When buying a house, one of the most common procedures to get that house you like so much is to make a pre-agreement between both parties. You have the option of signing a reservation contract or a deposit contract. Although you may have heard that they are the same thing, as they guarantee the purchase of a property, the reality is that they are not. A few months ago, Bankia’s blog published a post in which the differences between the two were clarified, and which we will now summarise.
«The main difference is that the reservation contract is a contract, while the deposit contract is a kind of legal agreement. Therefore, the deposit contract has the option of cancelling the agreement once it has been paid, while the reserve contract does not», explained the bank.
Booking contract.
In this case, it is a contract of obligatory compliance, given that it cannot be terminated according to the Law on the Sale of Movable Goods by Instalments 28/1998, reflected in the BOE 14/07/1998. The buyer reserves the home with the payment of a deposit, which is usually between 1% and 5% of the transaction price.
With this contract you have the advantage of ensuring that the operation will take place, as the other party cannot back out, unless there is an explicit clause allowing the contract to be recieved. Value your options well, whether you are the buyer or the seller.
If you are the buyer, on the one hand, you will be able to ratify the transaction of the home you are looking for, but you must also be clear that you will be able to assume the cost of the operation, and that you already have the appropriate financing.
If you are the seller, you guarantee how much money you will receive from the buyer and when you must hand over the property. In fact, this is the type of contract usually used by estate agents and construction companies, as it involves a direct and obligatory sale. But if you find a better offer or regret the operation, it will be too late.
«This type of contract includes a series of detailed points, such as the deadline for signing the deeds, the amount of the deposit or the payment procedure, which must be complied with,» explains Bankia.
Deposit contract (Arras Contract).
This other contract also guarantees the purchase of the home for sale with the delivery of a signal to be agreed between the parties, but there is the possibility of terminating the contract, with the opportunity to compensate for the damages caused.
There are three types of deposit contracts, with their relevant rights and obligations: confirmation deposit, penalty deposit and penalty deposit.
A confirmatory deposit serves a virtually identical function to the reservation contract. If one of the parties does not comply with the contract, the other party may go to court for damages.
Penitentiary deposits are the most common and widespread on the market and are covered by article 1454 of the Civil Code. They imply a commitment to buy and sell, with the possibility of breaking it.
If the seller does not comply with the contract, he will lose the deposit paid on account of the deposit. If it is the seller who decides not to proceed, he must return to the buyer twice the deposit.
Penalty deposits require greater compliance with the contract and therefore do not allow the buyer to withdraw from the agreement in any way.
