Buying a home is one of the most important events in a person’s life. It requires a significant investment of money and time, and involves a series of procedures that can be complex. In this post we will try to define the steps that must be taken to sign the purchase contract of a property.
The home purchase contract is a document which certifies that the seller hands over the property to the buyer in exchange for a previously agreed amount of money. As a result, the buyer becomes the rightful owner of the property. It is a private agreement between buyer and seller which establishes the rights and obligations of both parties.
If you are looking for a new home, at Sonneil we will accompany you at every stage of the buying process, from the first phone conversation until after the keys have been handed over to you.
Tips for drawing up a purchase contract
Before signing the purchase contract, a series of steps must be taken, which are detailed below:
- Check the legal situation of the property by requesting a land registry report at the Land Registry. The land registry report will provide information on things such as who owns the property, what state of conservation the property is in, whether it is free of encumbrances or not, or whether the owner has the necessary habitability and energy certificates.
- Sign a pre-contract. This step is not compulsory, but it is highly advisable, especially when a mortgage loan has to be taken out. A pre-contract or earnest money contract secures the purchase and sale transaction, as it is agreed between the parties that an advance payment will be made on the total value of the property. This means that if the seller fails to comply with the obligations, the advance payment will have to be returned twofold, and if the buyer fails to comply with the obligations, the advance payment will be forfeited.
After completing these steps, the home purchase contract is drawn up, and then the public deed must be signed in front of a notary. Although this is not a compulsory step, it is highly recommended as it provides legal guarantees. Furthermore, the public deed is the only document that allows the property to be registered in the Land Registry.
All the parties involved in the transaction must be present at the execution of the public deed: buyer, seller, real estate agent and lawyer (if any), the bank’s representative and the notary. At this point, the official signing of the deed and the handing over of the keys to the buyer takes place.
The last step in the buying and selling process is to go to the Land Registry to register the property.
What should the purchase contract for a property include?
Regarding the clauses that a purchase contract must contain, it is essential that they are properly drafted, as this will help avoid any possible legal disputes. The following are the basic details that must be included in the purchase contract of a property:
- Personal details of the parties involved: name, surname, national identity card number, address and contact telephone number. If the transaction is carried out by a married couple in community of property regime, although it is possible for either of them to sign, it is advisable for both to be present and sign in front of the notary to avoid any possible complications in the future.
- Verification of the title to the property. All the information concerning the property should be included in order to prove the legality of the title to the property (by means of a title deed, land registry report, etc.).
- Detailed information about the property. This clause should contain the following information: cadastral reference and surface area, registration number, address of the property, whether the property is up to date with payments or whether there are any encumbrances, the location and condition of the property, etc.
- The agreed price of the property. The final price of the property, the monthly amount to be paid, the extra costs and interest must be stated. It should also be specified whether an earnest money contract has been signed prior to the purchase contract and for what amount.
- Date of delivery. The signing of the contract and the handover of the property does not take place on the same day; the handing over of the keys is usually done at a later date. Therefore, the contract must specify the day on which the property will be handed over.
- Taxes and expenses. In this clause, all expenses related to the sale and purchase will be specified. It will also be detailed who has to pay them according to what has been agreed between buyer and seller. If there are any charges on the property, it is extremely important that they are reflected in the cancellation or expiry clause. Otherwise, they would be paid by the buyer.
- Penalties. This clause will establish the way in which the parties may be penalised for breach of contract.