Is it wise to sign the compromise immediately when buying a property in Spain? No. Although the compromise (contrato de arras or compraventa) in Spain as in Belgium is a binding agreement, crucial information is often missing when signed. Unlike in Belgium and the Netherlands, the Spanish notary no duty to investigate to the town planning condition of the property. If you sign the compromise without prior due diligence, you will be stuck with the sale - including any illegal constructions or debts - or lose your deposit (usually 10%).
Using a recent, anonymised file from our practice, we explain how to avoid this risk.
Read more about how to avoid a mis-selling.
The 3 stages of a Spanish property transaction
Before discussing the case, it is essential to understand the legal hierarchy of contracts in Spain.
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The Reservation Contract:
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Objective: Taking the property off the market temporarily (often 30 days).
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Costs: A small deposit (€2,000 - €3,000 on average).
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Status: This is no purchase contract. You are not yet definitively buying the property.
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Tip: This is the time to make a condition precedent build in legal control.
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The Compromise (Contrato de Arras / Compraventa):
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Objective: Final, binding sales agreement.
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Costs: Down payment of 10% of the purchase price.
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Status: Basically, there is no turning back. Do you break the contract? Then you lose your 10%.
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The Notarial Act (Escritura):
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Objective: Transfer of ownership, key transfer and payment of balance.
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Action: This document will register you in the Spanish property register (Registro de la Propiedad).
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Case study: The pitfall of the "dream villa" in Alicante
A retired couple reported to Confianz intending to buy a property in the interior of Alicante. The price agreed with the estate agent was €150.000.
The initial situation
The broker immediately laid a compromise for. The terms:
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Signature within 10 days.
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Payment of an advance of €15.000 (10%).
The risk: This procedure is standard in Spain but dangerous for the buyer. The notary does not carry out checks on the legality of the property. If, after signing, the property is found to be illegal, the buyer loses his €15,000 deposit on cancellation, or worse: he is stuck with an illegal property.
The property seemed perfect: a villa with a swimming pool. However, behind the fence, adjacent to the garden, there was a vacant industrial warehouse. According to the estate agent, "no problem", but our experts advised caution.
The strategic intervention
We advised the client to not sign the compromise, but first a reservation contract enforce with specific clauses.
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Guarantee: Limited to €2,200.
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Suspensive condition: If from the due diligence (legal audit) reveals that the property is not legally in order, the estate agent must refund the €2,200 in full.
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Timeline: One month for investigation before binding compromise (and 10% payment) follows.
During this investigation, it soon emerged that the warehouse would be rented out to a furniture company. This seemed acceptable to the client, but the legal investigation revealed more serious facts.
The shocking results of the audits
Our investigation into the property titles and urban planning status revealed facts that the estate agent had (knowingly or unknowingly) failed to report:
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Executive house on industrial land: The villa was not a residential property, but registered as an annexe/director's house belonging to the industrial shed.
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Illegal construction: Both the house and the warehouse had been built illegally.
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Forced co-ownership: The house and the shed were on the same plot (undivided). The purchase would create a 'forced undivided property'.
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The client would for 35% owner Be from the overall complex (housing).
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The owner of the shed would 65% owner stay.
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Common parts: The swimming pool and driveway would become common property with the furniture company.
Consistency: The client would not have full control over his own home. Renovations would be prohibited due to its illegal status, and in the event of a demolition order by the municipality, the client would share in the costs.
The outcome: €12,800 saved
Thanks to strategic advice not to sign the compromise immediately, the client was able to get out at no cost.
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Without advice: Client had signed the compromise and paid €15,000 in deposit. Upon discovery of illegality and cancellation of the sale, this amount would have been lost.
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With advice (Confianz): Client signed a reservation contract with conditions precedent. The broker deposited the €2.200 completely back.
Financial risk was reduced from €15,000 to €0. The client is currently looking for another property, with the same estate agent but with heightened vigilance.
Conclusion: Why legal advice in advance is indispensable
Buying a property in Spain is a fundamentally different process than in the Benelux. Never blindly trust the selling estate agent or the notary to check legality. The notary in Spain ensures the legal security of the transfer, but not For controlling urban planning violations.
Want to avoid a mis-selling? Never sign a compromise and never pay 10% deposit before a specialist lawyer has fully vetted the property.
Frequently asked questions (FAQ)
What is the difference between a notary in Belgium and a notary in Spain? In Belgium and the Netherlands, the notary has an extensive investigative duty and actively checks for building violations, soil pollution and debts. In Spain, the notary's role is more limited; he checks identities and title deeds, but rarely does urban planning research. That responsibility lies with the buyer (and his lawyer).
Will I lose my deposit if I cancel the sale in Spain? Yes, if you accept the binding compromise (contrato de arras) signed and you abandon the purchase (for example, because you discover the house is illegal), you will lose your deposit (usually 10%) under Spanish law. Unless you have had specific resolutive conditions included beforehand.
What is due diligence when buying in Spain? This is a comprehensive legal and urban planning study conducted before you sign the compromise. This includes checking for ownership, outstanding debts (mortgages, taxes), the legality of the structure (building permits) and future infrastructure plans of the municipality.
Is a verbal agreement binding in real estate in Spain? Although an oral agreement can be binding in theory, in practice it is hardly enforceable due to lack of evidence. In Spain, the written contract is leading. However, do not sign anything (including a 'booking form') without a legal check.
About the author: Glenn Janssens is a lawyer specialising in Spanish real estate transactions and tax regulations. Since 2017, he has been helping Belgian and Dutch individuals and entrepreneurs to safely purchase and structure real estate in Spain. He guides files from A to Z: from due diligence, ownership and tax control to estate planning and optimisation for residents and non-residents. Thanks to his years of experience, hundreds of handled files and focus on transparent communication, Glenn makes complex Spanish legislation understandable and practically applicable for every property buyer.
