Preliminary contract for sale of property in Spain

Spain is a country that attracts many tourists. It is mainly due to its rich culture, architecture, cuisine and the favourable climate. This part of Europe is also well-known for its attractive property prices. However, it is worthwhile to get to know the most important issues related to the purchase of property before starting to search for your dream house or flat.

The preliminary contract - Contrato de arras

What is the Spanish Preliminary Contract? This type of a contract is concluded between a potential buyer of property and its seller/intermediary. The parties undertake to conclude the main ‘’body’’ of the contract, also referred to as the ‘’promised’’ contract. In these circumstances, the buyer makes a kind of a reservation, which entails paying an agreed amount - a deposit. However, this is not a contract concluded before a notary. Therefore, it is worth paying special attention to whether it is properly executed, as it happens many times that the later notarial deed signed is an exact copy of it.

It is also worth remembering that the preliminary contract is concluded when buying all types of property, such as: garages or parking spaces. It does not only refer to flats and houses. As far as the amount of such deposit is concerned, it should normally amount to about 10% of the property value. The buyer may also want to protect himself in case of cancellation of the purchase - in that case a lower rate is negotiated. Of course, the final version must be agreed to by each party. As far as the deadline for signing a preliminary contract is concerned, it is usually concluded for a period of 1-2 months. This is enough time to complete all the formalities related to the purchase of property, including the mortgage.

Types of contrato de arras

1. Arras confirmatorias - the amount that is paid to confirm the willingness to purchase a given property - to conclude a sales contract The amount paid is part of the total selling price. Although it confirms the willingness to finalise the contract, it does not constitute its collateral. In case of withdrawal from the contract, the amount shall be fully recovered.
2. Arras penales - aims to guarantee the completion of the contract. It is a form of stipulated damages - a fine of a specific amount. In the event of withdrawal or non-performance, it is intended to cover the ensuing follow-up damages.
3. Arras penitenciales - the deposit is a form of collateral for the performance of the contract and is intended to protect the interests of both parties. In the event of withdrawal from the contract promised by one of them, it is returned. If the buyer is the terminating party, the buyer loses the deposit paid. However, if the seller terminates the contract, they are obliged to return the deposit in the double amount. This is provided for in Article 1454 of the Spanish Civil Code (Código Civil). It is important that the nature of the deposit is clearly defined in the contract.

What should you pay attention to when signing the Preliminary Contract?

When drawing up a preliminary contract, special attention should be paid to the type of contract you want to sign. The mere reference to article 1454 of the Spanish Civil Code (Código Civil) will be insufficient if we do not use a specific term, e.g. arras penitenciales. Otherwise, it may be interpreted as a non-refundable advance payment.

In addition to the basic elements of a sales contract, the following guidelines should also be included: the precise identification of the property, the determination of its price, the personal data of all owners and the deadline for the parties to conclude the sales contract.

Are you interested in buying property in Spain? Read our article How to sell property in Spain and check the property offers in Spain.