Is it required by law to pay a deposit ? Although not statutory it is customary for the buyer to pay a deposit of around 5% of the purchase price.
Is it convenient to draw a contract when I pay the first amount of my future property ? Yes it is. If you pay and you have just a receipt you fall into the first and one of the major pitfalls.
Is it mandatory to draw and sign the earnest money contract ? No it is not statutory but it is suitable to set the conditions of the purchase since the beginning.
What is the average percentage of the deposit ? The amount of the deposit varies from purchase to purchase, depending on a variety of factors, normally between 5-10 %. There are reasons to try and keep the deposit as small as possible, but not so small that the seller doesn't take it seriously
Which is the aim of the deposit ? Earnest money for bind the sale, when the contract is completed the deposit becomes part of the payment.
Which is the most important document what I have to sign in a purchase ? The contract of earnest money or deposit.
Where should I transfer money for deposit ? The earnest money deposit should be placed in a bonded or blocked account which is inaccessible except for the recorded purpose of the deposit . At that point it is no longer the buyer's money it belongs jointly to the buyer and seller.
What is gazumping ? Happens when the vendor has accepted your offer but then takes a higher one. It can come about any point before sign the contract or even after but always before sign public deeds. Even when a buyer and seller 'agree' a price, this agreement is not legally binding until deed are signed.
Is it usual gazumping practice in Spanish market ? It is unusual but not impossible, it depends of arras agreement but normally either party could withdraw but in this case the buyer will lose his deposit and the vendor will have to return double the amount deposited.
What references must include this contract regarding the parties ? Names and surnames, marital status, addresses, ID or NIE number and/or Passport number.
What clauses must include this contract regarding the sellers ? If this party is a marriage and the property is Spouses' Joint Property, it is frequent in Spain, both spouses must sign. If the property belongs to two or more people undivided, must sign all the owners. If the owner is a juristic person must record the details of the agent of the artificial person with full powers referring to the particular empowerment, If the seller is and individual but represented by a general attorney must also mention and verify the power of attorney.
What clauses must include this contract regarding the buyers ? In this case though only one spouse buy the property, is sufficient with one signature. If two or more people want to purchase undivided all must sign. If the acquirer is a company or corporate person must mention the power attorney of the agent who signs.
What clauses must include this contract regarding the property ? Must identify the property, footage, comprehensive address, garage, lumber room..
What clauses must include this contract regarding the Land Registry ? Number of the property and cadastral reference
What clauses must include this contract regarding the encumbrances ? After check the Land Registry information must indicate the existence of burdens and how, when and who will assume. There are two possibilities; the buyer subrogate and accept the charges or the seller has to cancel before sign the public deed.
What clauses must include this contract regarding mortgages or other encumbrances ? If the seller agree to subrogate the sum of the mortgage otherwise the obligation of the seller to cancel the charge before the deed's signature.
Must include this contract a clause regarding the date of deed's signature ? It is indispensable because the aim of this contract is reserves the property until the deed's signature
What clauses must include this contract regarding the payments conditions ? The amount of the deposit and the total sum of the sale to be payable. The parties to a contract are free to agree these quantities, normally about 5-10%.
What clauses must include this contract regarding furniture and appurtenances of the property ? Inventory of everything
Is it compulsory to draw up this contract or a purchase sale contract of real property ? No, you could go directly to sign the deed .
Is it advisable to include a damages clause in the event of breach of contract ? Yes, in this clause must be included the sum to be payable.
On the assumption that of having to request a mortgage can I propose a clause included in that indicates itself that in case of not obtaining the loan they should return the money of deposit ? It is advisable to include this clause.
How much time has to pass between the signing of the contract of sale and the signature at the Notaría ? As soon as possible. The danger of resell the property two or more times is true. Then, you would lose any right on the property if with another buyer the deeds are signed in presence of a notary, only you might claim for the lost quantity but you never recover the property since belongs the new buyer because he has acted in good faith
What kind of earnest money could I choose ? Two classes. First one helps protect each party if either backs out of the transaction (the buyer loses the deposit; the seller returns double the deposit). The second type avoid pulls out.
Should be included in the contract any reference about the real estate and his commission ? It is quite convenient.
Is it valid a contract signed by the vendor’s estate agent and the seller ? Yes but only if he has a notarial power of attorney otherwise is void
Where I have to pay the deposit ? Never directly to the vendor, it is advisable into a blocked “Bonded Client Account"
Felix Lopez
www.fljordan.com Spanish Law Firm