Deposit agreement or bilateral preliminary sales agreement

What is the Deposit Agreement and why you should sign it when buying or selling a house

04-01-2017

When a purchase and sale of a property is going to take place, the two parties usually sign what is called a deposit agreement or bilateral preliminary sales agreement. This is a private contract in which the owner and the buyer agree to buy and sell a property, and for this, a sum of money is given as a sign or reservation of the house. That money is a proof as a guarantee of the commitment made, that is, of the will of the buyer to acquire the property.

Generally, this document establishes that the buyer agrees to purchase the dwelling within the term stipulated in the contract and contemplates the possibility of losing the amount delivered as a signal, in case of lawfully desist from the sale. In addition, the seller must return in duplicate the amount received as a deposit, in case he gives up the sale.

In spite of being a private contract, it is a contract of great importance, and it must be drafted correctly, since it establishes the steps that will be followed until completing the sale of the property. It indicates the number of payments to be made, the dates in which they will take place ... and all relevant data related to the operation. In fact, this document is the basis of the final contract of sale that is signed before a notary.

Normally, the signal agreed upon in the contract will be paid by bank check or cash, but will depend on what both parties agree and sign in the document.

The basic information that must contain the deposit contract is the following:

  • The exact address of the property

  • The name and surname (with NIE) of the persons who own the property and sign ithe contract

  • The price that both parties have agreed for the sale. If it is a new home, it is advisable to reflect the price of the property, as well as the VAT and the commission that the agent or real estate agency will receive (in case there is a comission)

  • The maximum term to formalize the sale of the property and the period established for the granting of the public deed

In addition to this basic and essential information, it is also advisable to include the distribution of the costs of the sale, as well as the amount that is given as a signal and if they will be deducted from the final price.