How is the standard purchase process of a property in Spain (II)?

Following with the detailing of the process to buy a property in Spain and after talking in my previous article about the Reservation of the Property, I am going to touch in this article the Private Purchase Contract. As I mentioned on my previous article, there are many variations in this contracts for each particular case but I am referring to the general and most common one. 

2.– PRIVATE PURCHASE CONTRACT

A Private Purchase Contract is a binding contract between the seller and the buyer for the purchase of a property. In Marbella, the are two types of contracts usually used for this transactions: what is called an “Arras” contract and a Option to Buy contract. As I said before, there are many other options like the Rental with an Option to Buy contract but I am not going to get in so much detail and just will touch on the two ones mentioned.

a) The “Arras” contract.

- It is a binding contract between the selling and the buying part and is associated with a payment of an amount , the “arras”, of, in general, a 10% of the agreed price.

- This contract will include the identification of the property that is being transferred, the parties that intervene, the price and payment schedule, the date of the signature of the public deed and additional agreements like the distribution of expenses.

- The are three types of “Arras” contracts: confirmatorias, penitenciales and penales. The most common is the arras penitenciales contract that is the one where the amount paid, in general 10% of the agreed price, serves as penalty on both sides: if the buyer does not complete or fulfills the contract, he will lose the amount paid; on the other hand, if the seller does not fulfill his obligations as per the contract, he will have to return the received amount and pay a similar amount as penalty.

b) The Option to Buy contract.

- It is again a binding contract between the selling and the buying part and is associated with a payment of an amount, the premium of the option to buy, of, in general, a 10% of the agreed price. Similarly, this contract will include the identification of the property that is being transferred, the parties that intervene, the price and payment schedule, the date of the signature of the public deed and additional agreements like the distribution of expenses.

- The main difference is that in this case the buyer is buying a right to purchase the property or an option to purchase the property and agrees to pay the rest of the price before and agreed date. The premium paid will be discounted from the final price agreed. If the buyer does not execute his right to buy, that is, does not manifest his intention to execute his option to purchase the property or does not pay the rest of the agreed amount before the agreed date, he will lose the premium paid for the option to buy and with it all the rights over the property.

 

* Since each particular case is different, it is fully recommended that you check your own details with your lawyer.