In today’s overheated property market, it has become all too common for eager buyers to sign promises of sale — only to later get cold feet or encounter financing issues, then attempt to use legal technicalities to wriggle out of their commitments. Maltese courts have increasingly made it clear that the law’s protective mechanisms cannot be twisted to let buyers abandon binding agreements without consequences. A recent judgment delivered by the Civil Court on 6 June 2025 in the case brought by plaintiffs Alessandro Trapani and Victoria Sharaova against defendants Joseph Portelli and I.T. Properties Limited is a prime illustration of this prevailing judicial approach.
Back in May 2014, the plaintiffs entered into a private promise of assignment with the defendant Portelli. Through this agreement, Portelli undertook to transfer his rights under an earlier promise of sale he had signed with the defendant I.T. Properties for an apartment and garage in a Swieqi development known as ‘The Forum’. The price was set at €150,000, and the plaintiffs paid €15,000 upfront. The agreement did not immediately translate into construction; in fact, at the outset, what was effectively being promised was airspace — an arrangement not unusual in Malta’s phased property development scene. As often happens, the promise of sale was extended several times, with the last extension pushing the deadline to 31 July 2016.
Throughout this period, the plaintiffs were banking on securing a loan to finance the purchase. However, delays in the project meant the property was still underdeveloped, complicating their efforts to obtain bank financing. As the final extension neared expiry, the parties exchanged formal notices. The defendant Portelli called on the plaintiffs to appear and sign the final deed, explicitly warning that if they failed, he would enforce his contractual right to retain the deposit as pre-agreed damages. In a mirrored move, the plaintiffs also called on the defendants to appear. Ultimately, however, it was the plaintiffs who took the matter to court. They asked the court to declare that the defendants were legally bound to sign the final deed, to appoint a notary to publish it on their behalf, and to award them damages for the delay and complications they claimed to have suffered.
The defendant Portelli defended the case by asserting that it was actually the plaintiffs who were unable to perform, since they did not have the funds necessary to complete the purchase. He relied on the clear wording of their agreement, which gave him the right to keep the deposit as liquidated damages if the plaintiffs failed to appear for the
final contract without a valid reason. Portelli also filed a counterclaim, seeking the court’s authorisation to retain the deposit. Meanwhile, the defendant I.T. Properties pointed out that it had never entered into any direct contract with the plaintiffs and could not be held responsible.
The court carefully reviewed the facts and agreements. It noted that while the initial promise was indeed merely for airspace, the parties later entered into additional agreements concerning the construction. However, of crucial significance was the fact that over time the plaintiffs and Portelli had repeatedly extended the agreement without ever reserving their rights — meaning any previous defaults, by either side, were effectively wiped clean. By the time of the final extended deadline on 31 July 2016, the plaintiffs still did not have financing in place. Evidence showed that their application for a bank loan had been refused, and although they explored alternatives with the help of family, no funds were actually available by the deadline. The defendant Portelli, on the other hand, was ready to proceed and had instructed his lawyer to arrange the signing. The plaintiffs, however, did not respond to these overtures and instead launched legal proceedings.
Under Maltese law, particularly Article 1357 of the Civil Code, a promise of sale binds both sides to appear and complete the transaction. But critically, the law does not allow a party to demand enforcement if it is not itself in a position to perform its own obligations — a principle summed up in the maxim adimplenti non est adimplendum. The court emphasised that the legal mechanism to compel execution or prolong the effects of a promise of sale cannot be manipulated by a party who is itself in default. Since the plaintiffs could not prove they had the means to pay the agreed price by the final deadline, they could not force the defendants into completing the sale.
In the end, the court rejected the plaintiffs’ case against both defendants outright. It ruled that the defendant Portelli was contractually entitled to retain the €15,000 deposit as pre-liquidated damages, and dismissed the plaintiffs’ demands for compensation. It also agreed with the defendant I.T. Properties that it had no legal relationship with the plaintiffs arising out of these agreements, and therefore no liability.
Although this decision remains subject to appeal, it neatly encapsulates the current approach of the Maltese courts: parties cannot enter into promises of sale only to later hide behind procedural provisions when they themselves are unable to perform. Extensions granted without reservations wipe the slate clean of earlier defaults. And where a promise of sale includes a clause entitling the seller to keep the deposit as
liquidated damages, the courts will not hesitate to uphold it if the buyers fail to honour their side of the bargain.
This ruling stands as a clear warning in today’s bustling property market. Buyers must ensure their financing is secure and ready within the agreed timeframes. Sellers, meanwhile, can take comfort in knowing that well-drafted contracts and penalty clauses continue to offer solid protection under Maltese law.
Authored by Dr Joseph Camilleri