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The Contract
Let’s suppose that you have found a property that suits you, that all of the pre-purchase checks have satisfied you, and you have negotiated the price down to what you can pay Terms of the sales contract will be your next concern.
Because most buyers take some time to assemble the cash needed for the purchase, it is usual for the buyer and seller to make a “private contract” first, with the buyer putting down a non-returnable deposit of, say 10 per cent. This reserves the property while the buyer brings his money into Spain or perhaps obtains a Spanish mortgage.
If the seller finds another buyer willing to pay more and sells the property, the first buyer can claim twice the amount of the deposit back. If the buyer fails to complete the sale, he loses his deposit.
Remember never to pay the deposit directly to the seller. Make sure that it goes into an escrow account, a blocked account, called a Bonded Client Account, from which it will not be released until the sale is final. Insist on this.
The seller, through the estate agent, will certainly have a prepared private contract all ready for you to sign. The contract they offer may suit you perfectly, but it is quite likely that it will contain some clauses more favourable to the seller than to you, the buyer. This is when you want your lawyer to read the contract and make suggestions.
It is a very good idea to have the contract made in Spanish, with a translation into English or German or your native language, so you can be absolutely sure about what you are signing.
Although most property sales between individuals follow this system of private contract and deposit, followed by closing and final payment, there is nothing binding about it. If you like the property and have the price ready, you can proceed directly to the Notary, pay over the full price, and get your title deed.
This private contract, although it sets out all the details of the agreement, such as payment terms and who pays what share of the taxes, is not the final document for the sale.
Escritura de Compraventa
The final document is the escritura de compraventa and it must be signed by you and the seller in the presence of a Spanish Notario in order to make it legally binding. You can make a poder - a power of attorney - allowing another person to sign for you if you cannot be present.
The Notario, or Notary, is an official of the State who makes sure that contracts are legal. He keeps the original document in his files in case any question arises later.
The Notario is a public official, not a private lawyer. His duty is to certify that the contract has been signed, the money paid, and that the purchaser and seller have been advised of their tax obligations.
He does not verify or guarantee the accuracy of the statements made in the contract. He only certifies that the parties have signed it properly Too many people think that the Notario assures them that all statements made in the contract are true. This is not so. The Notary can, however, give useful advice to both parties.
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