Buying a property can take a long time. There may be a certain period of time between the basic agreement between the seller and buyer and the subsequent notarization, during which, for example, the buyer may still have to apply for a loan or other aspects may delay the sale.
Therefore, the purchase of a property in Spain can be preceded by the so-called "contrato de arras". This is a deposit contract with a mutual withdrawal clause. The buyer usually pays a deposit of 10% of the purchase price.
The purpose of the Arras contract is to give the parties involved security for the property purchase. The contract stipulates in writing that the agreed conditions for the sale of the property will be met.
The buyer also makes a down payment, which he loses if he later decides not to purchase the property. Conversely, if the seller no longer wants the property Sold, he must refund double the deposit.
The remaining purchase price is only due when the subsequent purchase contract is notarized.
There is no obligation to conclude such an advance payment agreement, especially if the purchase can be completed directly anyway, an advance payment agreement should not be necessary.
The Arras contract always makes sense if there is still some time to go before the contract is actually concluded, for example because the buyer still needs to arrange appropriate financing or the property still needs to be legally checked.
In contrast to an option contract, however, the Arras does not trigger a definitive obligation to sell on the part of the seller. The seller can withdraw from the contract at any time by paying double the down payment amount to the buyer. Therefore, it does not trigger any tax obligations on the part of the seller and is often preferred to an option contract.
Author:
Dr. Dominic John Patrick Porta, LL.M.
Attorney at Law (Düsseldorf Bar Association n° 52954)
Abogado (ICAIB n° 6645)
dominic.porta@anwaltmallorca.eu
www.anwaltmallorca.eu
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Porta & Associates is a law firm in Palma de Mallorca. Dr. Dominic Porta advises you as a German lawyer in Mallorca on all matters relating to house purchase, rental and licenses. The modern law firm in Palma also represents its clients in corporate law, inheritance law, contract law and tax law.
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