Real Estate Purchase Contracts In Ibiza

The Purchase Contract is the private agreement signed by the parties before the execution of the public deed of sale and purchase. It sets out all the terms and conditions of the transaction, including the identification of the parties, description of the property, purchase price, payment method, deadline for executing the deed, allocation of expenses, and other relevant provisions.

While the final transfer of ownership requires a notarized public deed (escritura de compraventa), the contracts that come before it are typically private written agreements between buyer and seller. That said, every contract should be reviewed by your attorney before signing — what looks straightforward rarely is when you're navigating Spanish property law for the first time. The General Council of Notaries of Spain notes that this private agreement is fully valid and legally binding on the parties from the moment it is signed.

In general, there are three types of sales contracts:

1. The Reservation Agreement (Contrato de Reserva)

In case of a spontaneous interest in a property, this may be blocked for a short time by signing a reservation contract and by paying a small reservation fee. In case of the actual purchase, this reservation fee is deducted from the agreed purchase price. In case the purchase does not go through, the seller usually keeps the reservation fee.

If you have powerfully negotiated the purchase price, this kind of contract is not recommended. Should another buyer in the meantime make a much higher offer, this could lead to conflicts and your rights would then have to be enforced by long-lasting legal battles.

2. The Penitential Deposit Contract (Contrato de Arras Penitenciales)

Through the Penitential Deposit Contract (Arras Penitenciales), the seller undertakes to reserve the property for the agreed period and to execute the public deed of sale once the remaining purchase price has been paid. The buyer customarily pays a deposit, usually around 10% of the purchase price, although the parties are free to agree on a different amount. Pursuant to Article 1454 of the Spanish Civil Code, this contract allows either party to withdraw from the sale, while clearly and in advance establishing the financial consequences of such a decision.

Signing this type of agreement is particularly suitable for buyers who require additional time to complete the procedures prior to the purchase, generally between 4 and 8 weeks, without relinquishing their reservation of the property. If the buyer decides not to proceed with the purchase or fails to complete the transaction on the agreed date, they will forfeit the amount paid as down payment and the seller is free to put the property again on the market. Conversely, if the seller withdraws from the sale, they must refund the buyer double the amount received, which normally amounts to 20% of the purchase price when the deposit represents 10% thereof, as compensation for damages and losses.

3. The Confirmatory Deposit Contract (Contrato de Arras Confirmatorias)

A Confirmatory Deposit Contract (Arras Confirmatorias) is a preliminary agreement entered into before the execution of the sale and purchase transaction, through which the buyer and seller express their firm intention to complete the sale. The buyer pays a sum of money on account of the purchase price, normally 10%, which serves both as a down payment and as evidence of the existence of the agreement.

Unlike a Penitential Deposit Contract, a confirmatory deposit contract does not allow either party to withdraw freely from the transaction. If either party breaches its obligations, the other party may seek specific performance of the contract or claim compensation for any losses and damages suffered as a result of the breach.

This type of contract is particularly advisable when both parties wish to ensure that the transaction is completed and to strengthen their commitment until the execution of the public deed of sale and purchase.

Key Elements of a Spanish Property Contract

These contracts should generally contain the following key elements:

• Rights and obligations of the parties
• Description of the property and ownership status
• Purchase price
• Payment terms
• Completion and handover date
• Penalties in case of non-compliance
• Other arrangements between buyer and seller

Essential Verification & Due Diligence Before Signing

Before signing any property purchase contract in Spain, buyers should carry out proper property due diligence and verify the following documents:

• Public sales-purchase deed (escritura de compraventa)
• Up-to-date Land Registry extract (nota simple registral), showing ownership, mortgages, charges, easements, rights of way and other encumbrances
• Registration in the Cadastre (Catastro)
• If the seller cannot be present at the signing, a valid Power of Attorney authorizing another person to complete the sale on their behalf.
• Current utility contracts or receipts (water, electricity and other services)
• Community fee payments (if applicable)
• Property tax (IBI) payments
• Energy Performance Certificate (EPC / Certificado de Eficiencia Energética)

Conclusion

Whether you use a Reservation Agreement, an Penitential Deposit Contract, or Confirmatory Deposit Contract, each option offers different levels of protection and commitment for both buyer and seller.

Before signing any agreement, it is essential to carry out proper due diligence, verify ownership, review possible charges or encumbrances, and ensure that all legal documentation is in order. Taking these precautions can help avoid costly surprises and provide peace of mind throughout the transaction.

For foreign buyers in particular, obtaining independent legal advice from a lawyer specialized in Spanish property law is strongly recommended. A professional review of the property and the contract will help protect your interests and ensure that your property purchase in Spain is completed safely, efficiently, and in full compliance with Spanish regulations.

At inmobiliaria LAS ANCLAS, we are familiar with all types of property purchase contracts used in Spain, including Reservation Agreements, Penitential Deposit Contract, or Confirmatory Deposit Contract. Having assisted national and international buyers and sellers for more than 25 years, we understand the legal and practical implications of each option and can help determine which contract best suits your particular situation. From the initial negotiations and due diligence process through to the signing of the public deed before a notary, our team works closely with trusted lawyers, legal and tax professionals to ensure a secure, transparent and smooth property purchase in Ibiza.

All information is supplied without liability!