Characteristics and elements that should be included in a purchase-sales contract for a new development property to carry out a real estate transaction.
When you buy a new development property off plan, a purchase-sales contract is usually signed by the individual buyer and the developer after the reservation is made. This contract will serve as the base to draw up the public title deeds for the property in the future, once construction has been completed and the home delivered to its owner.
But what exactly is a purchase-sales contract?
A purchase-sales contract for an off-plan property is an agreement between two parties in which one person (the vendor) commits to deliver a property to the other (the buyer) in exchange for an agreed amount of money, including a series of rights and obligations for both parties.
Elements of a purchase-sales contract for off-plan property
In this article, we’ll describe each of the elements a purchase-sales contract for an off-plan property should include so that you know what to look for before signing one to make sure it contains everything necessary to guarantee the operation will be carried out safely and in accordance with current regulations.
- Contract holders: Details of both the buyer and the vendor (name, surname, ID number and address for notifications)
- Object of the transaction: details of the property that is the object of the transaction (address, surface area, boundaries…). If applicable, a description of the building, communal areas and ancillary services is also necessary.
- Burdens and tenancies: existence of a mortgage on the property, tenancies or occupants. The property must also be declared to be up-to-date with payments (utilities, taxes, community fees…).
- Price: monetary amount for which the property is transferred, as well as the taxes applicable for the transaction.
- Method of payment: details of the amount deposited upon reservation, instalment payments or other amounts agreed by the buyer and the vendor. The method of payment for each amount must also be stated: bank cheque (specifying the bank), bank transfer…
- Delivery time: specified period in which the keys must be delivered to the buyer and specified times for each of the payments.
- Utility costs: share of costs deriving from utility supplies (water, electricity, heating). These costs are usually the responsibility of the buyer.
- Penalties: in the case of either party failing to meet the conditions of the contract (delay in payment, delay in delivery of the property…)
- Modifications: cases in which the contents of the contract may be modified (justified technical requirements, administrative authority obligations, town planning or technology laws) with no penalties for either party.
- Legal jurisdiction: in case of discrepancies deriving from the interpretation and/or execution of the conditions of the contract, the means of resolution (legal jurisdiction, Courts and Tribunals…) must be indicated.
Important! A purchase-sales contract for a new development property should never be signed before the relevant Building Permit has been obtained.
Paperwork to be presented with the contract
Along with the necessary information to fill in the purchase-sales contract (description of the property, identification of the parties, payment methods….), the developer or vendor must also provide the following paperwork in order for the signing to go ahead:
- Trade Registry.
- Property Registry.
- Plans (of the location of the property, distribution and plot).
- Infographics and building specifications.
- Layout of mains electricity, water and heating networks and guarantee of provision.
- Town planning licence or certificate to accredit the land’s urban status.
Likewise, on the day the Public Title Deeds are signed the information must be completed with the following additional paperwork:
- Utility certificates
- Copy of ten-year insurance
- Licence of First Occupation
- Energy Performance Certificate
- Building Book
At Modern House we provide certain additional paperwork and guarantees to bring greater security to all our transactions. This includes work progress certificates, visits to show villas, Open House, and all the paperwork buyers may need to help them make the best purchase decision.
You will find tips, purchase strategies and recommendations on how to find your dream home on the Costa Blanca in a simple, shock-free way in our guide to buying a house on the Costa Blanca.