Question
When buying a property in Spain, is it normal for the buyer to give the seller any money before the transaction is final? I’m being told that the amount of money for “contrato de arras” is normal to be given to the seller before the transaction is finished. In California, all monies are held in escrow until the transaction is done. Then the seller gets their money and the buyer gets the property. Seems strange to me that the seller would get any money early.
Answers
These are the answers of some Facebook group members:
“It is normal, yes. However, you can propose the seller to pay all the money when the “escritura” is signed. That would work too.”
“There are many different ways of property purchase around the world and in Spain it is not uncommon to give the seller the deposit as long as you have a sales contract and proof of payment.”
“Yes.. I believe it’s normal. Here’s what I know (I’m not a lawyer). It’s usually tied to a cancellation clause which calls for a penalty if either side cancels the deal. Buyer would lose the deposit if they cancel the transaction after signing contrato de arras, seller usually needs to return the deposit + send the equivalent amount of the deposit to the buyer as a penalty, if they cancel. Seems like a fair deal – locks both sides in pretty strongly. An escrow medium is probably safest still.
I’ve have done this twice as a buyer. I asked for the amount to be the lowest possible – usually around 5% instead of requested 10%. Both times this was accepted. We didn’t use escrow.”
“Normally you pay 10% on signing of ‘compraventa’ contract and then if you back out, you lose the deposit and if the seller backs out they have to pay the 10% + 10% as a penalty.”
“It is normal. I am an estate agent on the Costa Blanca and typically you pay a deposit (5-10% depends on the area and the property) when you sign the contrato de arras. Some agents will direct you to pay the money to the seller but we recommend it be held in the agency’s cuenta de arras or with a lawyer representing the buyer or seller until completion. Some older Spanish sellers expect to receive the deposit but are for the most part fine with it being held by a third party until notary. They get their money in the end. You get some peace of mind.”
