Option to purchase

TAKING A PROPERTY OFF THE MARKET

 

Option to purchase contracts are a feature of the Spanish property market. These sometimes require a payment from the prospective purchaser. Purchasers need to understand the nature of option to purchase contracts.

What does it mean?

Frequently estate agents will ask for some money to prospective property purchasers. The agents assure them it is needed to take the property off the market. And you might think that as soon as you pay the required money the property is yours for sure. And you will also think that the property will not be marketed any more anywhere. This is the idea and the aim of taking the property off the market. But I would like to try to clarify some issues, which I feel could lead to some confusion to consumers.

Option to purchase contract

Summarizing brutally, I will say that this is the most clear and legal way to take a property off the market. The option to purchase is an agreement between two parties where one of them (the seller to be) commits herself not to sell to anybody else but to the other party (the purchaser to be) during a certain agreed time. Within this time the ‘purchaser’ has to state if they want to buy or not and fulfil the agreed requirements between the parties. Only if they decide to buy will they then enter into the basic conditions of the sale regarding (price, payment method, deadline, etc) which are usually already agreed at the same time as the option to purchase.

The option to purchase contract might involve some money or not. Sometimes the seller to be will ask for some money as a gesture of goodwill and seriousness of the purchaser. This money could be either an agreed sum for the time that the seller is keeping the property for the purchaser or could be part of the price of the future sale and purchase in the case that the purchaser to be decides to buy.

My experience is that the real estate agents in general use the term reservation contract or similar to refer to the first payment of a property. This name of “reservation contract” means nothing specific in itself. It is necessary to look into the specific provisions and stipulations of the agreement to make sure we understand our commitments and position deriving from that agreement. If something is not easily understandable it should not be signed at all.

Spanish law tips

I would like to finish with two Spanish law tips which I think will help to clarify how it works the Spanish legal system.

One is that the contract system in Spain means that contracts are binding just with the consent of the parties. Just the consent.

The second one is that there is no need to pay anything from a legal point of view to take a property off the market.

Thank you

Thank you for your time and attention and I hope this information is of use. You are very welcome to share if you liked it.

Warning

Please, note that this is general information. This is not specific legal advice. It is advisable to seek legal advice for any specific legal issue.