The making of proper pre-contract enquires is a basic and sound step to ensure a smooth transaction that protects your interests as the purchaser and the interests of the vendor while also ensuring that you can avail of the professional assistance of the estate agent to best advantage. This is a fundamental process that should be part and parcel of the decision to place a deposit on a property and indeed should form the basis of the terms upon which such a deposit is given. Although to many the term “pre-contract enquiries” may seem like an aloof legal term, the process merely serves to assist the purchaser and the vendor to reach an agreement in a more efficient manner by bringing to light the true nature and circumstances of the property that is being sold. The advantage of making such enquires is that the process of purchasing or selling the property moves efficiently while at the same time it minimises the risk of the deal falling through at the final stages. Ultimately, the process should protect against a last minute insurmountable problem coming to light on the proposed day for the signing of the escritura pública (title deeds) at the notary’s office with all the financial consequences that this may entail.

It is a matter of grave concern to many legal practitioners in the region that a significant number of expatriates and non-residents have embarked on property purchases without
making such enquiries and as a direct result have paid over monies without signing an appropriate deposit contract. Unfortunately, many people in such circumstances have often handed over substantial amounts of money with little more than a non-specific receipt in return that does not state the basic terms upon which monies have been paid or without sufficiently identifying the particular property that the deposit relates. The avoidable harsh results of this are known to many in the expatriate community. As with a medical issue, prevention is invariably better than the cure. The cure in this instance can often involve protracted costly litigation coupled with the litigant having to deal with the ordeal of diminished financial and personal circumstances whilst the cure is being administered.

There is no substitute for thorough pre-contract enquiries that should include the following as a basic minimum:
1. the making of a detailed examination of the title of the property, the escritura pública, to ensure that the property is capable of being sold and that the seller indeed has the capacity to sell the property with good title;
2. the making of all due searches of the appropriate registries such as the Property Registry, Companies Registry and/or consult public institutions as necessary in the circumstances;
3. checking that the property benefits from compliance with local town planning requirements and has the requisite building permits and licenses;
4. when appropriate, the requisition of a report from the local town hall outlining whether an integrated urban development program (PAI) will affect the property within the foreseeable future;
5. that there are no judgments, debts or charges affecting the property;
6. that the property is properly served with rights of access and other such rights normally associated with a property of the type being purchased and
7. where necessary that an independent survey is carried out of the property.

Each of the above are crucial elements of the purchasing process which are all too often overlooked by the ill advised. The maxim of “buyer beware” holds true and it is largely
the purchaser’s responsibility to make proper and full enquiry into the property that he or she is purchasing. It is a misconception that the notary carries out the above enquires. The notary’s primary function is to give faith to the transaction. Based on the results of such pre-contract enquires, as discussed above, the deposit contract can be drafted or amended to deal with the particular characteristics of the property.
A common clause in a deposit contract is that the deposit is paid as an “arras” deposit. This is an effective provision that is a governed by Article 1.454 of the Spanish Civil Code. This article provides that in the event that the purchaser breaches the contract he or she will forfeit the amount paid as a deposit and in the event that the vendor breaches the contract he or she will have to return the deposit in full and pay the purchaser a sum equal to deposit in compensation. This provision often serves as an effective mechanism to focus both parties minds on bringing the transaction to a successful conclusion.
Purchasing a property in a foreign country through a foreign language can potentially be a daunting experience. We therefore go to extra lengths to explain the terms, conditions
and stipulations of each legal paper and official document encountered as a part of the purchasing procedure.

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mhayes Property law Contract Enquieries, deposit contracts, poveda hayes, property Spanish law