It is the legal formula that allows you to reserve a home that you like before formalizing the sale contract.
The truth is that it is a tool that is used very often in this type of operation, because it is also quite simple. Even so, there are some concepts that we must clarify and keep in mind so as not to have problems in the future.
What is a deposit contract?
As indicated by the OCU, it is a private contract signed by the seller and the buyer of a home to ensure the reservation of a property and thus prevent any of the parties from backing down before the formalization of the public deed before a notary public. It is a written pre-agreement that implies a subsequent sale under the conditions that are agreed and reflected in this contract. If, after this reservation and written commitment, one of the parties refuses to complete the sale and purchase action, it may imply a penalty. Therefore, despite the fact that the signing of a document such as the deposit contract is something simple, it is always recommended to have the advice of an expert in the field.
What types of earnest money are there?
There are three types of earnest money that are adapted to the needs of each buyer or seller:
Penitential or withdrawal charges
They are the most common type and are included in article 1,454 of the Civil Code. It gives both parties the option of not formalizing the sale contract. If it were the seller who desisted from the operation, he would have to return the economic amount of the earnest money multiplied by two. However, if it is the buyer who refuses to complete the acquisition of the home, he would lose the earnest money.
These differ from the previous ones in that their objective is to guarantee the sale of the property. They are reflected in articles 1,152 and 1,153 of the Civil Code. In this case, if finally any of the parties does not comply with the contract, apart from the financial compensation that is also given in the penitential deposit, the injured party can demand compliance with the contract and compensation in damages.
They are included in article 1,124 of the Civil Code and are characterized in that, in case of non-compliance, it would be necessary to go to court and there the consequences for the party that has withdrawn from the contract would be determined.
In any of the cases, when preparing the contract it is preferable to have the support of an expert in legal matters to ensure the most convenient type of earnest money.
How should a deposit contract be?
These are the points that cannot be missed in a deposit contract:
Both the buyer and the seller.
All the characteristics of the house, including the address or the cadastral reference number. Cost of the reservation. The amount that the buyer is going to pay the seller for the reservation of the home.
What is the total cost of the sale and purchase transaction.
Purchase and sale expenses.
The added expenses and who takes care of them.
If there are charges that affect the property, it must be indicated who assumes them.
How much time is there to finish the operation.
The consequences for both parties if the contract is rejected.
What is there to know regarding taxation?
Any more doubts?
One of the most frequent has to do with the type of taxation of the earnest money. The first thing to keep in mind are the characteristics of the home.
When it is not the first time that a home transfer is made, the deposit is taxed by the Property Transfer Tax (ITP) and the payment must be made when the sale is formalized before a notary public.
First delivery housing. If the delivery of the house is taxed by VAT because it is delivered for the first time, the buyer, in addition to the deposit, must pay the corresponding VAT.
In any case, when paying the corresponding taxes, it is always preferable to consult a professional who analyzes the situation on an individual basis to ensure the payments that must be made.