Are you looking for the types of Contracts you need to sign to Buy a Home? If this is the first time you are buying or selling an apartment, you may not even know that there are different types of contracts that you can sign to ensure the sale. Do not worry, sometimes real estate brokerage procedures can be a bit complicated, but in this post, we will clarify it for you.
Types of contracts that you can sign to buy a home
Before buying and selling a home, it is important that the parties sign a legally valid contract where the conditions they have agreed are put in writing, to personally and legally secure the purchase option.
With the signing of a contract by the property’s sellers (individuals or agencies) and its buyers, the operation is ensured while the mortgage loan is being managed.
This contract to formalize the sale can be of different types: private sale contract, signal or deposit contract, the promise of sale, or purchase option. Let’s see what they consist of one by one.
The private contract of sale
This type of contract is characterized by a firm agreement on the sale of the home, forcing the seller to deliver the home and the buyer to pay the agreed price for it.
This means that, from the moment the private sale contract is signed, the two parties are bound by the agreement, even if it has not been formalized before a Notary Public.
Once this private contract is signed, the buyer must ask the seller for the documentation of the house.
The sales contract is not subject to special formal requirements, but it must include some data related to the sale that must be clearly stated.
What should the private sale contract include?
Identification of the home buyer and seller, as well as recognition of their legal capacity.
Property data such as identification, registration data, description, location, and charges.
Economic obligations of the property: IBI and fees of the community of owners.
Type of contract.
Price of the house, deposit, payment method, and conditions of the mortgage loan, in the event that it has already been formalized.
In the case of not being specified in the contract, the buyer has to take charge of the expenses of the deed, registration, and taxes, while the seller will take charge of the capital gains expenses of the home and of the original deed.
Delivery of keys and deed period.
Effects of termination or breach of contract.
Date and signature of the contracting parties.
The signal or deposit contract
This type of contract formalizes in writing the delivery of the purchase signal or guarantee from the buyer to the seller. The document also states the consequences in the case of non-compliance with it.
The signal that the buyer gives to the seller is part of the total amount to pay for the house, so it will be deducted from the total price of the sale.
The earnest money can be of three types: Penitential, confirmatory or penal. In this other post, we explain what each one consists of and we see in depth this type of agreement prior to the sale.
The promise of a sale
This agreement is aimed at the future conclusion of the contract for the sale of a home or to buy a home. This means that it gives the right to both the buyer and the seller to demand compliance with the agreement. In addition, with this promise, both may claim otherwise damages.
The purchase option
The last type of contract that can be signed before buying a home or to buy a home is the purchase option. This type of contract gives the right to purchase a home on a specific date and with an agreed price in the event that the buyer cannot purchase it at the current time.
To obtain the purchase option, the future buyer has to advance an amount of money, which does not necessarily have to be part of the final price of the house.
This type of contract only generates obligations to the seller of the property, since he is obliged to dispose of it and maintain the offer.
Has it been clearer to you what types of contracts you can sign to secure a sale?
If you need more information or want to start the process of buying or selling a flat, you can contact us at Yarmoloy Group. One of our agents will take care of everything so that you don’t have to worry about anything.