If you are looking for a house and you find one that suits all your tastes, we recommend that you sign a deposit contract with the seller, as this will ensure that the house will be yours.
But, before going into details, it is first necessary to know what an earnest money contract is, so…
What…
What is an earnest money contract?
?Qué es el contrato de arras?
The earnest money contract is a private document in which both the seller and the buyer agree on the purchase and sale of the property, always giving each other a sum of money as a deposit, to be used as proof.
The earnest money contract is a private document in which both the seller and the buyer agree on the purchase and sale of the property, always giving each other a sum of money as a deposit, to be used as proof.
That is, it is a pre-agreement that serves as a guarantee. Ensuring the completion of the act of sale or rental.
But be careful, before signing a deposit contract you should bear in mind the following concepts:
But be careful, before signing a deposit contract you should bear in mind the following concepts:
Types of earnest money contracts
In summary, in law there are 3 types of earnest money contracts, which must be chosen with caution, as each contract has different objectives and legal consequences.
But be careful before signing an earnest money contract.
- Confirmatory Deposits (usual): Their main purpose is to confirm the commitment to the sale and purchase, which would be an advance payment of the total price, which would constitute the first instalment of the payment.
In the event of non-performance, the general rules of non-performance of obligations shall apply, i.e. the aggrieved party may demand performance or termination of the obligation with interest.
- Penal damages: Their main objective is to guarantee the fulfilment of the contract, and the main difference with respect to the previous one is that in this one an amount to be paid is agreed, which is added to the price, in the event of non-fulfilment.
- Penal damages: Their main objective is to guarantee the fulfilment of the contract, and the main difference with respect to the previous one is that in this one an amount to be paid is agreed, which is added to the price, in the event of non-fulfilment.
- Penitential clauses: The main difference is that this allows the contract to be unilaterally terminated by means of a literally written clause, always through the termination of the fulfilment of a contractual obligation, previously agreed. Being usually resolved by means of the loss or the double restitution, in the case of the buyer and the seller, respectively.
It is also worth mentioning that a deposit contract is a down payment, and is not a deferred payment of the price. We also recommend that, before entering into any contractual agreement, you consult an expert, as this document that you are reading is for information purposes only.
In addition, although it may vary from one to another, there are concepts that should be included in all of them invariably, such as:
Clear identification of both buyer and seller. Clear identification of buyer and seller. Clear identification of buyer and seller.
Detailed description of the property.
State both the price and the method of payment agreed in the contract. State the price and the method of payment agreed in the contract. State the amount and the method of payment.
State the amount given as a deposit or deposit, which will form part of the total payment. State the amount given as a deposit or deposit, which will form part of the total payment. State the amount given as a deposit or deposit, which will form part of the total payment.
Penitential deposits. Specify the term of the marriage.
Establish the deadline for delivery of the property by means of a public document. State the date of delivery of the property by means of a public document. State the date of delivery of the property.
State which of the two parties will bear the costs related to the sale and purchase: notary fees, registration, appraisal, etc. State which of the two parties will bear the costs related to the sale and purchase: notary fees, registration, appraisal, etc. State which of the two parties will bear the costs related to the sale and purchase.
In short, the earnest money contract is a very useful tool to ensure that the property you like will be yours, although like everything else, you have to be aware of what you are doing and the obligations it entails.
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