In Spain, purchasing real estate can be done without a notarial deed and entry in the land register, unlike in Germany. Instead, a private (preliminary) contract is typically used. However, to protect the buyer from any potential third-party rights, a deed of sale ("escritura") must be signed before a notary public and registered in the land register.
The two most common types of preliminary contracts used in Spain are the option contract - "contrato de opción de compra"- and the down payment contract - "contrato de arras". This article outlines the civil law and essential tax regulations involved in these contracts.
Option Contracts for Real Estate Purchases in Spain
In an option contract (contrato de opción de compra), the seller assures the buyer that the property meets certain requirements, such as building rights, size, and technical faultlessness. During an agreed-upon period of time, the buyer inspects the property to confirm that these conditions are met. To secure this period, the buyer pays an option premium, typically 10% of the purchase price.
The option premium is held in an escrow account managed by a lawyer, tax advisor, or notary, and is credited toward the purchase price if all assured properties are present. If not, the money is refunded to the buyer, and contractual penalties may be imposed. This type of contract is generally more advantageous for the buyer.