Upon reaching this crucial point in the sales process, we can confidently conclude that we have made significant progress. The transaction is heading in a favorable direction, signaling the achievement of key milestones indicating substantial advancement. This moment not only represents success in the presentation and offer stage but also marks the beginning of a fundamental strategic phase: negotiation.
Reservation and Deposit Agreement
This private contract can be signed in cases where the buyer wishes to keep the property off the market for a few weeks or days while deciding and/or conducting research on the property. To formalize the reservation, in addition to the signature of this contract, a small deposit is usually given as a gesture of good faith.
Earnest Money Agreement
Once the buyer decides to acquire the property firmly, and prior to the transfer of rights, a Private Earnest Money Agreement (Contrato Privado de Arras) is usually signed, commonly used while the buyer secures financial funding. This type of contract includes all relevant information about the property, along with the agreements and conditions agreed upon between the parties.
We can distinguish three types of earnest money contracts:
Penal Earnest Money
It is the most commonly used, and the clauses that differentiate it are as follows:
• Involves the payment of a percentage of the purchase price as a deposit.
• A period of 1 to 3 months is granted in exchange for the deposit.
• It is usually subject to the financing clause. Although this point is not mandatory in the earnest money contract, it is usually included for additional security in case banks do not approve the financing. In that case, the seller will have to return the percentage of the reservation since this event is not attributable to the buyer.
• If the buyer withdraws from the purchase for reasons attributable to him, he would lose the deposit.
• If the seller withdraws from the sale, he must pay the buyer double the amount of the deposit.
Confirmatory Earnest Money
They function as an advance and expression of the commitment of the real estate purchase contract, not allowing for the possibility of resolving the contracted obligation. In other words, the real estate purchase will take place in any case.
Penalty Earnest Money
Functions the same way as penal earnest money, but in this case, regardless of the deposit collection, the parties can demand the formalization of the real estate purchase contract if they wish.
Signing of Public Deeds before Notary
With this step, the transfer of the property to the buyer reaches its culmination. On the day of the signing of the public deeds, the notary will request the following:
- DNI or NIE of all involved parties (buyer and seller).
- Updated property deed.
- Simple note from the Property Registry.
- Certificate of being up to date with payment of the homeowners' association.
- Property tax (IBI). Last payment receipt.
- Energy certificate .
- Habitation certificate.
- Marital status, marriage regime, and address.
- Document of inheritance acceptance (if applicable).
- Notarial power of attorney (if someone represents the seller).
- Marital status, marriage regime, and address.
- Property title.
- Document proving payment of utilities.
- Certificate of pending mortgage debt and if applicable, request its cancellation.