same apartment sale, but they serve different purposes and are used at different moments. If that distinction is unclear, misunderstandings can quickly arise around payments, deadlines, property handover, or each party's obligations.
In this article, we explain:
- what an earnest money agreement is and when it is used,
- what an apartment sale agreement is and why it matters,
- how these documents differ in practice,
- when you need one document and when you need the other,
- and how Doqubit helps prepare apartment sale documents in a clear, structured way for both parties.
For a wider overview of real estate transaction documents, see Doqubit's guide to real estate contracts.
What is an apartment earnest money agreement?
Under Latvian law, earnest money (rokasnauda) is money or another asset given as evidence of a concluded contract and security for its performance. It is more than an intention to buy (Sections 1725 and 1728 of the Latvian Civil Law). It must actually be handed over; a promise to pay is not enough (Section 1727).
Earnest money differs from an ordinary advance payment. An advance is paid ahead of performance; earnest-money forfeiture or double-repayment consequences do not apply to it automatically. For earnest money, Section 1730 of the Latvian Civil Law links the outcome to the reason for non-performance: if the payer is at fault, they lose the right to repayment; if the recipient is at fault, they must return twice the amount. The party at fault may also owe damages.
In practice, an earnest money agreement is used when the buyer and seller have agreed on the main terms, but the apartment sale agreement is not yet ready to be signed. This often happens when more time is needed for bank financing, document preparation, property checks, or clarifying other transaction details.
An earnest money agreement helps record:
- the transaction price,
- the amount of earnest money,
- the deadline for signing the sale agreement,
- the property details,
- and the parties' responsibilities until the final transaction is completed.
Paying earnest money does not by itself transfer title to the apartment, but it is not merely a non-binding reservation either. Where the contract meets the legal requirements, Section 1728 of the Latvian Civil Law allows either party to demand performance. Ownership of immovable property is recognised through registration in the Land Register (Section 994 of the Latvian Civil Law).
What is an apartment sale agreement?
An apartment sale agreement is the document that formally records the apartment sale transaction between the seller and the buyer.
It sets out in detail:
- what is being sold,
- the agreed purchase price,
- how payment will be made,
- when and how the apartment will be handed over,
- and each party's duties and responsibilities.
The sale agreement sets out how the transaction will be completed. Agreement on the property and price is central to concluding a sale (Section 2004 of the Latvian Civil Law); legal requirements concerning form and other conditions also apply. A document’s title alone does not determine its legal effect: its full content and the obligations already undertaken matter.
Doqubit’s apartment sale agreement is intended for standard transactions without mortgage financing. The platform asks questions step by step and arranges the answers in a structured document. Before signing, both parties should check the terms and whether the document fits their transaction.
When do you need an apartment earnest money agreement?
In practice, an earnest money agreement is used when documents or financing still need arranging but the parties want to secure the agreement already reached. Record whether the payment is earnest money or an advance, as well as the amount, when it is paid, the obligations it secures, deadlines and whether it will count towards the purchase price.
If bank financing is still pending, spell out that condition. Specify the decision deadline, how refusal must be evidenced and what happens to the money if the condition is not met.
If the parties mutually cancel the contract, or performance becomes impossible without the payer’s fault, Section 1730 of the Latvian Civil Law provides for repayment. A bank’s refusal is not an automatic refund guarantee: the agreement and circumstances matter. Any agreed right to withdraw by forfeiting earnest money or returning twice the amount should be stated expressly; Section 1731 addresses that arrangement.
Example: the apartment costs €80,000, and the buyer has paid the seller €4,000 as earnest money under a valid contract. If they agree to count it towards the price, €76,000 remains. If the contract secured by earnest money is not performed through the buyer’s fault, the buyer loses the €4,000; through the seller’s fault, the seller must return €8,000 in total. If both parties agree to cancel the contract, the buyer receives the €4,000 back (Section 1730). Other situations depend on the reason for non-performance and the contract’s terms. Before signing, also check the documents and payment sequence in our apartment sale agreement FAQ.
When do you need an apartment sale agreement?
An apartment sale agreement is needed when the parties are ready to formally complete the transaction. This means the price has been agreed, payment terms are clear, and both sides understand and accept the property handover conditions.
At this stage, the sale agreement becomes the central document for the transaction. It records the parties' details, apartment and cadastral data, purchase price, payment procedure, and the conditions for delivery and acceptance of the property. Any binding terms already agreed must also be reflected in subsequent documents; both parties must agree to changes.
A sale agreement needs clear structure, not only correct information. Doqubit helps turn the parties' agreement into a readable document where the terms are arranged in a logical order and can be reviewed easily by both sides.
Common mistakes in apartment sale documents
Problems in apartment transactions can arise when the wrong document is used at the wrong time or the parties do not fully understand what it does.
A common mistake is treating an earnest money agreement as a non-binding reservation, or assuming that handing over the money already transfers title. Check what the document requires each party to do and which steps remain before completion.
Another frequent issue is failing to describe what happens if the agreement is not performed or if a dispute appears. If those situations are not clearly addressed in writing, each party may later interpret the same events differently.
Unclear or incomplete deadlines are another common problem. State exactly when the sale agreement must be signed and when each obligation must be performed, so both parties know what is expected and by when.
Another problem is relying on random templates found online. A generic template may not match the specific apartment transaction or may leave out important details. To understand this better, read Doqubit's article about the risks of using contract templates.
How to prepare apartment sale documents with Doqubit
An earnest money arrangement helps secure performance, while the sale agreement records the transaction in detail. Before choosing a document, check what is already binding and what still needs resolving.
Doqubit asks questions about the transaction, the parties and the property, then arranges the answers in a structured document. Download the file, check its contents and send it to the other party for agreement. You can edit the downloaded DOCX in a compatible word processor; sign the final version agreed by both parties.
Start creating your document without registering an account. Answer clear questions, and Doqubit will help prepare a document for your situation.