What belongs in the private purchase contract (contrato de compraventa)

Terms used

• Arras — The arras are a deposit paid when you sign the private contract, usually 10% of the price, which also sets the penalty for backing out.
• NIE — The NIE is the tax identification number Spain gives to foreigners.
• DNI — The DNI is the national identity number of Spanish citizens.
• ITP — The ITP is the regional transfer tax the buyer pays on a resale property.
• AJD — The AJD is stamp duty, charged with VAT on new-build purchases.
• Plusvalía — The plusvalía is the municipal tax on the increase in a property's land value since the seller bought it.
• IBI — The IBI is the yearly municipal property tax, which stays attached to the property.

Key rules

• Binding contract: The private contract binds you before the deed, and either side can ask a court to enforce it.
• Penalty: Backing out usually costs the buyer the arras, or the seller double, and levels are negotiable.
• Mortgage clause: Ask for a clause making the sale depend on mortgage approval, or you risk losing your arras.
• Community arrears: As buyer you can be liable for community fees for the current year and the previous three, so the seller should pay arrears up to the deed.

Treat the private contract as binding

Sign nothing until you have read every clause. The private contract (often called contrato de arras or contrato de compraventa) binds you and the seller even though no notary is involved. Either side can ask the other to formalise the sale in a public deed. If one side backs out, the other can go to court to force completion, or to end the deal and claim damages.

What the private contract does not give you is protection against third parties. That comes only from the public deed and the registry entry. Some regions have their own civil law, so ask your lawyer if the property is outside the common-law territory.

Have a notary or lawyer check the contract before you sign. The checklist below covers the points to confirm.

Parties and property

The contract should name both sides in full, with NIE or DNI numbers, addresses and marital status. It should describe the property completely, with its registry data and cadastral reference. The documents list below shows what to collect to fill these in.

Price and payment schedule

The contract must state the price and how it is paid. A typical resale runs in three steps:

• Reservation payment, usually 1,000 to 6,000 euros, to take the property off the market.
• Arras on signing the private contract, usually 10% of the price. The reservation counts toward it. Some contracts use 5% to 20%.
• Balance at the notary, normally 90% minus the reservation, paid by banker's draft or transfer.

With a mortgage, the bank's funds make up most of the balance on deed day. These figures are custom, not law, so they can be negotiated.

Deadlines

Look for these dates and terms:

• A fixed date or period for the deed, typically 30 to 90 days from the contract. Allow longer if you need a mortgage.
• A final date after which either side can end the deal.
• A time limit for withdrawing, if the arras allow withdrawal.
• A date for the seller to hand over the property vacant.

Conditions

If you need a mortgage, ask for a clause making the sale depend on the bank approving it. Without it, you could lose your arras if the loan falls through.

Penalties

The usual penalty for breaking the contract is losing your arras if you are the buyer, or returning double if you are the seller. Some contracts add a daily penalty for late completion. Levels are negotiable and not fixed by law. Courts can reduce penalties that are excessive, but do not count on that.

Taxes, fees and debts

• Buyer: pays the ITP (transfer tax set by each region, typically 6% to 11%). On a new build you pay VAT and AJD instead. You also pay most of the notary and registry fees for the deed and registration.
• Seller: pays the plusvalía and any income tax on their gain. The contract can say the buyer pays the plusvalía, but the seller stays the legal taxpayer.
• Community fees: as buyer of a flat, you are liable for the current year's unpaid community fees and the previous three years'. The contract should make the seller pay all arrears up to the deed and supply a community debt certificate.
• IBI: the debt stays attached to the property. By custom, the IBI is split between seller and buyer up to the deed date. Write that into the contract.

Condition of the property

Most contracts say the property is sold "as seen", meaning you inspected it and accept it. Check that this matches what you saw. An "as seen" clause does not protect a seller who knowingly hides defects.

Attach an inventory of included furniture, appliances and fixtures, with photos. Ask the seller to declare in the contract that the property is free of charges, debts and occupants except those listed, and that they know of no hidden defects.

Governing law and court

The contract should say which law applies and which court handles disputes.

Timeline and deadlines

• Sign the private contract and pay the arras: at the start, when the contract is signed (earliest on deposit signed)

• Sign the public deed at the notary: usually 30 to 90 days after the contract, longer if you need a mortgage (earliest 30 days after deposit signed; latest 90 days after deposit signed)

• Use the final date after which either side can end the deal: on the date written in the contract, if the deed has not been signed

• Exercise withdrawal, if the arras allow it: within the term written in the contract

• Receive the property vacant from the seller: by the term written in the contract for handover

Documents you need

• Your ID and the seller's ID (NIE or DNI) for the parties' details in the contract, with names, addresses and marital status.

• The property's registry data and cadastral reference, to describe the property fully in the contract.

• The energy performance certificate, attached to the contract; the seller provides it.

• The latest community-fees receipt and IBI receipt, attached to the contract to show payments are up to date.

• A community debt certificate from the seller, showing no arrears up to the deed.

• An inventory of included furniture, appliances and fixtures, with photos, attached to the contract.

• The seller's declaration of known defects, attached to the contract.

Checklist

• Check that the contract lists the reservation payment, usually 1,000 to 6,000 euros, and counts it toward the arras.

• Check that the arras on signing are stated, usually 10% of the price, and that the balance due at the notary is written as the price minus the arras.

• Confirm the contract says how the balance is paid at the deed, by banker's draft or transfer, and that mortgage funds are expected on that day if you have a loan.

• Read the clause saying the property is sold as seen and confirm it matches what you inspected.

• Make sure an inventory of furniture, appliances and fixtures is attached to the contract.

• Ask the seller for a signed declaration that the property is free of charges, debts and occupants except as listed, and of any known defects.

• Ask a notary or lawyer to check the contract before you sign, since it binds you before the deed.

Frequently asked questions

Can I sign the private contract without a public deed and still be bound?

Yes, a private contract is binding between you and the seller even before the deed is signed. Either side can require the other to formalise it in a public deed. Without the deed you have no registry protection against third parties, but a court can still enforce the contract or end it with damages.

How long after the private contract is the deed usually signed?

The deed is usually signed 30 to 90 days after the private contract, and longer if you need a mortgage. The contract should also set a final date after which either side can end the deal. Penalty levels are negotiable, and courts can reduce excessive ones.

Who pays the community debts and IBI in a private resale contract?

The seller normally pays community arrears up to the deed and provides a community debt certificate. As a buyer you can be liable for the current year's unpaid fees and the previous three years' fees. IBI (the yearly property tax) is usually split between you and the seller up to the deed date, and the debt stays attached to the property.

Does an "as seen" clause protect the seller from every defect?

No, an "as seen" clause does not protect a seller who knowingly hides defects. The clause says you inspected the property and accept it as it stands. Attach an inventory and a declaration of known defects to the contract.