What must a deposit agreement (“contrato de arras”) say? Does it have to be signed before a notary?

Question

José Manuel Alburquerque · Accepted Answer

No notary is needed. A private document signed by the buyer and by all the owners of the flat, or by someone holding a power of attorney from them to do so, is enough. The law does not say what it must contain, but it should clearly identify the parties and the flat and set out the price and how it is to be paid, the type of deposit, the deadline for signing the public deed and the conditions on which the purchase depends. In Catalonia, a withdrawal deposit (“arras penitenciales”) can also be lodged with a notary and recorded at the “Registro de la Propiedad”, the Land Registry, which gives greater protection for its repayment. What it should say This is not a list laid down by law, but what practice recommends to avoid problems: Who signs. It must be all the owners recorded at the Land Registry, or their representative, on production of the power of attorney. If the flat is the seller's family home, the seller's spouse or stable partner (in a “pareja estable”, the Catalan stable partnership) should also sign, because their consent will be needed to sell even if they are not an owner. The flat, with its address, its property number at the Land Registry, its cadastral reference and any attached units, such as a storage room or parking space. The price, what is paid now and when and how the rest will be paid. What type of deposit it is and what happens if either party backs out. In Catalonia, unless it is expressly stated to be a withdrawal deposit, it is confirmatory and neither party can withdraw. The deadline for signing the public deed and who chooses the notary. That the flat will be sold free of charges (encumbrances) and how the seller's mortgage will be discharged, which is normally paid off with part of the price on the day of signing. That it will be handed over with vacant possession and with the keys on the day the deed is signed. If it is let, the buyer will generally have to respect the tenancy agreement of the tenant, who may also have the right to buy it before anyone else. It is advisable to provide for what happens if the tenant exercises that right and to allow time for it in the deadline. The conditions on which the purchase depends, such as being granted the mortgage, with a deadline for proving it, or a survey of the flat. The documents the seller will provide, such as the certificate of habitability (“cédula de habitabilidad”), the energy performance certificate, the certificate from the owners' association (the “comunidad de propietarios”) stating that the flat is up to date with payments and the latest receipt for the IBI (the local property tax). How the costs of the sale and the year's IBI and service charges are to be shared. In Catalonia, unless otherwise agreed, the buyer pays the notary's fees for the deed and the registration at the Land Registry. So, if the contract says “gastos según ley” (costs as provided by law), the buyer pays the notary. The notary and the Land Registry A deposit agreement is valid without a notary. Signing it before a notary, or having the notary authenticate the signatures, that is, certify who has signed, gives it a date that cannot be disputed and makes it easier to prove, but it is not compulsory. Bear in mind that a deposit agreed in a private document does not prevent the seller from selling the flat to someone else. If that other buyer purchases in good faith, signs the deed and registers the purchase at the Land Registry, they keep the flat. All the first buyer can then do is claim from the seller what they paid plus damages. In Catalonia there is an additional safeguard. If the deposit is a withdrawal deposit and is agreed for six months at most, it can be lodged with a notary and recorded at the Land Registry. The notary holds the money and pays it to whoever is entitled to it if one of the parties withdraws. In addition, the flat is charged with its repayment, that is, it stands as security for it even if it changes hands. This involves the notary's and the Land Registry's fees. In the rest of Spain the law does not provide for this deposit recorded at the Land Registry.