Deposit contract, Different kind of deposit.

One of the most important steps taken by seller and buyer, once they have reached an agreement on the price, and prior to the formalisation of the purchase contract, is to sign a deposit contract, or earnest money contract, between the parties.

This gives firmness to the agreement reached, being until then only a verbal agreement between the parties. In the earnest money contract, in Despacho Lamas, we give importance to record the terms of the contract of sale that have been agreed such as, among others, the description of the property, the price of the sale or the date of the signing of the notarial deed. To this end, the purchaser undertakes to pay a sum of money on account of the total price agreed, called ARRAS, which will remain on account of the final price payable with the execution of the public deed of sale.

There are different types of earnest money, with very different legal consequences. For this reason, lawyers believe it is important to differentiate between them and to express clearly in the contract what type of deposit we are signing, as otherwise the interpretation of the same may give rise to conflicts between the parties.

We can differentiate between three types of earnest money: penitential, confirmatory and penal.

Penitential Deposits are those that allow the withdrawal from the contract by either of the parties, without the need to allege cause. In the event that the withdrawal is made by the buyer, the latter will lose the earnest money paid to the seller. On the other hand, if it is the seller who withdraws from the purchase contract, the latter must return the earnest money doubled, that is to say, he must deliver to the buyer double the amount received. Penitential deposits are the only ones that are expressly regulated in the Civil Code. Specifically, we find its reference in Art. 1.454. Penitential deposits are exceptional in nature and are not presumed, because, as mentioned above, this agreement will only be understood if the parties expressly agree to it.

Confirmatory Deposits are those that consist of an advance payment on account of the final purchase price, as a guarantee of performance. These are governed by the general rules of reciprocal obligations, so that, in the event of breach by one of the parties, the other will be entitled to demand performance of the same or, failing this, to request the termination of the contract with the corresponding compensation for damages, in accordance with art. 1.124 of the Civil Code. If the quantification of these damages is reflected in the earnest money contract, either by the amount deposited or any other amount, this amount, as a penal deposit, will be agreed between the parties.

The essential difference between the penitential and confirmatory earnest money consists in the fact that the penitential earnest money allows the withdrawal from the contract, whereas, if we sign a confirmatory earnest money, the other party may demand the fulfilment of the contract.

In both cases, the amount of the deposit may be freely agreed between the parties. In practice, it is usually set at an amount of around 10% of the total price of the sale.

At Despacho Lamas, we have been defending and representing the interests of our clients for more than thirty years so that these agreements are favourable, in order to achieve the purchase or sale of a house in a satisfactory manner.


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