Buying Property in Mallorca (Part 1)
The entire process of buying a property in Mallorca, from the moment of making an offer to collecting the keys to your new property, should be carried out under the guidance of a real estate agent and lawyer.
First of all: get an agent and a lawyer!
It is essential that you have these two people available to give you advice, review documents and explain the intricacies of the Spanish buying process every step of the way. You need their expertise to make the right decisions about banking in Spain, acquiring a mortgage and understanding the costs, fees and taxes when buying property. They will help you in the negotiation process and organize the formalities and necessary documents to ensure that the process is carried out correctly.
Real Estate Contracts
To pay the deposit you will need a purchase contract, which will be drawn up and checked by your lawyer. Signing this initial contract is essentially the first step in purchasing a property. If the broker provides you with a standard contract, have your lawyer review it.
There are different types of contracts:
- The normal private sales contract (contrato privado de compraventa), which is binding for both the buyer and the seller and requires a deposit.
- The option contract (contrato de opción de compra), non-binding and a deposit must be paid and is lost when paid out.
- The reservation contract (documento de reserva), where you pay a small goodwill deposit to secure the property for a short period of time. If you withdraw from the sale, the deposit will be forfeited.
A deposit (arrás, fianza, reserva or depósito) of approximately 10% is paid to secure the property you wish to purchase upon conclusion of the contract. This will then be deducted from the total amount after the sale is completed. Conditional clauses in the contract can protect you from not getting a mortgage, for example, but can also be forfeited if you do not complete the purchase within the agreed time frame.
If you cash out, you may not only lose the deposit but also have to pay brokerage fees. Check the terms and conditions, make sure you add any necessary conditional clauses to protect your deposit from legal or other problems and have the money deposited into a promissory note account.