Legal Aspects

Deposit agreement

The initial commitment in the purchase of a home in Spain lies in the signing of one of three types of agreement: “penitencial” (down payment), “penal” (security) or “confirmatorio” (guarantee). Which is best?

Deciding to buy a house is difficult, choosing a house is complicated, and getting it is almost impossible. This degree of difficulty in the purchase phase is due to the number of formalities and documents involved.

Another equally important factor in this initial step is the signing of a deposit agreement. So let’s take a look at the different types of deposit agreement: although a lot of importanceis placed on the sale contract, this is nothing more than a transcription of the provisions previously undersigned in the deposit agreement.

Types of deposit

• Penales (Security): these constitute proof of the sale contract and the guaranteed fulfilment thereof. The potential buyer will lose the money given in the event of any breach of contract attributable to him.
• Penitenciales (Down payment): with this type of contract, the parties may free themselves in the event of any problem. Should the problem be caused by the buyer, then they shall lose any deposits made. But if it is caused by the seller, then it is the seller who must return the exact quantity to the buyer.
• Confirmatorias (Guarantee): this type of agreement serves only as proof of execution of the contract.

The most convenient

Obviously it’s up to the individual to decide what’s most convenient for them when it comes to buying a home. However, the majority of property experts will advise you that the most common form of contract for new homes is a sale contract, leaving the deposit agreement aside.
When buying second-hand homes, however, more common practice is the signing of a deposit agreement.

And for the sale contract…

This is a binding contract through which the seller –or contractor –is obliged to hand over the home, for which the buyer is obliged to pay a price. This contract must specify the final date for signing the public contract, with a notary, a date on which the insurance terms are also to be stipulated.