The Valencia Property Deposit Contract Explained

We have been asked many times what are the parts of the Valencia Property deposit contract so today it's time to go through the deposit contract in full and explain to you what you will be signing when we get to the point of having found you your perfect property and having an agreement with the owner for purchase.

We have taken a typical deposit contract, taken out the identifying features and placed boxes with numbers in to explain what goes in each box. We will also explain what each clause is and why they are there.

Once you have read this post you will know what to expect in the Valencia Property deposit contract. Bear in mind that sometimes deposit contracts vary and may add in other specific clauses or even take out some we have in here (We took out the tenth clause here and I can't remember what it was for, I think it referred to furniture but I'm not sure) This is our typical contract that we use to protect our clients.



The Deposit Contract

The deposit contract is called a "Contrato de Arras". You may also get asked to sign a "Contrato de Compraventa". We prefer the "Arras" system which protects both parties from bad faith on behalf of the other party whereas the Compraventa contract obliges both sides to proceed with a purchase even if further information comes to light.

What is the deposit contract? Well read on and find out.


The first part of the contract is above. First we have the date and location for the signing of the contract. Then it is stated that this is a deposit contract. The first thing to do is identify the buyer (1) in this case a British buyer, and their address (2) with their NIE number (3) and their passport number (4) Sometimes the NIE number has not yet been acquired so the passport is sufficient and is often attached to the contract.

The seller is then identified (5) with their marital status and address (6) and their DNI/NIE number (7). It is stated that they both agree that the other has the right to sign this contract and that they have the legal right to do so.


The second part of the contract is above. This carries on with identification but this time of the property. It establishes that the seller is the rightful owner of the property according to the deed signed at the notary where they originally signed for the house, in this case Daniel Beuzna Saez in June 1976.

It then describes the property with its address (9), floor in this case as it's an apartment (10) size and distribution. It tells you where the property lies in relation to other streets and neighbours (11) and the percentage of the freehold which corresponds to the apartment (Because almost all sales are freehold). It then details the inscription in the property registry in this case the Valencia registry and number, Volume (12), book (13) in which area, page (14) building number (15) and which inscription. It finishes identifying the property with the Catastral number which starts with 7 numbers then YJ and finishes with morenumbers and letters.


The final part of the description tells us that there are no "Cargas" or charges on the property, that there are no current rentals or occupiers and that it is up to date on community costs and that the seller will provide documentation to this effect (A certificate from the community) on the date of purchase.


The next part states that according to the requirements of the law the seller will provide an energy certificate on purchase. Finally both parties agree that this is a deposit contract with arras and that it is governed by the following clauses.


The first clause is that the buyer who is identified again is interested in buying the property described above. The second clause establishes the price (18) agreed on by both parties and (19) is the currency which is almost always Euros (Sometimes between a buyer and seller from a different country other currencies may be used but almost never). It is stated that this price doesn't include costs or taxes.

The following paragraph states that the property is sold free of any charges and up to date on all required payments such as council taxes, community costs and more. It also states that if there are any embargoes, liens or other on the property then these will be satisfied by the seller along with any costs of cancellation of these within the property registry.

The final paragraph states whether the property is the habitual or principal residence of the seller or whether there is another residence, stipulated in the first section for notifications.


The third clause is about the method of payment. On signing this document the buyer pays a deposit (20), usually around 10% which is either paid on the spot or as in this case will be paid within five working days through a bank transfer to the sellers bank (21) in this case Caixa Bank. We usually ask for a copy of the transfer to be sent to us within the five day period as proof of payment as it may not appear immediately in the bank of the seller. If the money is not transferred within those five working days then this contract is rendered null and void. The final paragraph states that the rest of the agreed price (22) will be paid by bank draft in the name of the seller at the notary on the day of purchase.


The fourth clause gives the final date for signing in this case the 31st of January, often 30, 60 or 90 days after the signing of this deposit contract with the name of the notary (23) and address of the notary's office (24). You have to remember that this is the final date possible and the signing is within that time period, often well before, with the agreement of both parties.


The fifth clause is a new one in the last couple of years. It states that the council tax for the year will be paid pro rata by both parties according to the date of signing. This is despite the fact that the council tax bill will come in the name of the seller for this year. One party will compensate the other in an agreed way for the payment. Usually this means the buyer pays the seller some money in cash and the bill is paid by the seller on arrival in their name for the year in course. We prefer the opposite where the seller pays our buyer and we ask the seller to send us the bill when it arrives. (Just in case they don't pay it by cancelling the direct debit beforehand)


The sixth clause is the important part about why this type of contract protects both parties. If the buyer doesn't buy by the final day then they lose their deposit and the contract becomes null and void with the seller keeping the money paid (25). However if the opposite is true and it is the seller who doesn't honour their side of the contract, by not turning up or changing their mind, then they have to return double the deposit to the buyer as stipulated in article 1454 of the civil code in Spain.


The seventh clause is also a clear one. In this case all of the costs of the sale/purchase are according to the law with each party paying what is required of them. Sometimes you will find costs to the buyer, we don't do that!


