Page 7 - A guide to buying a new property in Andalucia

A Guide to buying
ANDALUĆA
new property in

The contract

2.

There are a number of different types of contract that may be encountered.

1. The reservation agreement.

2. The option contract.

3. The Arras contract or private contract.

4. Investment contracts.

1. The reservation agreement is a simple contract that has the effect

of reserving a particular property for a limited period of time. Typically a

reservation period will last no longer than 30 days. On making the reservation

a fee will become payable. The reservation fee payable is in general between

€ 3,000 and € 6,000 plus its IVA or VAT. If the full private contract is then

signed within the reservation period, the reservation fee is deducted from

the purchase price agreed. If it is not, then the reservation fee is forfeited

and the property is placed back on the market.

2. The option contract as its name suggests, gives the buyer the “option”

to buy a property. However, many sellers particularly in the sale of resale or

second hand properties now commonly use options instead of a full contract.

Generally, an option contract will give a period within which completion

must take place usually, 30 days of the date of the option contract. If the

“Escritura de Compraventa” (Title deeds/ Conveyance) is not signed within

this period the buyer will forfeit the sum paid under the option contract.

Often the deposit paid on signing an option contract is in the region of

10 to 30 percent of the full purchase price. The option Contract makes it

easier for a seller to rescind the agreement in the event of default, and does

not afford a buyer the statutory protections normally given when signing a

“contrato de arras” or full private contract.

7