Essential elements of a property purchase contract

Are you thinking of buying or selling a new home? Do you have questions about what to include in the purchase contract? Acquiring a new property is one of the most important decisions along our journey. Therefore, being well-informed about the elements and features of a purchase contract is essential to sign the transaction with complete confidence and avoid legal issues in the future.

At Prime Invest, we understand what the exciting journey of finding your dream home entails, as well as the financial and bureaucratic challenges it poses. In this article, we provide you with all the details you need to know before formalizing such an agreement. We accompany you throughout this journey to guide you through the process. Shall we begin?

What is a purchase contract? Exploring its parts and modalities

First and foremost, let's explore what a purchase and sale contract is. It is a legal agreement between two parties, a seller who undertakes to transfer the ownership and property of a good to the other party, the buyer, in exchange for a previously agreed-upon price or consideration. This type of contract is commonly used in transactions involving real estate, automobiles, products, services, and other assets. However, for now, we will focus on homes.

This activity gives rise to obligations for both parties. For the seller, it involves delivering the property and its accompanying elements (such as parking spaces, storage rooms, etc.) in accordance with the terms specified in the contract. For the buyer, it involves receiving the property and paying the agreed-upon price.

There are two different modalities when formalizing a purchase contract: the public deed and the private contract. The first is granted before a notary and is recorded in the Property Registry, while the private purchase contract is signed by both parties without the intervention of a notary.

What are the essential elements of the purchase contract? 

We recently talked to you about the taxes of a newly constructed home when purchasing it, and in this article, we explore the fundamental characteristics and basic elements that make up a contract when buying or selling a home. There are different sections that structure the contract, such as the presentation, the declarations, the clauses and the signatures and annexes. In each of them, from the parties involved to the most important legal aspects, let's see what they are.

Buyer and seller information

One of the first things we find is the personal information of the two parties to the contract of sale of a property. Included are: the full names of both the seller and the buyer, the DNI, the address and the marital status.

Description of the property

A home purchase agreement would not be complete without a detailed description of the property being transferred. Here we must include:

• Specify the full address, including the street, number, block, floor, and door, to identify the home without mistakes.
• Discuss the characteristics of the property, such as the condition of the property (especially if it is second-hand), the built and usable area, the square meters, the qualities in the case of a newly built property, or the distribution, among others.
• Any economic burden affecting the property such as mortgages or liens, among others.
• Ownership of the property. The contract for the purchase and sale of a property must include who is the current owner of the property and who will be the new buyer.
• If furnished, it is also advisable to include household goods.
• Attach the energy efficiency certifications.

Price and payment terms

Among the essential elements of a real estate purchase contract is the price. In the agreement, the price is usually included in letters and numbers; the chosen payment form and the maximum term are detailed. 

In case of signing a deposit contract before the purchase contract, it must be reflected in the same and the amount contributed will be deducted in the same price of the final transaction. The figures must appear clearly without giving rise to any doubt as to the exact amount.

In the event that both parties agree that the buyer provides the amount of the instalment payment, it may be agreed that he provides some guarantee of such payment, such as a guarantee. Another possible option is to agree on a resolutive condition of the contract in case the buyer does not comply with any of the instalments.

Costs of the sale and purchase

The expenses generated by the agreement of purchase and sale of a property are the notary's fees for the preparation and signing of the deed as well as the property registrar's fees for the registration of the property. The different parties to the sale and purchase agreement can agree on how to divide these expenses, although they are usually borne entirely by the buyer.

Delivery date of possession

The date of delivery of the property is another of the basic elements of the purchase contract for the parties involved. It determines when the seller must hand over the property and when the buyer can start moving in.

IBI and community expenses

The agreement for the purchase and sale of a property allows the two parties to agree that the Real Estate Tax (IBI) will be divided proportionally according to how long they have owned the property during the year of the sale.

If it is not a new construction project or under construction, the seller must present a certificate proving that he is up to date with all community fees.

Professional advice on your sales and purchases with Prime Invest

Do you need professional advice on the purchase and sale of a new property? At Prime Invest we have a large number of new real estate developments in the most luxurious and residential areas of the Costa del Sol, Ibiza, and Punta Cana. A differential factor of our projects is their privileged location and the care of their qualities, always betting on the sustainability and comfort of our customers.

Our experience and knowledge of real estate market trends, combined with our commitment to finding the home of your dreams, make us your ideal allies. We offer you a team of expert real estate agents to perform real estate consulting and guide you through every step of the process of buying and selling your new home. 

Our goal is to give you confidence and peace of mind during this process. We take care of the details so you can enjoy a successful and hassle-free sale and purchase. Count on Prime Invest as your ally for a smart buying decision. Contact us and get ready for the adventure.