Page 8 - A guide to buying a new property in the Balearic Islands

3. The Arras contract or full private contract will usually require a 10 to

30% deposit to be paid. The seller cannot pull out of the transaction. If the

buyer pulls out he will lose the deposit paid.

Once both parties sign the main contract and the deposit credited in the

account of the seller, it is binding. The buyer is then committed to pay the

balance of the price, and the seller (once the money has been paid) must

transfer ownership to the buyer.

This is the normal contract when buying a new property from a developer.

4. The investment contract is an agreement for the reservation of a future

property on a development that has yet to obtain planning consents. These

types of agreement are highly speculative in that often they are based on the

“vision” of a development company. Often the attraction of such contracts

is the resale value of the rights acquired under the agreement. These rights

are usually resold prior to the development being completed. If considering

such an investment it is essential that detailed legal advice be sought as there

are special considerations regarding this type of contract.

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