Signing a compromis without a loan conditions precedent in Morocco: how you lose your deposit

1. The moment when the money changes status

As long as nothing is signed, your contribution is your money. When the compromis is signed, you pay a deposit — earnest money, down payment, or instalment depending on the terms — and that money changes status: it becomes the pledge of your commitment. The compromis does not transfer ownership, but it binds you to a price. From that moment on, failing to complete the sale has a cost — and that cost is precisely what the deposit makes tangible.

The mistake is not paying a deposit: that is normal and reassuring for the seller. The mistake is paying it without having planned for what happens if your loan falls through. And it is a frequent mistake, because at the moment of signing, no one imagines the bank will say no.

2. The real mechanism: no financing clause = firm commitment

The loan conditions-precedent clause is a clause that suspends the sale until an event occurs: you obtaining your financing. If the bank grants the loan, the condition is met and the sale proceeds. If it declines — on the terms set out in the clause — the condition fails, the compromis lapses, and the deposit is returned to you. It is a protection, not a formality.

The crucial point: this clause is not automatic. No legal text requires it to be inserted. A compromis can perfectly well be signed without it. And in that case, the legal reasoning flips:

• Without a financing conditions-precedent clause, you are bound at the signed price, whether or not the bank follows you. The loan refusal is no longer a cause for the agreement to lapse: it is your problem, not an exit door.
• The fate of the deposit then depends on the other clauses of the compromis — penalty clause, terms for returning the earnest money, characterisation of the sums paid. Depending on what was agreed, the seller may be entitled to keep all or part of the deposit as damages for the uncompleted sale.
• You are no more an owner either: you lose the deposit and the property. The worst of both worlds.

If the sale collapses for lack of financing and the dispute hardens, you enter the territory of cancelling a sale after a preliminary agreement and of rescission for default of payment — long, uncertain, and rarely to the advantage of the party who signed without a safety net.

3. The cost of the mistake — an illustrative worked example

The figures below are an illustrative example, intended to show the mechanics of the risk — they are neither market data nor a statistic. Imagine a purchase on these terms:

• Agreed price: 1,800,000 MAD.
• Personal contribution planned: 360,000 MAD; loan sought: 1,440,000 MAD.
• Deposit paid at signing of the compromis: 180,000 MAD (10% of the price), without a financing conditions-precedent clause.

The bank processes the file. Its internal estimate comes out at 1,600,000 MAD — below the price. As a result, it does not finance 1,440,000 MAD but a fraction calculated on its value, or declines the file as it stands. The buyer cannot bridge the gap with equity. The sale does not go through. And because the compromis contained no financing clause:

• the 180,000 MAD deposit is exposed — depending on the clauses, it may be forfeited to the seller in whole or in part;
• the buyer has neither the property nor the money, and may begin a long procedure to try to recover part of it;
• the real cost of the mistake is not “a forgotten formality”: it is, in this example, the equivalent of several years of savings.

The trigger here is not bad luck: it is the gap between the signed price and the value the bank retains. An overpriced starting point makes the loan refusal predictable — and the absence of a conditions-precedent clause makes that refusal ruinous. It is the same chain of events as when the bank refuses your purchase price.

4. Safeguard no. 1: the financing clause, in black and white

The basic protection is free: all you have to do is ask for it and have it draftedbefore signing. A useful financing conditions-precedent clause is not just “subject to obtaining the loan” — a vague wording is a source of dispute, not a protection. It specifies:

• The object: the exact loan amount sought and the term.
• The rate ceiling above which you are not bound to accept the offer.
• The deadline for obtaining it, with a long-stop date.
• The fate of the earnest money if declined: full return, within what time, to which account.
• The supporting evidence of the refusal you must produce (the bank's refusal letter).

Drafting this clause is the job of your notary or your adviser. Absolute rule: it is negotiated before signing. You do not add a conditions-precedent clause to an already-signed compromis.

5. Safeguard no. 2: pre-approval before signing

The clause protects you if the loan fails; pre-approval, for its part, reduces the probability that the loan fails. Before committing your signature, have your borrowing capacity assessed and obtain written pre-approval from the bank. You will find the details of conditions and rates in our guide to mortgages in Morocco.

Pre-approval is not a definitive guarantee — the bank will confirm after appraising the property — but it turns a gamble into a controlled process. Combined with the conditions-precedent clause, it makes the risk on the deposit residual.

6. Safeguard no. 3: knowing the real value before setting the price

This is the upstream cause many forget. The bank does not finance your price, it finances its value. If you sign at a price above market value, the refusal or partial financing becomes predictable — and that is what triggers the loss of the deposit. So the real safeguard begins before the clause: setting a price consistent with the property's real value.

That is the whole point of a property appraisal in Morocco commissioned before signing the compromis. A report prepared by RICS-certified experts — condition observed, surfaces verified, comparables documented, explicit methodology — gives you three levers at once:

• Negotiate the price on an objective basis, so that it matches what the bank will agree to finance.
• Reduce the risk of a loan refusal linked to overvaluation — hence the risk on the deposit.
• Calibrate the clauses (deposit amount, proportionate conditions precedent) with full knowledge of the facts.

A useful point: a private appraisal serves negotiation and decision — it is not binding on the seller, who remains free to accept or refuse an adjustment. Its strength lies in its quality, and it helps you support your position with third parties. Cost: from 3,500 MAD excl. VAT, report in 5 to 8 days (48-72 h express), firm quote within 24 h. Set against the 180,000 MAD of the scenario above, the trade-off speaks for itself.

7. Your checklist before signing

• Written pre-approval from the bank obtained — not a verbal promise.
• Financing conditions-precedent clause drafted and inserted: amount, term, rate ceiling, deadline, fate of the deposit.
• Property value documented by an independent appraisal, to align the price with what the bank will finance.
• Earnest money held in escrow with the notary — never directly in the seller's hands — with written terms for its return.
• Clause-by-clause reading of the compromis by your notary or adviser, before signing: it is the last window where everything is still freely negotiable.

8. FAQ

Note: This article has a methodological purpose; the worked example is illustrative, not market data. The fate of the deposit, the financing conditions-precedent clause and the consequences of non-completion depend on the agreed clauses and the regulations in force: have your compromis drafted and reviewed by your notary or adviser before any signature, and confirm your borrowing capacity with your bank. To have your property's value assessed before committing, see our property appraisal page or the ReaConsult blog.