What should a property purchase contract in Spain include?

The property sales and purchase agreement is a key document that formalises the agreement between the seller and the buyer regarding the transfer of ownership of a property in Spain. This contract regulates the conditions under which the sale and purchase take place and safeguards the rights and obligations of both parties. To help you verify that the purchase contract is valid, we present the essential elements and clauses it should include.

1. Personal details of the buyer and seller

The contract must contain the personal details of both parties, including their full name, identification number (DNI/NIE), current address and marital status.

If one of the parties is represented by an agent, the identity of the agent and the power of attorney must be attached.

2. Detailed description of the property

It is essential that the agreement includes a detailed description of the property:

• Characteristics of the property: exact address (street, number, floor, etc.), surface area in square metres, layout and characteristics (number of rooms, bathrooms, outbuildings, etc.), state of preservation (if it is a second-hand property), etc.
• Cadastral reference and registration details: It is important to include the reference number that allows the property to be identified in the land registry. It is also necessary to provide the details of the property as they appear in the Property Register (register number, volume, book and folio).
• Property ownership: There must be an indication of who the owner of the property is.
• Information on encumbrances: It is essential to specify whether the property is free of encumbrances or subject to liabilities such as a mortgage or embargo. If there are encumbrances, it must be agreed upon who will assume them. To verify both ownership and the legal status of the property, it is common to include a copy of the ‘nota simple' (property report) from the Land Registry.
• Occupancy status: The agreement should state whether the property is vacant, occupied by tenants, or still inhabited by the owner.

3. Purchase price and payment terms

The Spanish sales and purchase agreement must clearly state the total amount the buyer will pay for the property. The agreed price is typically written in both letters and figures. The contract should also specify the payment date and method (bank transfer, cheque, cash, etc.). If payment is made in instalments, the contract must outline the number of instalments and their schedule.

4. Existence of a deposit or deposit contract

If a deposit contract exists, this should be recorded, along with the amount paid. This ensures that the deposit is deducted from the total amount. All figures should be clearly stated to avoid any misunderstanding regarding the total amount payable by the buyer.

5. Date of handover

Often, the date of signing the contract differs from the date the property is handed over. It is crucial to specify the exact date the seller will transfer possession of the property to the buyer.

6. Costs associated with the purchase

Several expenses and taxes are associated with buying and selling a property in Spain. The agreement should clearly define who will bear these costs. These may include notary fees, agency fees, estate agent fees (if applicable), taxes, and land registry fees. Generally, most of these costs are borne by the buyer, although there is room for negotiation between the parties.

Additionally, it is important to specify who will be responsible for costs that may cause uncertainty, such as community fees or the property tax (IBI) for the year of the transaction. Generally, the IBI is paid by the person who owns the property on 1 January of that year, although it is often agreed to share the payment proportionally.

7. Compulsory certificates and documents

Even if they are not included in the contract, it is essential to be aware of the additional documents the seller must provide at the time of signing:

• Energy efficiency certificate: The seller must provide this certificate to the buyer, as required by law.
• Certificate of habitability: In some Autonomous Communities, this document is mandatory as it certifies that the property is suitable for habitation.
• Certificate of outstanding debts to the community: Issued by the community administrator to confirm that there are no debts owed to the community.

We recommend that you read our article 10 documents you should ask for before buying a property in Spain. This guide will help ensure that you have all the necessary documents to confirm that the property is legal, in good condition, and free of debt.

8. Possible penalties

Spanish sales and purchase agreements often include penalties in the event of non-compliance by either party. These clauses protect both the seller and the buyer and ensure that the agreed terms are met.

Some common reasons for breach of contract include delays in handing over the property or late payment by the buyer. The agreement should specify the compensation applicable in such cases.

9. Signing by both parties

Both the buyer and the seller must sign the contract to confirm their agreement to all the terms and conditions. Signatures (or initials) should appear on each page of the document, not just the final page.

Please note while a private sales and purchase agreement is legally binding for both parties, we strongly advise formalising the transaction by executing it as a public deed (escritura pública). In Spain, a public deed of sale is a mandatory legal requirement to finalise the transfer of property ownership and register the change of legal title with the Land Registry.