The Process of Reserving your Property Payment Terms and Contracts: The normal procedure in Spain is to reserve the property with a deposit, to give you time to gather the funds. Here is the typical breakdown for reserving and paying for off-plan and resale property; Off-plan payment terms

• 6,000 euros and sign a reservation contract to reserve the property for a time period of one month.

• Within one month you will pay 30 percent plus taxes (minus the 6,000 euros you have already paid) of the agreed sales price and sign the purchase contract.

• Once the property is finished and the terms of your purchase contract have been met by the developer, you will pay the final 70 percent plus taxes and sign the property’s escritura (title deed) in front of a public notary.

Resale Payment Terms

• To reserve the property you will sign the private purchase contract that agrees the terms and date for the completion of the sale and then pay 10 percent plus taxes, of the agreed sales price to the vendor’s lawyers escrow account.

• Once the terms set in the purchase contact are met, you will be expected to pay the final 90 percent plus taxes and sign the property’s escritura in front of a public notary.

• The above payment structures are merely a guide, developers are commonly more flexible than this and resale scenarios are down to the negotiation between you and the vendor. For instance, a vendor may accept a reservation fee to give the buyer more time to prepare the finance required for the 10 per cent deposit for the purchase contract.

• On all the reservation payments we advise you to pay directly to the vendor’s lawyer or to a bonded or escrow account that has been set up for this purpose. Always try to avoid paying the money directly to the seller.

What is a reservation contract? The reservation contract is used as the standard format for reserving off-plan property for a specified period of time. Typically the contract describes the:

• Identity of the developer

• Exact location of the property

• Description and details of the property

• Property price

• Date to exchange purchase contract

• Details of developers building licence

• Details of the relevant permits, insurance and other documentation

What is a purchase contract? The Contracto de Compraventa is made between the purchaser and the vendor and sets out the terms under which the property will be purchased, such as:

• Agreed purchase price

• Payment of the Deposit Amount

• The exact dimensions and features of the property you are buying as demonstrated by the referencia catastral (cadastre reference).

• The exact location of the property

• The intended completion date

• All terms and conditions negotiated between the seller and the vendor

• A declaration that the purchaser and vendor are legally in a position to buy or sell the property respectively.

The following points are specific to a purchase contract for an off-plan property:

• Details of the planning approval

• A specification that the developer is responsible for all debts on the property up until the completion date

• Confirmation that your payments go into an escrow account to which the developer has no access until the property is finished and delivered to you

• Confirmation that the relevant bank guarantees or insurance policies that protect your deposit are referred to in the purchase contract

• That the costs of cancelling the developer’s mortgage are paid by the developer

• That all the other developer’s costs of completion are paid by the developer i.e. plus valia, the costs of the segregation of the land, etc.

All purchase contracts and reservation documents contain terms that set out the provisions for the sale of the property. Parties can draw up tailor-made contracts to suit their interests, inserting their own terms and conditions. These are valid and enforceable as long as: 1. They are not deemed unlawful or unfair 2. They are easily interpreted (otherwise the courts could interpret to the detriment of the property who crated the clause). If required an Arras or clause can be inserted so that if either party breaks the contract there are automatic penalties. This is usually the loss of the deposit on the purchaser’s side, and payment of double the deposit on the vendor’s side. It would be a very good idea to have your lawyer translate your purchase contract into your language so that you have a dual copy and understand the terms and conditions described in the Spanish document. The use of a ’subject to’ clause One important point to note during the reservation contract phase for an off-plan property or a purchase contract for a resale is that it is a good opportunity to include a ‘subject to’ clause(s) to prevent the loss of your deposit money should you be unable to gather your finances. Your lawyer and sales consultant will be able to advise you and negotiate on your behalf. Buying your property It is quite possible in Spain for a vendor and a seller to come to a quick agreement and move straight to completion and the signing of the escritura de compraventa (title deed of conveyance) by passing the prvious two contracts. When both parties are ready to complete the transaction, they and their lawyers will attend the notary’s office to sign the escritura de compraventa.

• The notary will undertake his own search of the Land Register (Registro de la Propiedad) and see if there are any undisclosed charges on the property.

• He will then prepare the title deed of conveyance from the information supplied by the vendor and check compliance with Spanish Law.

• The notary will then read the whole document in Spanish or English with a translator to you and the vendor, and you will both sign the deeds.

The balance of the final monies owed will be settled and the notary witnesses the vendors confirmation that he has been paid. The escritura de compraventa is then passed to the tax office to be assessed for duty and then to the land registry for entry to the property register. Your lawyer will contact you once the escritura publica (the registered deeds that state that you are the legal owner of the property) is ready for collection (usually 2-3 months) The contract prevents the developer selling the reserved property to a third party within the specified time frame.