Money that is delivered when signing a deposit contract. Photo: Pixabay
The deposit contract is one of the most recommended documents when selling a home. This includes all the conditions agreed during the negotiation of the sale and indicates the possible penalties that each of the parties may assume for breaching the contract and, as its figure is fully recognized by jurisprudence, it provides legal certainty to both parties. For this, It is common for buyers and sellers to sign this paper to cover their backs and, in doing so, it is normal for the buyer to deliver a percentage of the price of the house to reserve the home. And how much money are we talking about? In this article we solve this common doubt.
The amount of the down payment may vary depending on the circumstances
The deposit contract is a private contract. Therefore, there is no amount of money defined by law and the parties can freely agree on the amount that must be delivered to reserve the home. Nevertheless, the usual thing is that the seller decides the amount and, generally, this is usually 10% of the value of the house. This amount will normally be deducted from the total price that will be received when signing the deed at the notary’s office.
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However, depending on the circumstances surrounding the sale, the seller can choose to ask for more or less money as a down payment from the buyer. For example, if the sale is in a hurry and the seller wants to make sure the buyer won’t back down at the last minute, he can ask for a higher percentage. In this way, it is very unlikely that the person will risk giving up the sale, since it would mean losing a significant amount of money.
On the other hand, if confidence in the buyer is full or he does not need to apply for a mortgage to buy the house and the signature can be carried out in a few days, a lower percentage can be asked, for example, 5 % of the value of the house.
What happens to the signal if a party gives up the sale?
One of the peculiarities of the deposit contract is that it includes a clause with the penalties that the seller or buyer must assume for backing down with the sale. Thus, the penitential deposit contract, which is the one most frequently signed in Spain to sell a house, contemplates that if the buyer decides not to buy the house, the seller has the right to keep the money from the signal.
Conversely, if it is the seller who desists from the sale, the buyer has the right to receive that amount in duplicate. It is important to take this into account when deciding what type of contract to sign with the buyer, since if you are not very sure you want to sell the house, instead of opting for a deposit contract, the best would be sign a reservation document. Why?
The reservation contract is not defined by jurisprudence and the seller can draft it in the way it deems appropriate (for, for example, not to include penalties for non-compliance or to soften them). On the other hand, the penitential deposit contract, being defined by jurisprudence, has established penalties. In this sense, Even if you choose not to write in the document the type of applicable penalty, simply by indicating that it is a penitential deposit, the other party could try to go to court to claim the money of the signal in duplicate if finally the seller does not want to carry out the operation and a judge could give him the reason.