We at Hondon Villas always use a Lawyer (abogado) to collect and receipt deposits on house purchases. We DO NOT HOLD your money in a special account or keep it if the sale goes cold.
We highly recommend to NEVER PAY AN AGENT or BUILDER an advanced DEPOSIT. Always ask for a qualified lawyer or appoint one in advance to take care of your finances.
Unfortunately, some agents in the area who insist on taking a deposit as their commission, whether the sale goes through or not. This is RISKY for the buyer and seller and in our opinion WRONG! The chances are you will never see that money again. We are AIPP registered and adhere to good practice for both buyer and seller.
It is common practice when buying a property in Spain to ask the buyer to pay a % deposit on the home they wish to buy in advance of the completion. The main reason is to show good will and for the agent to remove the property from sale whilst the paperwork is checked. So you are making a reservation on the property by signing an “arras agreement“.
This actually helps both sides of the deal. The buyer is assured their offer has been accepted and there will be no further viewings or offers on the property and the seller has some peace of mind that the buyer has the good intention to purchase.
Bare in mind that you may lose this deposit if you don’t complete the sale on the date stated, or that the vendor shall return double the amount deposited, was he finally not to honour the contract in the stated date. But your contract should be clear on that.
A deposit can be any amount depending on the sale price and circumstances. In the Hondon Valley and surrounding areas a €3000 deposit is common but can be more if the property is of a high price, a special deal or maybe an off-plan new build. The latter can be 10% of the purchase price so a a builder can commence with the work.
Of course integral to this should is trust and a signed contract spelling out the terms of the deposit, what it is for, costings and any other due fees or staged payments until completion. Make sure you understand the terms and if a deposit is refundable or not.
The lawyer will have a special holding account for these deposits and importantly is the legal guardian whilst the house sale goes through.
There are many good estate agents in Spain but the industry is more loosely regulated than in the UK and unscrupulous estate agents sometimes target overseas investors. So be careful!
Sean Adams, international director of mortgage broker SPF Private Clients, says: “Do not hand over any money to an estate agent until you have taken formal legal advice. You should always choose a lawyer who specialises in Spanish land,” he said. “Ask for their registration number and check that they are registered and practicing with the local bar association (Colegio de Abogados). It would be wise to also check that your lawyer has professional indemnity insurance.”
Need more advice on deposits, purchase fees and buying in Spain?
Please call Hondon Villas and we will be happy to help. Or read this article for background >
At the time of writing, Hondon Villas are the only Hondon Valley based AIPP agent with this prestigious membership and we now have the right to show the AIPP badge. Which of course we do with pride.