Home purchase contract in Spain: what is it and what does it include?

Are you thinking of buying or selling a property in Spain? If you are, you should learn about a purchase contract's characteristics, so you understand the rights and obligations of the parties involved in the process.

Likewise, this article will outline the key points that must be included in the purchase contract or those that, although not compulsory, should be highlighted. Moreover, you'll learn how to approach this contract from both sides, as a buyer or a seller. This is everything you need to know about home purchase contracts in Spain.

Purchase contracts in Spain

According to Article 1445 of the Spanish Civil Code, "through the purchase contract, one of the contracting parties undertakes to deliver a given thing, while the other party undertakes to pay a certain price for it, in money or a sign that represents it".

This type of contract must have the following characteristics:

• Consensual: it is concluded by the parties merely expressing their consent.
• Onerous: there is an exchange of assets between the parties as a consequence of the arising obligations.
• Bilateral and reciprocal: for this contract, the will of two parties is required (bilateral) and obligations are attributed to each of them (reciprocal).
• Commutative: the buyer's obligation to pay the price and the seller's obligation to deliver the goods are essentially equivalent.

What is included in the purchase contract in Spain?

The following elements must be included in the purchase contract:

• The signatories' documentation: full names and surnames, ID numbers and addresses where they live.
• The property's expenses and burdens, i.e., any non-payments or debt that the property may have. Moreover, any possible debt to the residents' community must also be considered. Costs include the plusvalía municipal (a municipal tax), public deed, registering the property with the Spanish Land Registry or administrative consultancy services.
• The completion date
• The down payment amount paid in advance as part of the price
• Cancellation penalties: this is an express agreement by which either of the parties may withdraw from the contract fulfilment; in the seller's case, they must return double the amount paid, and as for the buyer, they forgo the down payment. In Spain, this is known as a "contrato de arras".
• The seller and buyer's expenses and taxes: plusvalía municipal (municipal tax), public deed in the notary's office, registering the property with the Spanish Land Registry or administrative consultancy fees, among others.
• Ten-year insurance: this is compulsory for residential buildings whose building licence was applied for after 6 May 2000, the date the Spanish Building Law came into force. Therefore, it will only be included when appropriate.

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Purchase contract obligations 

According to Article 1500 of the Spanish Civil Code, the buyer must pay the price of the sold property at the time and place set out in the contract. If such has not been set, payment must be made at the time and place when the sold object is delivered.

Formalising the purchase contract

The contract can be formalised in two ways: by a private document without the intervention of a public official, which gives the document evidentiary value or by a public document authorised by the notary.

Registering the property with the Spanish Land Registry makes it effective against third parties.

The following steps are recommended (although not compulsory) when formalising a contract:

• A letter of intent: this is a unilateral document which expresses the intention of entering into negotiations and making offers. If the recipient confirms their intention to proceed with negotiations, a preliminary negotiations stage will follow.

• Preliminary negotiations: this stage is to make preliminary contact in which the will of the parties is sought, and the essential lines of the future contract are determined.
• Pre-contract or promise of sale: as the name suggests, this is a preparatory contract through which the parties undertake to conclude another contract, the bases of which are defined in the pre-contract.
• Contract of sale: this is the final contract.

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