BEWARE: The ‘reserve’ does not reserve the flat for you. It does not take the flat off the market, and it does not bind the seller in any way. The reserve is incorrectly titled and very confusing.
On the reserve, you write your offer for the property and pay a deposit of app. 1% of the purchase price to the real estate agent. The seller has time, normally seven days, to accept your offer. If they do you proceed with the purchase and the deposit should go towards the purchase price. If they reject your offer, the agent should return your deposit.
Careful! Agent’s Fee. In Spain, the seller pays the agent a % of the purchase price for their services. However, some agents also charge the buyer. So if the seller rejects your offer, the agent will keep part of your reserve deposit for their fee. This fee, however, is not in the property’s listed price. Thus, before you sign the reserve, read it carefully to see if you have to pay the agent a fee. If in doubt, propose a clause: “The Agent is not charging the Buyer anything in this transaction.” The seller is already paying the agent 3% to 7% of the purchase price.
Seller’s Obligation. The reserve has no legal effect on the seller unless it says so. Thus, the seller may continue showing the property and even disclose your offer to other buyers. It’s perfectly legal. To address this you must put a clause in the reserve: “Upon signing this reserve, the Seller will take the property off the market and reserve it in the Buyer’s name.”
Buyer’s Obligation: If the Seller accepts your offer you must buy the property or lose the deposit. And if they accept, they will want a 10% non-refundable deposit soon, normally within 10 days. Thus, be sure you have your mortgage approved before you sign the reserve. Mortgage applications can take time. You could lose your reserve deposit if you don’t pay the 10% deposit on time.
Right of First Refusal. These generally don’t exist in Spain, but you can ask: “The Agent or Seller can’t sell the property during the reserve period without offering it to me first”. You might have to pay a higher deposit and they might say no.
Give yourself time. If the seller accepts your offer, they’ll want a 10% deposit right away. But you can’t pay it until you thoroughly inspect the property and its legal documents. This takes time, so write in the reserve: “The Buyer is granted up to 21 days to conduct due diligence on the property before they pay the 10% deposit.”
Mortgage. If you need a mortgage your bank will need time to approve it. So write in the reserve: “The Buyer does not have to pay the 10% deposit until the bank approves the Buyer’s mortgage.” Good luck with this, but you must at least discuss this issue with the Seller to find a solution to the mortgage-time issue.
Paying the Reserve. It’s usually paid to the agent. Before you pay:
1) Ask to see the agent’s license to sell property, called an API license.
2) Ask to see their written authorization from the seller to collect the money.
3) Ask if they are charging you a fee and write it in the reserve.
4) Get a detailed, signed receipt back; you’ll need it when you sign the deed.
If the agent refuses these requests or finds them unusual, they’re either dishonest or incompetent. For questions regarding these and other issues, call or email: Mark Carr at 664 665 365 or [email protected]