The deposit contract (arras) when buying new in Valencia

In the complex process of buying and selling property, the penitential deposit agreement plays a crucial role. This preliminary agreement not only sets out the conditions of the future transaction but also provides guarantees and security for both the buyer and the seller.

In this article, we will explore in detail what a penitential deposit agreement is, its structure, and its usefulness in the real estate context.

What is a penitential deposit agreement?

It is a private agreement between the buyer and seller of a property whereby both parties commit to completing the sale under the terms and conditions set out in the contract. This type of deposit is referred to as “penitential” because it allows both parties to withdraw from the transaction under certain conditions.

Structure and content of the contract

If you are convinced that this is the right time to buy or sell your property, it’s essential to understand that a penitential deposit agreement usually includes the following information:

• Identification of the parties: names and personal details of the buyer and the seller.
• Description of the property: details of the property to be sold, including its location, characteristics, and registration status.
• Sale price: total amount agreed upon for the sale of the property.
• Deposit amount: the sum of money given as a deposit, which typically represents a percentage of the sale price.
• Deadlines and conditions: the deadline for signing the final sale contract and any additional conditions agreed upon by both parties.
• Withdrawal clause: outlines the consequences of either party withdrawing from the sale.

What is the purpose of a penitential deposit agreement?

Confirmatory and penitential deposits

Commitment Guarantee

The main purpose of this type of contract is to ensure the commitment of both the buyer and the seller to proceed with the sale under the agreed terms. By signing it, both parties demonstrate their intention to move forward with the transaction and accept the consequences of withdrawing from the deal.

Right of Withdrawal

One of the most important aspects of the penitential deposit agreement is the right of withdrawal. This contract allows either party to back out of the transaction under certain conditions:

• Buyer’s withdrawal: if the buyer decides not to proceed with the purchase, they will forfeit the deposit paid to the seller.
• Seller’s withdrawal: if the seller decides not to proceed with the sale, they must return double the deposit amount received from the buyer.

Security and Transparency

The penitential deposit agreement is so important because it provides security and transparency to both parties during the sale process. By clearly outlining the conditions and consequences of withdrawal, misunderstandings and potential future disputes are avoided.

Deadline for formalising the sale

This legal document also sets a deadline for signing the final sale contract, helping to keep the process on track and ensuring that both parties meet the agreed timeline.

At Domosno Valencia, we believe this is a fundamental tool in the property sale process. It provides guarantees and security to both the buyer and the seller, ensuring that both parties fulfil their commitments and establishing the conditions for withdrawing from the transaction.

Knowing and understanding this contract is essential for anyone involved in a real estate transaction, as it helps to properly manage the expectations and responsibilities of all parties involved.