Buying one is one of the most important decisions in life. They involve a large financial outlay, but it also involves carrying out various legal procedures. Many of them are well known, but others not so much. In that second group is the deposit contract.
In fact, six out of ten who plan to sell their home are unaware of some of the essential points of this essential contract for the operation, according to the Mendez Lit law firm, specialized in real estate law.
“After agreeing on the price, it is time to close the agreement in which to indicate the conditions and delimit the operation of the operation. We find different instruments for this and one of them is the so-called deposit agreement,” explain the experts from the law firm.
In practice, the seller does not want to withdraw his property from the market without having a guarantee that the bidder will carry out the purchase. On the other hand, the buyer usually requires some time to organize for the acquisition, for example when he requires financing or is going to move from another property and does not want to miss the opportunity to acquire the one he is now interested in buying.
“The deposit contract is usually given less attention, but it is a true sales contract where the final payment is postponed to the public. It is not a mere reservation, which has more to do with the agency than with the purchase. It is important that our down payment be detailed to avoid later conflicts,” says David García Cerecedo, a lawyer specializing in Real Estate Law at Mendez Lit.
There are several types of arras. On the one hand there are the confirmations. They are those in which the delivery of money is made as an advance payment on account of the buyer’s payment obligation. The sale is understood to have already been completed. The parties cannot desist – back down -. If one of them fails to comply, the other may force him to comply or request the termination of the contract with compensation for damages.
There are also penitential deposits. They are the most common. This type of deposit allows the free withdrawal of the parties. The delivery of money is made as a guarantee of the fulfillment of the contract. But it is possible not to comply assuming its loss by the buyer or its duplicate return if it is the seller. In this case, it is not possible to force forced compliance or to claim damages that are understood to be included in the penalty that we have mentioned.
Finally, there are the criminal deposits. They are equated to obligations with a penal clause. The deposit is configured as the amount of the penalty that must be paid without prejudice to the possibility of judicially requesting forced compliance with the agreement or resolution, in both cases with compensation for damages. They are not common.
A key element in the deposit contract is to differentiate between the withdrawal (power of the parties to freely disassociate themselves from the sale) with the breach of the agreed obligations. “Withdrawal enables the voluntary exit of the operation at the cost of the deposit. Failure to comply empowers the enforcer to demand forced compliance (forcing to buy/sell) or termination of the contract with damages,” explains the Mendez Lit expert. .
As for the amount of the deposit, it is open to what the parties freely agree on. In practice, it is usually equivalent to 10% of the total price agreed for the sale. The amount will be deducted from the total at the time of granting the deed of sale.
Regarding the deadline, it is imperative that the deposit document clearly express the date before which the sale must be notarized before a notary. Secondly,
Notary and notice
In general, it is customary that the notary in which the deed will be granted is chosen by the buyer, although nothing prevents another agreement by the parties. “This may be designated as a deposit or leave a mention of the power of the buyer in this regard for when the time comes,” explains David García.
In addition, it is also advisable to agree on a minimum notice period for the appointment of a notary and the date of appearance at the notary, for example 10 days. In this way, tensions regarding the granting date are avoided.
As for notary expenses, it is one of the most conflicting points that are dealt with in law firms. As explained by the expert, the Civil Code establishes that, unless otherwise agreed, the costs of granting the deed and those of the first and subsequent copies of the buyer will be borne by the seller. The most frequent thing is that the buyer bears the notary’s expenses.
Experts recommend that it be assumed according to a pro rata temporis criterion, with the payment corresponding to the seller until the day of elevation to the public and, from then on, to the buyer. It is advisable to request a notary, a few days before the sale, telematic consultation to the City Council of the tax. In this way, you will be certain of the status of your liquidation, being able to deduct from the purchase price surcharges that are unpaid.
In addition, to avoid assuming pre-existing charges, such as non-payments by the seller or spills from the community of owners, corresponding proof of being up to date with payment of community expenses must be requested. Regarding the energy certificate, depending on the autonomous community, its contribution will be mandatory, or not, at the time of writing.
“Although it must be agreed that the property is delivered free of charges and encumbrances (mortgages, attachment notes, resolutory conditions), information that can be obtained by requesting a simple registry note, special attention must be paid to the easements that operate on the property (passage, light, etc.), without neglecting other conditions”, concludes the lawyer.
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