When you put an offer in on a property in Spain and the seller accepts your offer it is common to be asked to sign a reservation contract (Contrato de Reserva) and pay a reservation fee to secure the property. This process may seem unusual to UK buyers as it is not a customary practice in the UK, however it is often a common part of the buying process in Spain.
Here’s everything you need to know about reservation contracts and reservation fees in Spain.
Why should I seek legal advice before signing a reservation contract in Spain?
It’s crucial that you seek independent legal advice before signing a reservation contract and/or paying a reservation fee to ensure that you are adequately protected. Instructing an independent Spanish lawyer who is not linked to the estate agent, developer or seller will help ensure that your lawyer is solely acting in your best interests to protect your position and your investment.
We strongly advise that you do not sign a reservation contract until:
- a valuation of the property has been carried out, if necessary
- you have secured a formal mortgage offer (if you require a Spanish mortgage)
- the basic property background checks have carried by your Spanish property lawyer
Are reservations contracts in Spain obligatory?
Reservation contracts are customary when buying property in Spain, however they are not mandatory. Estate agents are often keen for buyers to sign a reservation contracts and pay reservation fees as it signifies a firm commitment to the property purchase. You are not obliged to sign a reservation contract though (although some estate agents might suggest you have to) and should not be pressured into doing so.
Are there any benefits to signing a reservation contract in Spain?
Signing a reservation contract with regards to a Spanish property purchase, ordinarily ensures that the property is not actively marketed for an agreed period (usually up to 30 days) which gives your Spanish lawyer time to run all the necessary background checks to ensure there are no issues regarding planning, land registry, debts attached to the property etc.
However, you should be aware that if the property is being marketed by more than one agent it may not be removed from all marketing platforms. It’s worth asking the question before you sign anything!
The reservation contract also outlines the agreed sale price, which means the seller cannot ask for a greater sum once both parties have signed the contract.
If you choose not to sign a reservation contract, the seller can decide to keep the property on the market and may receive a higher offer for the property. So, you need to weigh up the pros and cons carefully. If there is a lot of interest in a property and you’re keen to secure it, a reservation contract can be a good way to ensure you don’t lose out on your dream property in Spain.
Are the terms of the reservation contract fixed?
In Spain it’s commonplace for estate agents to request that you sign their own reservation contract. However, the reservation contracts drawn up by Spanish estate agents are usually quite vague and focus on protecting the seller, so they offer very little protection to the buyer. The terms of Spanish reservation contracts are negotiable though, which is something your Spanish lawyer can assist with.
How much are reservation fees?
Typically, reservation deposits in Spain are usually between €3,000 and €6,000. Usually, you’ll be expected to pay a lower fee for a low-value property and a higher fee for high-value properties (although this is not always the case). However, you can negotiate the amount of the reservation deposit. The reservation deposit is usually deductible from the agreed purchase price – but don’t assume this, double check and make sure that the agreement is detailed in the reservation contract!
Are reservation fees refundable?
A Spanish reservation fee is usually non-refundable as the purpose of a reservation fee is to make a buyer commit to the property purchase. So, unless there is a valid legal reason for you to withdraw from the property purchase you will not be able to claim the money back. Therefore, you need to be certain that you want to proceed with the property purchase at this stage and ensure that the full funds for the property purchase are secured. If there are any agreed conditions, make sure that your lawyer sets these out in the reservation contract before you sign it.
In exceptional circumstances, where there is a legitimate legal problem relating to the Spanish property purchase, the reservation deposit may be refunded. However, this will be dependent on what was agreed in the reservation contract, which is why it is wise to ensure you get guidance from an independent Spanish before you sign it.
Can I buy the property if I don’t sign a reservation contract?
It’s possible to completely bypass the reservation contract step when buying a property in Spain and move straight to signing a purchase contract, providing all the necessary checks have been made and your Spanish lawyer is satisfied that there are no risks regarding the property purchase.
Being prepared and contacting an independent Spanish property lawyer before you go on any viewing trips can be helpful, so that they can advise from the outset.
For more information about buying a property in Spain or for assistance from one of our recommended Spanish lawyers and a no-obligation quote, give us a call on 01244 470 339 or email email@example.com.
You can also download our FREE Buying Property in Spain guide.