Real Estate News
The ‘contracts arras’ serve more than what you imagine: types, differences and consequences.
Article by Carmen Giménez, lawyer holder of G & G Bar.
The road to a sale is usually initiated through a first installment of money, commonly called signal or reserve, which is intended to ensure that such housing will be for the buyer and not for no other person.
This signal or reserve, which is formalized through a document whose legal name is the earnest money, will be, in principle, the first payment of the price of one of the most significant financial outlays that makes a person or a family unit.
There are different types differentiated by doctrine and defined by the Supreme Court arras. The importance of knowing lies in the different consequences that occur depending on whether you sign one or the other, consequences will be determined mainly by the content that is given in the wording.
Confirmatory, criminal and penitential: And so, three types of arras allowed.
1. Confirmatory Arras. They are those that are proof of perfection or conclusion of the sales contract and are a sign of their celebration. the price is agreed, delivery is on account of this and do not allow to withdraw in case of default. They are a real guarantee for both the buyer who wants it, and the seller, that future sales will be done.
In the event of default, the aggrieved buyer may choose to enforce or resolution, with compensation for damages in the latter case, provided that such damages are tested.
Sample clause in confirmatory deposit:
“The parties agree that the purchase price is € X to be paid as follows:
a) The sum of € X are credited to this act as a deposit or confirmatory deposit.
b) The rest, that is, X €, will be paid in the act of granting the public deed, which will take place a deadline … of … ..of …… ”
2. criminal Arras. Its purpose is securing the contract by the threat posed to the defaulter economic loss: represent compensation for damages, but do not prevent the enforcement of the obligation. While the latter case and to compensation and compliance requirement, the court may moderate the amount of the first, if it is a partial default. Therefore, if one violates the terms and obligations of the contract it is the buyer will lose the amount paid, whereas if it is the seller who fails, it must return so bent the amount received.
Sample clause in criminal arras:
“It establishes for the breach of any of the parties of the obligations undertaken by this contract, and by way of compensation for damages, the following:
If the failure is due to the seller, it will be obliged to return to the buyer double the amount received as a deposit or signal.
If the buyer fails to perform the obligations reflected in this contract, you will lose the amounts paid as a deposit or signal, making theirs the seller.
The breaching party also may terminate the contract, communicating it to the defaulting irrefutably, or enforce applying in both cases the compensation payable pursuant to the preceding paragraphs “.
3. penitential Arras. Also called arras of withdrawal, constitute a lawful for the parties to unilaterally disengage from the contract by means loss or bent restitution. They are those usually intended use and that, in principle, are in every mind of seller and buyer, although they are exceptional. That is, if not expressed clearly its consequences, or the provision of the Civil Code which are regulated (Article 1454) mentioned, we face other arras.
Sample clause in the earnest money:
“The quantities delivered by this document are by way of earnest money, so that:
If the buyer fails to fulfill its obligations under this contract or desist of it, you will lose the amounts paid.
If the seller who fails to comply with the terms agreed or decided not to go ahead with the sale, the buyer will pay twice the amounts received. ”
Attentive therefore to sign a pledge, since before the recognized diversity, both doctrine and jurisprudence have been understood that, in the absence of express indication in the contracts, delivering arras has a purely confirmatory function or payment a part of the final price.