Contrato de arras: everything you need to know about this contract in SpainIn Spain, the "contrato de arras" is a fundamental document and, in most cases, an essential condition for sealing an agreement to purchase a property in Spain. Although for many buyers it may seem a mere formality, especially after months and months of searching for the perfect home, it is a contract that commits both parties to the sale. What is the earnest money contract in Spain and how does it work? What is the purpose of the earnest money contract in Spain? First of all, this contract in Spain serves to give peace of mind to all parties involved in the sale of a property, as this contract agreement guarantees in writing that the agreed conditions for the sold property are fulfilled. If the buyer finally decides not to buy the property after signing this contract, he will lose the amount paid as deposit. On the other hand, if the seller does not sell the property as agreed, he will normally have to return double the amount of the deposit. Is the earnest money contract mandatory in Spain? It could be said that this contract serves as preparation for the signing of the purchase contract. But, why not sign the purchase contract directly? Is it compulsory to sign an earnest money contract in Spain? The answer is no, it is not compulsory at all and you can sign the purchase contract directly and people usually do it. Therefore, it is not always necessary to sign a deposit contract beforehand. If both parties agree on the price, on the term, that the financing does not require an additional term or that there are no other circumstances that would prevent the purchase from going ahead, no prior agreement would be necessary and the deed could be signed directly. But this is not always the case. There are many factors that can delay the signing of the deed of sale, such as cancellation of prior liens, property checks, encumbrances, permits, licenses, financing applications and even pandemic. There are many and varied reasons to use these pre-arrangements. Sample deposit contract Although you can find many models and templates of Spanish deposit agreements on the Internet, it is best to seek the help of a lawyer. Often these contracts preparatory to a sale are not given the attention they deserve and are considered simply as a simple reservation without further consequences. However, as mentioned above, there are serious consequences if either party breaches the terms of this contract. In Spain, this contract is usually signed before a notary who will give you an additional guarantee, although in some cases it can also be signed in a real estate agency. The notary informs the parties in detail of the conditions involved so that they can make a decision adapted to the circumstances, with full knowledge of the facts, as well as the time that may be necessary to prepare everything. Since these agreements are poorly regulated and their scope is very broad, it is best to turn to a professional. What is normally included in a deposit contract in Spain?
Personal data: signing one of these duly drafted contracts will ensure that everyone has the necessary documentation, both in terms of representation, taxation, money laundering, foreign investments, etc. Identification of the transferred property Fees, limitations or other relevant circumstances The price at which the purchase and sale is fixed and the amount to be paid at the time of signing the contract, the advantages and disadvantages for each party and the nature of possible options Time of execution of the deed of sale and purchaseAllocation of expenses, so that each party is aware of what they are signing, as this cannot be changed at a later date unless there is a new agreement between the two parties. Other issues that may be relevant on a case-by-case basis