The eighth clause covers the changeover of the electric, water and gas. The seller states that they will not cut the services until the buyer has had time to change over the the current contracts or get new ones up and running and they state they will help in the changeover process as required (This is sometimes important for water companies) The buyer commits to changing the utilities over to their name within 15 days of the purchase deed being signed.

In the second paragraph we state that if there is no service of any of the water, electric or gas supplies then the owner will be obliged to supply a copy of the habitability certificate of second residence or equivalent prior to the sale to allow the connection to the mains services.


The ninth clause is often contraversial with sellers. It states that the buyer reserves the right to cede the rights to this contract to another person or persons. Owners always ask why on this one. We include it in the contract as sometimes between signing the deposit contract our buyers may decide that their partner will sign alone, they will sign as a couple or a family member may sign for the property for tax, golden visa or inheritance reasons. It does however give our client, the buyer, the right to cede the contract to a third party totally unrelated to them if they wish. This has never happened but in theory it could due to illness or even death.


I honestly don't know where the tenth clause went or what it was :-). We must have had one in a previous contract and taken it out of this one due to an agreement between the two parties. The eleventh clause though states that if there is a dispute between the two parties then it will be the courts in Valencia that are the competent authority to rule on that dispute and any other juridstrictions are ronounced.


The statement is that everyone is in agreement and as a result the contract is then signed by both parties, seller (26) and buyer (27). The other pages should also be signed or initialled.


Attachments

Often there are documents attached to the deposit contract. You may include but they are not always attached, DNIs, Passports and NIEs of buyers and sellers, Nota Simple from the property registry with the details of the property or an inventory (written or a photo inventory) of what is being left by the owners when they leave. Many times however the deposit contract is a stand alone contract.


Thoughts

As you can see the deposit contract is a thorough document that stipulates all the conditions of purchase and protects both parties from any actions of the other that may prejudice them. It is a standard document that may differ from other agencies and lawyers but it should be broadly similar to the one above. Of course as usual if you have any questions then feel free to pass them onto us and we'll endeavour to answer them for you. If you want us to draw up a contract of sale for you then feel free to ask and we'll give you a price depending on how busy we are ;-). Just contact us by mail and we'll get back to you.


Properties Of The Week (Yes, two this week)

"We're no strangers to... (Mad ideas on property listings)"

You know the rules and so do I. Yes, we finally did the property listing based on "Never Gonna Give You Up" with a simple one word change of "View" for "You". See what you think.

Are you ready for this one?

Now, you know the rules and so do I. A full commitment's what I'm thinking of with this property. If you're asking how I'm feeling don't tell me (Just because) you're too blind to see.

Yes, we've started this by simply RickRolling you but in order to make that full commitment what do you have to give up.

A terrace? Nope we have a huge 25m2 terrace with great city views.

Location? Nope, just around the corner from the Central Market and the Lonja listed building with which it shares a road.

Modernised? Nope, ready to go more or less though you might want to change a few things.

Air Conditioning? Nope, top floor so you will probably need it in the summer and winter for heating.

Views? Definitely not. Surrounded by domes and blue skies

Now you've only known each other for a short time
Your heart's been aching (For something like this), but you're too shy to say it (to say it) Inside, we both know what's been going on (you love it really) We know the game and we're gonna play it (because we have the keys).

But what do you REALLY have to give up?

Well, there is one small thing. A lift. And maybe your gym membership. Fourth floor without lift but that's what you give up to have this amount of outside space at this price in the heart of the city centre.

Two bedrooms, bathroom, kitchen, living room and large terrace with space for barbecues, guests and chilling out. What more could you ask for?

"Always gonna give lifts up...
Always gonna walk right down...
Always gonna remember to pick the milk up..." (I'll get my hat!)

If you want to see more photos just click on this link.


Sunshine on a Rainy Day

Valencia Property presents this beautiful apartment just outside the city centre in the Extramurs area of the city. We went to see it during an uncharacteristically wet and cold day this week. On the fourth floor, and a corner property. We had to imagine the morning sun spilling in through the east facing living/dining room windows. There is also a garage space included, located in a building just a few metres away.

In fact on one of the very few days when the weather might make you wish you were somewhere that wasn’t Valencia, this apartment does have the feel of far-away lands. To the extent the owner calls one bedroom the French room, and another the Chinese room. Mainly due to the furniture he inherited when he bought the property. Too nice to throw out he says, and they are very interesting pieces. The fact they they are enormous might have something to do with it too. The apartment is being sold fully furnished so maybe you will have the same decision to make.

The property has been fully renovated very recently, so for those of you allergic to cement dust, plaster and sweaty workmen, this place is perfect. Both bathrooms and kitchen are new, a central heating system was installed, climalit windows. 4 bedrooms and 2 bathrooms, including an en suite. The only modernising that needs to be done is to change out some of the furniture if its not to your taste. Although a sledgehammer and at least one sweaty workman may be required.

And as you can see, we did go back to get a photo of the building in sunshine. We had to wait a whole 24 hours, that's a long time for the Valencian sun to go missing


Last Week's Podcast

The first part of our full guide to saving money on your Valencia Property purchase.

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Then you might also like these related posts where we get deep into the weeds on the many processes of buying Valencia Property and financing it.

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What is the Purchase Process of Valencia Property




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