After you have started viewing properties and found a nice property in Spain, the estate agent will ask you for a reservation contract (contrato de reserva) to be signed. With this contract, the property cannot be sold to other interested parties for a certain period of time.
Within that period, you can have the property and/or the promoter legally examined for any defects such as debts, building violations and the presence of certificates. In case you buy a property on plan, there will also be due diligence needed towards the construction promoter.
Read more about the buying process in Spain.
First deposit
After signing the deposit, you will also be asked to make an initial deposit of between 2,500 - 6,000 euros on site via credit card or bank transfer. This amount actually acts as a deposit. You will lose the down payment if you cancel the purchase.
However, it is possible to include a clause in the reservation contract giving you the right to abandon the purchase if the legal investigation reveals irregularities. In that case, you can waive the purchase and recover all or part of your deposit.
Full refund is basically the rule if such a clause was included in the reservation contract. Of course, discussions can always arise. For example, one client renounced the purchase after instructing the seller to have certain technical examinations carried out by an architect. The architect's costs were therefore deducted from the deposit. Keep this in mind when asking specific technical questions to the seller.
Note: refund is not the rule when buying new construction.
Who do I pay the deposit to?
If you appoint a lawyer prior to signing a reservation contract, you can opt to pay the deposit into the third-party account. That way, you will avoid the broker or seller refusing to refund you if there are defects in the property.
It often happens that the down payment is paid into the broker's account. This does not necessarily lead to problems. There are certainly reliable estate agents on the market, including Spanish estate agents.
We do advise against making the down payment to the seller's account. This may be a private seller or Spanish building promoter. If you are buying on plan, for example, it is advisable to use your own lawyer's third-party account. If the construction promoter would then not be fully in order, you can still recover the deposit.
Read more about buying on plan in Spain.
When do I lose the right to a refund?
You lose the right to a refund of the first deposit if you let the deadline in the reservation contract expire (read: decide not to buy) or if you cannot pay 10%'s second deposit. Depending on the reservation contract, there may be other reasons. This should be checked.
Read more about what to do in case of a mis-selling.
What after the reservation contract and investigation?
If you decide to buy, the compromise (contrato de compraventa) drawn up. You will then make a second deposit of 10% of the purchase amount.
It is important that you do not sign the compromise until you are certain about the legal situation of the property. After all, the compromise is a binding sale-purchase agreement that you cannot renounce. Using a practical example, we explain why it is best not to sign the compromise too quickly.
Find out what Confianz can do for you if you decide to buy a second home in Spain.
