Chapter

Contracts before completion when buying in Spain

§ 1The stage between agreement and deed

Between agreeing a price and signing the deed, many sellers and agents ask the buyer to sign a paper and pay money. The names vary: reserva, señal, arras, contrato privado. They are not the same, and the differences decide what you can lose. The notary’s own guidance says arras are optional, and that the most common type is confirmatory arras. The documents form one family, each with a different purpose. It belongs to the process described in the buying-process section of this handbook.

§ 2Reservation

A reservation takes the home off the market for a short time while you do your checks, in return for a small payment. It is usually the first paper. The terms matter more than the name: is the payment refundable, for how long does it hold, and what happens if the checks fail. See the reservation contract.

§ 3Arras

Arras are a payment on account of the price, made under a contract that fixes the terms of the sale. The type decides what happens if someone withdraws. The notary’s page explains that arras are optional, that confirmatory arras are the most common, and that penitential arras apply only if agreed, with loss of the deposit by the buyer or return of double by the seller. The detail is in arras.

§ 4The private contract

A private purchase contract sets out the terms: the price, what is sold, the deadline for the deed, the conditions and the penalties. It is usually signed with a deposit. It binds the parties, and sometimes forces a sale. Read it carefully. The content is in the private purchase contract.

§ 5The deposit

Whatever the paper is called, the money you pay raises questions of who holds it, what it counts for and when you get it back. Those are covered in the deposit.

§ 6Pulling out

Sometimes a buyer needs to withdraw. What it costs depends on what you signed. Pulling out explains the cases, and how to prepare so that a withdrawal is possible.

§ 7Fees and taxes on the papers

Signing a private contract does not usually trigger the main purchase taxes, which arise on the deed, but fees for the lawyer’s review and for any translation are payable early. Ask for them in the quote, so that the cost of getting to the deed is clear.

§ 8Why the order matters

Most disputes about contracts before the deed come from sequence. A buyer pays, signs and only then checks. By that time the seller holds the money and the paper, and the buyer holds a list of doubts. Reversing the order, with checks first and commitment second, is the single most effective protection. When that is not possible, a short, conditional and refundable reservation is the next best thing, and a longer commitment should wait until the registry, the debts and the licences have been seen.

§ 9What lawyers add

A lawyer reads the paper in the original language, explains the effect of each clause and proposes changes. A lawyer can also hold the deposit in a client account, send formal notices, and attend the signing. These services cost a fee, which is small compared with the sums at stake. The professionals chapter explains how to find an independent one.

§ 10Taxes and the contract

The taxes on the purchase are normally paid after the deed, but the contract should say who bears which cost. The costs section of this handbook explains the taxes, and your lawyer can write the split into the paper. Where the seller is a non-resident, the buyer’s retention is recorded in the deed.

§ 11Reading in your own language

If a paper is only in Spanish, ask your lawyer to explain it clause by clause, and ask for a written summary in English. Never sign a paper because someone says it is standard. Standard forms are written by and for one side.

§ 12A sound approach

Do your checks first, if you can. If you must reserve, keep the amount small and the reservation short, and make it conditional on the checks. Insist on a written paper that says who holds the money and when it is returned. Pay by bank transfer so the payment leaves a trail, and the notary prefers that method at the deed too.

§ 13Developers

For off-plan purchases, the law requires advance payments to be secured and held in a separate account. Before paying an off-plan deposit, verify the developer’s registration, the ownership of the land and the building licence.

§ 14Back to the section

Spanish property law for foreigners explains the legal steps and checks of a purchase.

§ 15Other chapters in this section

An overview of the NIE explains the foreigner’s number you need to buy and the basics of the professionals in a purchase explains who does what: lawyer, notary and gestor.

The section on due diligence explains the checks to make before you sign and what to know about illegal builds explains the planning risks and how to avoid them.

How completion and the deed works explains the signing at the notary and what follows and Spanish will for foreigners explains how inheritance works for foreigners who own Spanish property.

How communities of owners work explains how a Spanish flat block is governed and is it safe to buy property in Spain explains the real risks and how to reduce them.

Legal note. How the process works in general. It is not legal advice, and it never replaces an independent Spanish lawyer acting for you.