Selling property in Ibiza: tips for the earnest money contract

Are you thinking of selling your house in Ibiza? In today's article, our real estate agents share some tips when it comes to signing the earnest money contract, one of the most important documents in property sales.

The earnest money contract acts as a pre-contract for the purchase transaction. The document specifies that the buyer reserves the right to the property by paying a deposit.

On the other hand, the earnest money contract contemplates the possibility of renouncing the purchase or sale of the property, establishing a penalty for the party that fails to comply or renounces to formalise the corresponding purchase contract.

The earnest money contract commits both parties and the most important aspects to take into account are several, which we explain below.

IDENTIFICATION OF THE DWELLING AND ITS RIGHTFUL OWNER

The first step when formalising the earnest money contract for the purchase of a property is to obtain a "Nota Simple Informativa" from the Land Registry. This note determines whether the property to be purchased has any liens, mortgages or other encumbrances.

For this reason it is necessary for the seller to clear the property of all encumbrances prior to the sale. In this aspect it is also very important to check that the person who is going to sign the sale and purchase of the property is its legitimate owner or, if applicable, a person with the corresponding power of attorney.

PRICE AND FORM OF PAYMENT FOR THE SALE OF THE PROPERTY

The earnest money contract must specify unequivocally, in letter and number, the amount and currency of the purchase of the property. The form and terms of payment must also be stated in this document.

For example, it must be specified whether part of the payment is to be made in cash, part by bank transfer, part by cheque, ...  With regard to the distribution of the costs arising from a sale and purchase, it is also important to identify which of these costs are to be borne by each party.

Knowing the legislation and understanding concepts such as capital gains can be critical, so if you have any doubts about this when buying or selling a property in Ibiza, please contact our estate agents.

DEADLINES FOR KEY HANDOVER

The public deed of sale of a property is what effectively determines the transfer of the property and its new owner. For this reason it is vitally important that the deposit contract clearly states the maximum deadline for signing the title deed.

Nor should it be forgotten that even if the deposit contract specifies a certain amount as a deposit, the keys should not be handed over until the public signing of the title deed with a notary.

BREACH OF CONDITIONS IN A PLEDGE CONTRACT

In the earnest money contract, it is highly recommended that the relevant penalties appear in the contract in the event of non-compliance by either of the parties. Generally, it is stated that if the buyer does not comply with the conditions, he/she will lose the amount of the deposit.

In the case of the person who wants to sell the property, if he/she fails to fulfil any of the conditions specified in the earnest money contract, he/she will have to return them for double the agreed amount. The contract may reflect, however, that there is no breach if the sale is not formalised due to the failure to obtain the necessary financing.

MORE INFORMATION ON EARNEST MONEY CONTRACTS

Do you have any questions about the earnest money contract required for the purchase of a property in Ibiza? In our real estate agency we have a multidisciplinary, multilingual team with a long experience in the sector that will be happy to help you.

You can call us directly on (+34) 971 339 307, write to us at This email address is being protected from spambots. You need JavaScript enabled to view it. or come to our office on the Paseo Marítimo de Ibiza (Avda. Juan Carlos I s/n, Edificio Transat Local 15). We will answer all your questions and provide you with all the necessary tools to achieve a successful sale and purchase.

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